Category: Employment Law

Categories
Employment Law

Terminated Employee Entitled to Bonus and Unvested Stock Award

In a recent Ontario case, the court had to determine whether an employee who had been terminated was nonetheless entitled to his bonus and stock benefits.

Employee Terminated After 23 Years

The employee was employed by the employer, Microsoft Canada Inc., for almost 23 years until his termination, without cause, on August 10, 2018. At the time of his termination, the employee was 53 years old.

In addition to his base salary, the employee received yearly benefits, including merit increases, cash bonuses and stock awards under Microsoft’s Rewards Policy. These bonus payments constituted about 30% of the employee’s total compensation.  

Between 2015 and 2018, the employee received the following base salary and bonuses under the Rewards Policy and stock under the Stock Plan :

 Base SalaryMeritCash BonusStock
September 2015 2.5%34,400 CDN662 Shares – $28,800 USD
September 2016 1.7%29,600 CDN418 Shares – $24,000 USD
September 2017$201,463.001.4%24,200 CDN193 Shares – $14,400 USD
August 2018 $204,262.76NILNILNIL

Because the employee was terminated shortly after Microsoft’s 2018 fiscal year, which ended June 30, 2018, he was advised that he would receive no merit increase and no cash bonus for the 2018 fiscal year. Microsoft also took the position that following his termination, the employee was no longer entitled to the vesting of any granted but unvested stock awards.

Length of Reasonable Notice: 24 months 

First, the court determined that given the employee’s age, length of service, character of his employment, availability of similar employment and case law, he was entitled to a period of reasonable notice of 24 months.

Employee’s Entitlement to Bonuses

The court then turned to the employee’s entitlement to the bonus award during the notice period. The court explained that whether a bonus is an integral part of the employee’s compensation package turns on a consideration of (a) the bonus is received each year although in different amounts; (b) bonuses are required to remain competitive with other employers; (c) bonuses were historically awarded and the employer had never exercised its discretion against the employee; and (d) the bonus constituted a significant component of the employee’s overall compensation.

After reviewing such considerations, the court found that the merit increase and the cash bonus under the Rewards Policy were significant parts of the employee’s total income. Additionally, the court found that there was nothing in the Rewards Policy that removed the common law entitlement to receive bonuses during the notice period.

As a result, the court found that the employee was entitled to damages for the lost opportunity to earn a merit increase and cash bonus during the notice period.  The court further found that the proper measure of such damages was based on the average of the amounts that were awarded for such bonuses in the two-year period preceding his termination. The employee was therefore entitled to a 0.7% annual merit increase during the notice period and an annual cash bonus of $12,100 during the notice period.

However, the court found that the employee was not entitled to a bonus award for the 2018 fiscal year. 

Employee’s Entitlement to Damages for Awarded but Unvested Stock Awards

In considering the employee’s claim for stock awards, the court reviewed Microsoft’s Stock Award Agreement, which stated in part:

“Awardee’s Continuous Status as a Participant will be considered terminated as of the date Awardee no longer is actively providing services to the Company or a Subsidiary (regardless of the reason for such termination and whether or not later to be found invalid or in breach of employment laws in the jurisdiction where Awardee is employed the terms of Awardee’s employment agreement, if any), and unless otherwise expressly provided in this Award Agreement or determined by the Company, Awardee’s right to vest in [Stock Awards] under the Plan, if any, will terminate as of such date and will not be extended by any notice period […]”

While the court found that the agreementunambiguously excluded the employee’s right to vest his stock awards after he was terminated without cause, the court also found that the agreement’s termination provisions were harsh and oppressive as they precluded the employee’s right to have unvested stock awards vest if he was terminated without cause and the provisions had not been adequately brought to the employee’s attention.  

As a result, the court found that the termination provisions in the Stock Award Agreement could not be enforced against the employee and he was therefore entitled to damages in lieu of the 1,057 shares awarded that remained unvested. The court stated that those damages were to be assessed as of the date of the breaches using the closing market price for the stock on those dates.

Get Advice

Social distancing is here to stay for the medium term, and in response, we have moved our full business online. Our service model may look a little different, but we are continuing to meet all of our clients’ legal needs using online technology that is readily available and user-friendly. We would be happy to help you get set up as needed. In most cases, we will send a single link to clients, allowing them to join a meeting with just a click. We can still be reached by leaving a voicemail at 905-828-2247; however our reception is not staffed for safety reasons, so there will be a delay in replies. For faster access, please email your lawyer directly; lawyer contact information is available here. For new inquiries, or if you are unsure who to contact, please email our office at info@baderlaw.ca.

At Bader Law, our Mississauga employment lawyers have been representing non-unionized employees in workplace disputes since 1999. We know that such disputes can be very stressful and can get emotional quickly. We seek to simplify the law so that you understand your options and make informed decisions. We leverage our extensive experience advising employers to provide insightful guidance to employees who are facing challenging circumstances at work. We work hard to protect you.

If you have questions about unfair practices in the workplace, wrongful dismissal, or any other employment matter, contact the Mississauga employment lawyers at Bader Law. Our knowledgeable employment lawyers can counsel you on your rights, advise you on your options, and help you create a plan for moving forward. We represent employees in Mississauga and areas west of Toronto. Contact us online or at (289) 652-9092 to learn how we can help.

Categories
Employment Law

Employee Excused from Employer’s Self-Isolation Policy During COVID-19

In a recent Ontario labour arbitration case, an employee was exempted from an employer’s policy requiring employees to self-isolate due to COVID-19 if they travelled from the United States to Canada. The employee lived in the U.S. and crossed the border every day to work in Ontario. 

Employee Unable to Work Due to Employer’s Policy

The employer is situated in the City of Sault Ste. Marie, Ontario, in the District of Algoma. It manufactures steel and steel products. The employer has 2,850 employees at its Sault Ste. Marie site, 2,200 of whom belong to a union.

The unionized employee had been employed by the employer since 2017 as a machinist apprentice. He is a dual Canadian and American citizen and lives in Chippewa County in Northern Michigan on the American side of the border with Canada. During his employment, he had been crossing the border to attend work at the start of his shift and to return home at the end of each shift. 

After the onset of the COVID-19 pandemic, the Canadian government enacted an emergency order pursuant to its authority under s. 58 of the federal Quarantine Act. Under the order, individuals who enter Canada from the United States must self-isolate for a period of 14 days. However, regulations enacted under the order exempt certain categories of persons who must cross the border regularly to go to their normal place of employment. The employee fell within the exemption and was therefore not required by the government order to self-isolate if he crossed the border to attend work. 

However, the employer implemented a policy that any of its employees who crossed the border must isolate for 14 days before attending work. The employer stated that it implemented the policy on March 16, 2020, in consultation with Algoma Public Health and in due consideration of its obligation under s. 25(2)(h) of the Occupational Health and Safety Act to take every reasonable precaution for the protection for its employees. 

This proved problematic for the employee because he lived with his two young children in the United States and the children were not entitled to cross the border to be with him while he was in Canada under a custody agreement. As a result, the employee had to choose between living in Canada to pursue his employment or to continue living in the United States to be with his children. He had chosen to maintain his custody arrangement with his children and had therefore been unable to work since March 17, 2020. 

Parties’ Positions

The employer acknowledged that the application of its policy had resulted in a very difficult situation for the employee but that it did not see any alternative to maintaining the health and safety of its employees and the viability of its operation during the pandemic. The employer acknowledged the existence of s. 5(1) of the Ontario Human Rights Code, which guarantees every employee the right to equal treatment in employment without discrimination on the basis of enumerated categories, including family status. However, it asserted that it could not be required to accommodate the employee’s family situation beyond the point of undue hardship and that no accommodation short of undue hardship was available in the circumstances.

The union representing the employee asserted that given the federal regulations exempting the employee from the self-isolation order, the employer was without authority in requiring employees crossing the border to work to self-isolate. The union further argued that the policy was not being applied in a reasonable way. Finally, the union asserted that the policy was unreasonable as the employer had not made sufficient accommodations that would have allowed the employee to work. 

Decision: Employee Excused from Employer’s Policy

The arbitrator stated:

“The Covid 19 pandemic presents all of us with extraordinary challenges which are unprecedented. The condition is highly contagious and although the majority of those afflicted with the virus do recover, anyone following the news today is aware that Covid 19 can be life threatening to people of any age and certainly may have long term impact on the health of those afflicted, even when it is not fatal. […] 

In this unusual case, the policy has forced [the employee] to make the difficult choice of having access to his two young children or to make a living. In my view it was not reasonable to have forced [the employee] to make this choice without determining whether there are conditions in which [the employee]’s ability to work while living in Chippewa could be accommodated.”

The arbitrator concluded that s. 5(1) of the Ontario Human Rights Code required the employer to consider accommodation in such circumstances. 

As a result, the arbitrator determined that in order to balance the competing legitimate rights of the employee and the obligations of the employer, the employer must allow the employee to work without requiring him to self-isolate.

However, the arbitrator added that the employer would also be free to assign the employee to work which it deemed necessary to minimize the safety risk and to wear protective equipment and follow other health measures. 

Get Advice

Social distancing is here to stay for the medium term, and in response, we have moved our full business online. Our service model may look a little different, but we are continuing to meet all of our clients’ legal needs using online technology that is readily available and user-friendly. We would be happy to help you get set up as needed. In most cases, we will send a single link to clients, allowing them to join a meeting with just a click. We can still be reached by leaving a voicemail at (289) 652-9092; however our reception is not staffed for safety reasons, so there will be a delay in replies. For faster access, please email your lawyer directly; lawyer contact information is available here. For new inquiries, or if you are unsure who to contact, please email our office at info@baderlaw.ca.

At Bader Law, our Mississauga employment lawyers have been representing non-unionized employees in workplace disputes since 1999. We know that such disputes can be very stressful and can get emotional quickly. We seek to simplify the law so that you understand your options and make informed decisions. We leverage our extensive experience advising employers to provide insightful guidance to employees who are facing challenging circumstances at work. We work hard to protect you.

If you have questions about unfair practices in the workplace, wrongful dismissal, or any other employment matter, contact the Mississauga employment lawyers at Bader Law. Our knowledgeable employment lawyers can counsel you on your rights, advise you on your options, and help you create a plan for moving forward. We represent employees in Mississauga and areas west of Toronto. Contact us online or at (289) 652-9092to learn how we can help.

Categories
Wrongful Dismissal/Termination

Court Rules Termination Provision Unenforceable for Potential Violation of Employment Standards

In a recent Ontario decision, the court found that a termination provision in an employment contract was unenforceable for its potential violation of employment standards legislation. 

What Happened?

The employee was a construction employee working in the construction industry. He was first employed by the employer in 2012, and was laid off from time to time. 

On November 10, 2015, he signed an employment agreement with the employer. 

The employee was later placed on temporary layoff on October 10, 2017. The employee was not recalled to work and, in December 2017, he found alternate employment. No notice of this lay-off was given, nor did he receive any pay in lieu of notice from the employer. 

In June 2018, the employee commenced an action in the Small Claims Court seeking damages for wrongful dismissal. 

The employer claimed that the employment contract absolved it from any requirement to give any notice of the lay-off, or pay in lieu of notice. It also relied on the fact that as a construction employee, the employer had no obligation under the Employment Standards Act (“ESA”) to give notice or termination pay in lieu thereof. 

The Employment Contract

The relevant provision at issue under the employment contract stated:

Termination of Employment

…..

The Employee may be terminated at any time without cause upon being given the minimum periods of notice as set out in the Employment Standards Act, or by being paid salary in lieu of such notice or as may otherwise be required by applicable legislation. The Employee acknowledges that pursuant to the Employment Standards Act they are not entitled to any notice or time in lieu thereof due to the nature of their job and as such they are entitle[d] to absolutely no notice or pay and benefits in lieu thereof upon termination. 

The termination provisions set for[th] above, represent all severance pay entitlement, notice of termination or termination in lieu thereof, salary, bonuses, vacation pay and other remuneration and benefits payable or otherwise provided to the Employee in relation to the termination of the Employee regardless of cause or circumstances. 

Lower Court Decision

The Deputy Judge granted judgment in favour of the employee, awarding him damages equivalent to 9.5 weeks’ salary, which was equal to $9,530.

The Deputy Judge agreed with the employee’s submissions that the termination clause of the employment contract was void because it purported to contract out of the obligation under s. 60(1)(c) of the ESA to pay benefits during the statutory notice period and the presumption of reasonable notice was not rebutted by the employment contract. 

The employer appealed. 

Issues on Appeal

The employer claimed that the Deputy Judge erred by determining that it had purported to contract out of the obligations under s. 60(1) the ESA to pay benefits during the statutory notice period despite the fact that the employee was a statutory “construction employee” and not entitled to statutory notice under the ESA.  

Appeal Decision

The court began by explaining that the common law principle of termination of employment on reasonable notice is a presumption, rebuttable only if a contract of employment clearly specifies some other period of notice. Additionally, a contract of employment is only enforceable if it complies with the minimum employment standards in the ESA. As a result, if it does not do so, then the presumption is not rebutted, and the employee is entitled to reasonable notice of termination.

However, the court also noted that some types of employees are not protected by the ESA, including those “prescribed individuals” under s. 3(5)12 of the ESA.  Nonetheless, if an employee has two or more roles in their employment, and only one of these roles is not protected by the ESA, they will continue to be protected with respect to that other role as per s. 3(6) ESA. The court acknowledged that the employee fell within the definition of a prescribed individual as a construction employee under s. 2(1)9 of the ESA’s Regulation 288/01.However, the court then explained that the Regulation does not disentitle prescribed individuals to the protection of the entire ESA; rather, the inapplicability of the ESA to the employee is limited to those employment standards set out in s. 55 – being notice of termination and termination pay. 

The court found that the error in the employment contract was twofold. 

First, an employee cannot contract out of a protected employment standard under the ESA, even if that particular standard does not yet apply under s. 5(1). The court stated:

“It is sufficient if a provision of an employment contract potentially violates the ESA at any date after hiring […]. Accordingly, on the chance that [the employee]’s position at [the employer] changed to something other than a construction employee, the effect of the Employment Contract is that it denies [the employee] his right to benefits during his notice period, which is protected by the ESA. While the Employment Contract does refer to [the employee] being employed as an apprentice and that he will be working in the construction industry, it does not explicitly state that this applies only to him while occupied as a construction employee and that it would be of no force or effect if his position changed.” 

Secondly, the court found that the termination provision of the employment contract also violated the ESA in a way that was not so remote, because as “prescribed” employees, construction employees may not be entitled to the employment standards governing the termination of employment or notice thereof, but they are still entitled to the employment standards guaranteed in the event of their severance. The court opined that if the employer grew in size, employing more than 50 employees and then discontinued its business, or else had a payroll more than $2.5 million, the employee would have been entitled to severance pay, irrespective of his job description. The court stated:

“The Employment Contract clearly disentitles [the employee] to these employment standards. Again, the potential violation of the ESA renders these provisions unenforceable. 

Accordingly, […] even a potential violation of the ESA, no matter how remote, should be unenforceable.”

As a result, the court found that the termination provisions, read as a whole, clearly showed that the employment contract purported to contract out of the ESA in at least two ways and dismissed the appeal.   

Get Advice

Social distancing is here to stay for the medium term, and in response, we have moved our full business online. Our service model may look a little different, but we are continuing to meet all of our clients’ legal needs using online technology that is readily available and user-friendly. We would be happy to help you get set up as needed. In most cases, we will send a single link to clients, allowing them to join a meeting with just a click. We can still be reached by leaving a voicemail at (289) 652-9092; however our reception is not staffed for safety reasons, so there will be a delay in replies. For faster access, please email your lawyer directly; lawyer contact information is available here. For new inquiries, or if you are unsure who to contact, please email our office at info@baderlaw.ca.

At Bader Law, our Mississauga employment lawyers have been representing non-unionized employees in workplace disputes since 1999. We know that such disputes can be very stressful and can get emotional quickly. We seek to simplify the law so that you understand your options and make informed decisions. We leverage our extensive experience advising employers to provide insightful guidance to employees who are facing challenging circumstances at work. We work hard to protect you.

If you have questions about unfair practices in the workplace, wrongful dismissal, or any other employment matter, contact the Mississauga employment lawyers at Bader Law. Our knowledgeable employment lawyers can counsel you on your rights, advise you on your options, and help you create a plan for moving forward. We represent employees in Mississauga and areas west of Toronto. Contact us online or at (289) 652-9092 to learn how we can help.

Categories
Wrongful Dismissal/Termination

Court of Appeal Rules That One Illegal Part of a Termination Clause Renders Its Entirety Unenforceable

In a recent case, the Ontario Court of Appeal found that the fact that one part of a termination provision violated employment standards legislation meant that all parts of the termination provision were unenforceable.

What Happened?

The employee began working for the employer on January 8, 2018 as its director of sales. His base salary was $135,000 per year plus expenses and the possibility of an annual bonus, which brought his overall annual salary close to $200,000. 

The employee was terminated without cause on October 18, 2018 and the employer paid the employee two weeks’ pay in lieu of notice.

The employee sued the employer for damages for wrongful dismissal, claiming six months’ pay in lieu of notice for his eight months of employment with the employer. 

The Employment Agreement

The employment agreement between the parties contained a termination without cause clause, which entitled the employee to one week notice or pay in lieu of such notice in addition to the minimum notice or pay in lieu of such notice and statutory severance pay as may be required under the Employment Standards Act, 2000 (the “ESA”). 

The employment agreement also contained a termination for cause provision. 

The employee submitted that the termination for cause provision breached the terms of the ESA and was therefore void and unenforceable. 

The employer conceded that the termination for cause provision violated the ESA and was unenforceable, but argued that it was irrelevant because the employee was not terminated for cause.

Finally, the agreement contained a severability clause, which stated that if any provision was found to be invalid or illegal, all remaining terms in the agreement would remain in full force and effect. 

Parties’ Positions

The employee argued that the unenforceability of the termination for cause provision impacted the agreement beyond that one clause. The employee submitted that the defective clause rendered the entire agreement – or, at the very least, both termination provisions in the agreement – void and unenforceable. 

The employer submitted that where there were two discrete termination provisions that applied to different situations, the court must consider whether one provision impacted upon the other and whether the provisions were “entangled” in any way. If they were not, then there was no reason why the invalidity of one should impact on the enforceability of the other. 

Issue

The issue was whether the illegality of the termination for cause provision rendered the termination of employment without cause provision unenforceable.

Lower Court Decision

The motion judge dismissed the employee’s action, and awarded the employer $16,000 for costs. He concluded that the termination of employment without cause provision was a stand-alone, unambiguous, and enforceable clause.

Court of Appeal Decision

The court explained that an employment agreement must be interpreted as a whole and that the correct analytical approach was to determine whether the termination provisions in an employment agreement read as a whole violated the ESA. The court then stated: 

“In conducting this analysis, it is irrelevant whether the termination provisions are found in one place in the agreement or separated, or whether the provisions are by their terms otherwise linked.”

As a result, the court found that the motion judge had erred because he failed to read the termination provisions as a whole and instead applied a piecemeal approach without regard to their combined effect.

Additionally, the court rejected the employer’s argument that it did not rely on the illegal termination for cause clause because a court must determine the enforceability of the termination provisions at the time the agreement was executed; therefore, non-reliance on the illegal provision was irrelevant. The court explained this is because where an employer does not rely on an illegal termination clause, it may nonetheless gain the benefit of the illegal clause. 

Finally, the court declined to apply the severability clause to the termination provisions, explaining that a severability clause cannot have any effect on clauses of a contract that have been made void by statute. Because the court had already concluded that the two termination provisions must be read together, the severability clause could not apply to sever the offending portion of the termination provisions.  

As a result, the court set aside themotion judge’s order.

Because the only defence the employer had to the action was its reliance on the termination without cause provision, the court ordered that the matter be remitted to the motion judge to determine the quantum of the employee’s damages and the costs of the action. 

Get Advice

At Bader Law, our Mississauga employment lawyers have been representing non-unionized employees in workplace disputes since 1999. We know that such disputes can be very stressful and can get emotional quickly. We seek to simplify the law so that you understand your options and make informed decisions. We leverage our extensive experience advising employers to provide insightful guidance to employees who are facing challenging circumstances at work. We work hard to protect you.

If you have questions about unfair practices in the workplace, wrongful dismissal, or any other employment matter, contact the Mississauga employment lawyers at Bader Law. Our knowledgeable employment lawyers can counsel you on your rights, advise you on your options, and help you create a plan for moving forward. We represent employees in Mississauga and areas west of Toronto. Contact us online or at (289) 652-9092 to learn how we can help.

Categories
Wrongful Dismissal/Termination

Supreme Court of Canada to Decide Whether a Terminated Employee Was Entitled to a $1.1M Bonus

The Supreme Court of Canada is expected to issue a decision in the coming months that will clarify whether a constructively dismissed employee was entitled to the bonus he would have received during his reasonable notice period.

The lower court decision on appeal awarded the employee almost $1.1 million as part of the employer’s incentive plan.

What Happened?

The employee was a chemist who has worked in the omega-3 fish oil industry for decades. He worked for the employer (or its predecessors) from January 1997 to June 2011.

In 1997, the employee started in the position of operations manager. He became a senior manager in 2001; and became vice-president of various departments from 2006 to 2009.

In early 2007, the employer created a long-term incentive plan. Under the plan, 2% of the employer’s value created on the sale or public offering of the company in excess of $100 million would be distributed among the executives who were party to the incentive plan. The plan was intended to be an incentive and a retention tool. During his employment, the employee was entitled to the plan.

Under the terms of the plan, if the employer company was sold during the period of time that the employee was employed by it, he was entitled to receive a portion of the sale proceeds based on the formula contained in the plan.  

The plan also provided that if the employee was not employed by the company at the time of the sale he would not be entitled to share in the proceeds, whether he resigned or was wrongfully dismissed. 

After a change in management and a significant change and reduction of his duties, the employee resigned on June 24, 2011.

On May 18, 2012, the employer announced it had been purchased by another company. On July 19, 2012, the completion of the acquisition was announced. Thetotal enterprise value of the sale was $540 million.

The employee sued the employer for wrongful dismissal seeking damages for breach of his employment contract, including the loss of the long term incentive plan.

Lower Court Decision

The hearing judge found that the employee had been constructively dismissed and was entitled to 15 months’ notice. The sale of the employer took place during that 15-month period. 

The hearing judge found that despite the employee not being employed with the company at the time of the sale, he was still entitled to recover under the long term incentive plan because the notice period overlapped with the sale of the company.

As a result, the hearing judge found that had the employee been employed with the company at the time of the sale he would have been entitled to receive approximately $1.1 million under the plan and so ordered.

The employer appealed the decision.

Court of Appeal Decision

The Court of Appeal found that the hearing judge did not err in finding that the employee had been constructively dismissed, nor did he err in finding that the reasonable notice period was 15 months. However, the majority of the court found that he erred in awarding damages pursuant to the long term incentive plan. 

The majority of the court found that the clause stating that the employee was not entitled to the share of the proceeds if he was not employed by the company at the time of the sale, whether through resignation or was wrongful dismissal, precluded any such payment.  

As a result, the court allowed the appeal in part. It upheld the finding of constructive dismissal and 15 months reasonable notice, but set aside the $1.1 million awarded under the long term incentive plan. 

However, the judge in dissent would have confirmed the amount awarded by the trial judge related to the plan. The dissenting judge stated that though the plan itself prevented recovery under that agreement, the employment contract had an implied duty of honesty and good faith and it was the employer’s dishonesty which had resulted in the employee’s constructive dismissal. 

The dissenting judge would have dismissed the appeal on the issue of the long term incentive plan, finding that it was within the reasonable contemplation of the parties that if the employee was constructively dismissed he would be entitled to the payment under the plan.

The employee appealed the decision.

Supreme Court of Canada Decision

The Supreme Court of Canada granted the employee leave to appeal and heard arguments for the appeal in October 2019. The decision is expected in 2020.

Get Advice

At Bader LLP, our Mississauga employment lawyers have been representing non-unionized employees in workplace disputes since 1999. We know that such disputes can be very stressful and can get emotional quickly. We seek to simplify the law so that you understand your options and make informed decisions. We leverage our extensive experience advising employers to provide insightful guidance to employees who are facing challenging circumstances at work. We work hard to protect you.

If you have questions about unfair practices in the workplace, wrongful dismissal, or any other employment matter, contact the Mississauga employment lawyers at Bader Law. Our knowledgeable employment lawyers can counsel you on your rights, advise you on your options, and help you create a plan for moving forward. We represent employees in Mississauga and areas west of Toronto. Contact us online or at (289) 652-9092 to learn how we can help.

Categories
Wrongful Dismissal/Termination

Can a Terminated Employee Sue for Damages If They Find a Higher-Paying Job?

A recent Ontario appeal addressed the issue of whether a terminated employee can sue their former employer if they mitigated their damages by finding a higher-paying job?

What Happened?

The employee worked for the employer as a delivery driver from June 2006 to May 30, 2014. His hourly rate was $12. He worked 37.5 hours per week, resulting in weekly remuneration of $450. He did not work overtime for the employer.

On February 21, 2014, the employer gave the employee notice that his employment would terminate effective May 30, 2014; he was given three months’ working notice. The employee was 65 years old at the time of termination. He was terminated without cause.

Two weeks after the end of the working notice, the employee found replacement employment. In this new employment, the employee worked as a driver, with similar responsibilities to those in his former employment.

At his new job, the employee was paid $11 per hour. He also worked some overtime in his new employment, for which he was paid time-and-a-half ($16.50 per hour).

As a result, the employee earned more at his new employment than he had with the employer: in 2014, he earned one to two thousand dollars more and in 2015, he earned more than $3,000 in excess of what he would have made with his former employer.  

The employee filed an action with Small Claims Court for damages for the two weeks of his unemployment between jobs.

Small Claims Court Decision

The trial judge found that the employee was unemployed for two weeks before starting his new job and the employee’s new job was comparable to and replaced his job with the employer. The judge awarded damages for wrongful dismissal for two weeks’ lost wages ($900) for this period of unemployment. 

The employee argued that his overtime wages should not be included in the calculation of his new income, which the trial judge accepted.As a result, the trial judge also made an award of damages of $742 for the reduction of $1 per hour in the employee’s base rate of pay.

The trial judge also found that the employee was required to retire because he reached the age of 65. The trial judge found that this forced retirement was discrimination on the basis of age within the meaning of the Ontario Human Rights Code and awarded general damages for this discrimination fixed at $8,000.  

The employer appealed.

Appeal Decision

The court found that there was no reason to exclude the overtime earnings from the mitigation income; the employee’s opportunity to work the overtime hours arose because of his new employment.

The court explained that it is a general principle that all earnings from replacement employment apply as mitigation of loss of employment earnings from wrongful dismissal. As a result, the court found that the trial judge’s conclusion was an error in principle that fell outside the general principles of mitigation. The court allowed this aspect of the appeal and set aside the trial judge’s award of damages of $742 for the reduction of $1 per hour in the employee’s base rate of pay.

The court then set out the remaining issue as follows: 

“The issue is thus: a wrongfully dismissed employee is out of work for a period of time and then finds replacement employment from which he earns more than he had been earning at his former employment. Do the surplus earnings from the new employment serve to reduce the damages for the period of unemployment?”

Although the court reviewed one case that found that an employee is entitled to no damages if they find a better paying job, it disagreed with this position. Instead, the court explained that where an employer gave adequate working notice for the entire notice period, the worker would have been paid while he continued work up until commencing new employment, with no duty to account back to his old employer for his increased wages. 

As a result,  the appeal was only allowed in part, to reverse the trial judge’s award of damages of $742 for the reduction of $1.00 per hour in the employee’s new employment. The balance of the Small Claims judgment was upheld in the amount of $8,900. Additionally, the employee was awarded $5,000 in costs for the appeal.

Get Advice

At Bader Law, our Mississauga employment lawyers have been representing non-unionized employees in workplace disputes since 1999. We know that such disputes can be very stressful and can get emotional quickly. We seek to simplify the law so that you understand your options and make informed decisions. We leverage our extensive experience advising employers to provide insightful guidance to employees who are facing challenging circumstances at work. We work hard to protect you.

If you have questions about unfair practices in the workplace, wrongful dismissal, or any other employment matter, contact the Mississauga employment lawyers at Bader Law. Our knowledgeable employment lawyers can counsel you on your rights, advise you on your options, and help you create a plan for moving forward. We represent employees in Mississauga and areas west of Toronto. Contact us online or at (289) 652-9092 to learn how we can help.

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Employment Law

Disabled Employees Are Not Bound by Duty to Mitigate

In a recent Ontario case, the court found that an employee could not be penalized under a settlement agreement for failing to mitigate his loss of employment after he became disabled.

What Happened?

The employee worked for the employer for 32 years in various roles. The employer is a construction company that specializes in bridge construction.

The employee was dismissed without cause on January 5, 2015, and a settlement agreement was negotiated. At the end of his employment he was making approximately $75,000 per year as his base salary.

The settlement agreement provided for an initial payment of $56,250, and two other payments of $75,000, to be payable on September 30, 2015 and September 30, 2016 respectively. The two payments of $75,000 were subject to the employee seeking reasonable alternate employment, with a corresponding reduction of the payment for that period should he fail to do so, or if he received income from such reasonable alternate employment or any other source. There was an additional $5,000 available for reimbursement of fees incurred towards securing alternate employment.

Shortly following the employee’s termination, he registered with Canada Manpower to seek alternate employment and made one phone call in pursuit of it. 

He claimed that he experienced depression about his termination and that longstanding pre-existing illnesses of diabetes, hypertension and hypercholesterolemia became symptomatic. The employee stated by late February 2015 he was effectively unable to leave his house in search of any employment.

Then, on March 19, 2015, the employee was taken to a hospital by ambulance because of difficulty breathing; he subsequently developed sepsis leading to acute renal failure and septic shock. He underwent emergency surgery and rehabilitation but is on dialysis twice weekly for the remainder of his life. He was initially confined to a wheelchair for several months. He applied for and received Canada Pension Plan Disability Benefits. 

When the employee contacted the employer in advance of the September 30, 2015 payment and communicated that he was extremely ill and unable to seek reasonable alternate employment, the employer suspended payment of the additional $75,000 for 2015 and later similarly refused to make the 2016 payment on the grounds the employee had failed to mitigate, or that the obligation to pay became frustrated or void once he became disabled. 

Parties’ Positions

The employer argued that the employee’s failure to seek alternate employment relieved it of its obligation to pay. 

The employee argued that his inability to seek alternate employment excused him of that obligation and the employer was required to make the payments.

Decision

The court stated that if the employee had been capable of searching for work, and did not do so, that would have been a wilful failure to mitigate; however, that is not what happened. 

The court found that the employee did not wilfully fail to comply; rather, he became unable to do so. The court stated:

“I find that his disability and resulting incapacity was not within the reasonable contemplation of the parties at the time of the agreement. [The employee] would not logically agree to a condition that required him to do that which was physically impossible. Similarly, the [employer] could not, in good faith, have imposed such a condition without clearly stipulating that that was their intent. The only rational inference is that both the employee and the employer contemplated that [the employee] would be required to seek reasonable alternate employment so long as he was capable of doing so. This qualification is an implied term of the agreement, reasonably expected by the parties, and not overridden by the language of the agreement.”

The court found that the employee’s disability relieved him of his duties to seek employment under the contract, but did not extinguish the employer’s obligation to pay.

As a result, the court granted the employee’s claim to enforce the termination agreement and to receive the two outstanding payments of $75,000 each.

Get Advice

At Bader LLP, our Mississauga employment lawyers have been representing non-unionized employees in workplace disputes since 1999. We know that such disputes can be very stressful and can get emotional quickly. We seek to simplify the law so that you understand your options and make informed decisions. We leverage our extensive experience advising employers to provide insightful guidance to employees who are facing challenging circumstances at work. We work hard to protect you.

If you have questions about unfair practices in the workplace, wrongful dismissal, or any other employment matter, contact the Mississauga employment lawyers at Bader LLP. Our knowledgeable employment lawyers can counsel you on your rights, advise you on your options, and help you create a plan for moving forward. We represent employees in Mississauga and areas west of Toronto. Contact us online or at (289) 652-9092 to learn how we can help.

Categories
Wrongful Dismissal/Termination

Employee Barred from Suing Employer 6 Years After Termination

In a recent Ontario Court of Appeal decision, the court explained the “appropriate means” provision in the Limitations Act in a case where a dismissed employee waited six years before commencing an action for wrongful dismissal against his former employer.

What Happened?

The employee began working as a fuel delivery truck driver for the employer in 1996. In November 2009, the employer received an anonymous tip that one of its drivers was involved in the theft of its fuel. It began an internal investigation that ultimately found that the employee had committed several acts of theft.

On November 9, 2009, the employer terminated the employee for cause. That day, the employee retained a lawyer who requested further details from the employer regarding the termination. 

On May 6, 2010, the employee retained a second lawyer who wrote to the employer in May and June of 2010, asserting that the employee had been wrongfully dismissed and was entitled to damages, though the employee did not commence an action for wrongful dismissal at that time.

The employee was then criminally charged on July 7, 2010, and convicted on August 15, 2011, of three counts of theft and three counts of fraud. He appealed his convictions, and the Court of Appeal acquitted him on all counts on November 26, 2014. 

The employee then commenced an action for wrongful dismissal against the employer on July 24, 2015.

The employer brought a motion for summary judgment on the basis that the Limitations Act barred the employee’s action. The motion hinged on whether the employee knew that it was appropriate, for the purposes of s. 5(1)(a)(iv) of the Limitations Act, to commence a civil proceeding. 

Lower Court Decision

The motion judge rejected the argument that the employee did not know it was appropriate to commence his action against the employer before the criminal proceedings had concluded. She found that the employee knew, or with reasonable diligence ought to have known, that he had a claim against the employer at the time of his dismissal on November 9, 2009.

As a result, the motion judge rejected the employee’s argument and dismissed the action.

Issues

The employee appealed and submitted that until the criminal proceedings were completed, he did not know if he had a viable claim. He stated that if he had ultimately been convicted, his claim for wrongful dismissal would have had little chance of success because it would have been proven beyond a reasonable doubt that he had committed multiple thefts against his employer. 

Therefore, according to the employee, it made sense to await the outcome of the criminal proceeding before deciding whether to commence his action. 

Court of Appeal Decision

The court explained that at issue was the interpretation of s. 5(1)(a)(iv) of the Limitations Act, which contains the so-called appropriate means provision. The subsection provides that a claim is not discovered until the day on which a putative plaintiff first knows that a proceeding would be anappropriatemeans to seek to remedy an injury, loss, or damage.

The court explained that the use of the word “appropriate” means whether it is legallyappropriate to bring an action and does not include an evaluation of whether a civil proceeding will succeed. The court explained:

“The [employee]’s principal submission is that he should have been permitted to wait until the criminal proceedings concluded so that he could evaluate his chances of success in litigation. He argues that litigation is an expensive and risky proposition, and he should not have been forced to commence a civil proceeding until he knew that he had a chance of success. This argument, of course, is precisely what this court […] said a plaintiff is not permitted to do.” 

As a result, the court dismissed the employee’s appeal.

Get Advice

At Bader Law, our Mississauga employment lawyers have been representing non-unionized employees in workplace disputes since 1999. We know that such disputes can be very stressful and can get emotional quickly. We seek to simplify the law so that you understand your options and make informed decisions. We leverage our extensive experience advising employers to provide insightful guidance to employees who are facing challenging circumstances at work. We work hard to protect you.

If you have questions about unfair practices in the workplace, wrongful dismissal, or any other employment matter, contact the Mississauga employment lawyers at Bader Law. Our knowledgeable employment lawyers can counsel you on your rights, advise you on your options, and help you create a plan for moving forward. We represent employees in Mississauga and areas west of Toronto. Contact us online or at (289) 652-9092 to learn how we can help.

Categories
Wrongful Dismissal/Termination

Are Wrongfully Dismissed Employees Entitled to Exercise Stock Options and Receive Bonuses?

The Ontario Court of Appeal recently issued a decision concerning an issue that is being litigated with increasing frequency: the entitlement of a wrongfully dismissed employee to exercise stock options, receive bonuses, or take advantage of other aspects of his or her compensation package during the reasonable notice period.

What Happened?

The employee had been employed for 22 years with the employer when he was dismissed from an executive position on January 4, 2016. The termination was to be effective March 31, 2016.

The employee’s compensation package included a base salary, commissions, group benefits, and participation in both a long term incentive plan, which included both restricted share units(“RSUs”) and stock options, and a stock option plan (collectively, the “awards”). 

After unsuccessful attempts to negotiate a severance package, the employer extended the effective termination date from March 31, 2016 to July 8, 2016. It advised the employee that any awards that had already vested could be exercised for up to 30 days after the latter date. Any awards that had not vested as of that date would be “cancelled and forfeited without any consideration.”

The employee brought an action for wrongful dismissal. 

Lower Court Decision

The motion judge found that the employee was entitled to damages, calculated on the basis of 24 months’ reasonable notice, together with all commissions outstanding at the date of termination. The judge also determined the employee’s damages for wrongful dismissal, including the damages for lost opportunity to earn commissions on sales during the reasonable notice period, the pension contributions that would have been made during that period, and the value of benefits lost during the notice period.

Additionally, the motion judge concluded that the employee’s damages for the loss of the awards should be calculated on the basis of what would have probably happened had he remained employed until the end of the notice period. He noted that the employee had exercised his options in the past and that he therefore would likely have done so in this case, had his employment not been terminated.

The motion judge found that the language of the relevant awards was not sufficient to cancel the employee’s entitlement to exercise the awards or to remove his entitlement to damages for their loss. He was therefore entitled to damages for the loss of the right to exercise the RSUs and stock options that would have vested during the reasonable notice period.

The motion judge accepted the employee’s evidence that he would have exercised the options at the “earliest possible opportunity” and calculated damages on the basis that the employee would have sold the shares that vested during the reasonable notice period five months after their vesting date.

The employer appealed.

Court of Appeal Decision

The court stated that the motion judge correctly found as a fact that the awards were an integral part of the employee’s employment, that they would have vested had his employment not been wrongfully terminated, and that he would have exercised the awards, as he had done in the past. 

Ultimately, the court found that the motion judge applied the correct legal principles and arrived at the correct conclusion, stating: 

“[I]n the absence of unambiguous contractual language […], the awards continued to vest during the reasonable notice period. The [employee] was entitled to damages for the loss of his entitlement to exercise his rights.”

As a result, the court dismissed the employer’s appeal.

Get Advice

At Bader Law, our Mississauga employment lawyers have been representing non-unionized employees in workplace disputes since 1999. We know that such disputes can be very stressful and can get emotional quickly. We seek to simplify the law so that you understand your options and make informed decisions. We leverage our extensive experience advising employers to provide insightful guidance to employees who are facing challenging circumstances at work. We work hard to protect you.

If you have questions about unfair practices in the workplace, wrongful dismissal, or any other employment matter, contact the Mississauga employment lawyers at Bader Law. Our knowledgeable employment lawyers can counsel you on your rights, advise you on your options, and help you create a plan for moving forward. We represent employees in Mississauga and areas west of Toronto. Contact us online or at (289) 652-9092 to learn how we can help.

Categories
Wrongful Dismissal/Termination

Employee Claims He Was Discriminated Against for Not Being Gay

A recent Federal Court decision reviewed an employee’s complaint of discrimination based on sexual orientation and disability against a major Canadian bank. The employee claimed, in part, that a manager told him he would not be promoted unless he was gay.

What Happened?

The employee worked for a major Canadian bank as a financial services representative. His work involved calling sixty to seventy customers every day to sell them products, which required him to read 4-6 pages of product information and legal disclosures.

The employee filed a complaint with the Canadian Human Rights Commission (the “CHRC”) in April 27, alleging discrimination by the bank because of his sexual orientation and disability, resulting in his eventual termination on May 10, 2016.

Regarding his sexual orientation, the employee alleged that he had a one-on-one meeting on September 15, 2015 with his manager to discuss his medical concerns and qualifications. 

During the meeting, the manager advised him that unless the employee joined their “group”, there was “no hope” for him. The manager explained that every male manager in both his office and headquarters was either gay or bisexual and he advised the employee this was why young employees with few qualifications were promoted. He advised that the employee should “be smart and learn”. The manager then allegedly asked the employee what he thought of him. The employee responded, stating that he thought of the manager as just his manager; he was willing to work with anyone at anytime but he was not gay or bisexual. The manager allegedly requested that the employee never discuss their conversation with anyone.

As a result, the employee believed the encounter was the primary reason for his discrimination and explained why, despite his qualifications, experience, and excellent performance, he was denied workplace accommodation for his disability, and not offered any alternative position. He also stated that the encounter added to his mental stress and negatively impacted his self-dignity. 

With regards to his disability, the employee explained that due to several months of continuous outbound calling under a high stress environment, he developed severe throat and vocal cord pain. The employee claimed that his family doctor recommended modified duties, including not speaking on the phone, to help his pain.

The employee alleged that despite his own doctor’s recommendation and his qualifications, experience, and excellent performance, the bank refused to accommodate him by offering him another position. Instead, his senior manager asked him to go on short-term disability. The bank referred him to a specialist, who concluded that the employee suffered from “muscle tension disphonia” and advised that the employee required accommodation, including regular medical breaks, to achieve maximum recovery.

The employee alleged that the bank started to discriminate against him soon after the specialist’s diagnosis. Among other things, his basic pay was cut and he was not given any sales incentives or annual bonuses under this standard evaluation scheme because his disability required he take essential medical breaks, which neither his daily statistics nor his managers properly took into account.

He was eventually terminated.

In his complaint, the employee requested reinstatement in a suitable position that matched his qualifications and experience, full back pay and benefits, and monetary compensation.

CHRC Decision

The CHRC’s investigator dismissed the employee’s complaint, finding, in part, that the employee did not provide sufficient evidence to support his allegations of discrimination due to sexual orientation to justify any additional investigation. The investigator also found that the evidence supported that the bank had accommodated the employee for his disability because he received short-term disability leave and benefits and modified work for as long as it was medically required.

The employee appealed to the Federal Court. The employee claimed that the CHRC investigator failed to consider crucial evidence related to discrimination on the basis of sexual orientation and disability when writing her report. Additionally, the employee alleged that the Commission never examined his evidence. He explained that he raised his concern that the investigator failed to conduct an investigation into his sexual orientation complaint and failure to be interviewed for other positions in his reply submissions, and that the Commission failed to follow up on this and instead erroneously adopted the investigator’s report on its face without justification for doing so.

Federal Court Decision

The court explained that, as part of the entire CHRC complaint process, prior to making a final decision, the Commission reviews not only the investigator’s report, but also parties’ submissions in reply. Therefore, the Commission’s procedural fairness obligations extend to the Commission’s consideration of parties’ reply submissions.

The court found that the investigator had not properly investigated the employee’s claims of discrimination and that the Commission had accepted the investigator’s report without properly reviewing the evidence or reply submissions.

Accordingly, the court found that the CHRC’s investigation and decision were not procedurally fair and ordered that the matter be returned to the Commission to conduct a fresh investigation, with a different investigator.

Get Advice

At Bader Law, our Mississauga employment lawyers have been representing non-unionized employees in workplace disputes since 1999. We know that such disputes can be very stressful and can get emotional quickly. We seek to simplify the law so that you understand your options and make informed decisions. We leverage our extensive experience advising employers to provide insightful guidance to employees who are facing challenging circumstances at work. We work hard to protect you.

If you have questions about unfair practices in the workplace, wrongful dismissal, or any other employment matter, contact the Mississauga employment lawyers at Bader Law. Our knowledgeable employment lawyers can counsel you on your rights, advise you on your options, and help you create a plan for moving forward. We represent employees in Mississauga and areas west of Toronto. Contact us online or at (289) 652-9092 to learn how we can help.