Dismissal for Poor Performance: Does an Employer Need to Provide Severance?

| March 21st, 2017 | No Comments »

Only if there is just cause for termination, the employer may terminate the employee without severance pay. As an employer, it is very difficult to establish just cause for employee incompetence or poor performance. To do so, the employer must prove that the employee fails to perform essential duties or meet the required working standard, and that this has been ongoing; an isolated incident of poor performance will likely not be sufficient. To establish just cause for termination, there must be an established objective standard of performance, and proof that the employee’s poor performance is their own fault. Any mitigating factors can be considered by the courts. Among other, mitigating factors may include volume of work, whether the employee was hired as an experienced hire, and the training provided.

If an employer claims that there are ongoing issues of unacceptable performance, then the employer must provide a warning to the employee. The warning must include the employer’s performance related concerns and the consequences that may result. It is advisable that the warning be in writing and is clearly presented so that there is no possibility of confusion. An effective warning will identify what the employee is doing wrong, along with the preferred standard by the employee. Further, support for improvement such as supplemental training should be provided and stated in the warning, with a time limit for improvement and potential consequences for failure to meet the stated objective standard.

There are rare instances that may grant an employee just cause to terminate without a severance for isolated incidences. These cases usually involve gross negligence or incompetence that cause an employer significant harm, or a lack of skills that the employee claimed to have during the hiring process.

Whenever faced with an issue of poor performance by an employee, it is always best to seek the advice of an employment law expert. It is difficult to establish just cause for performance related issues, so any decisions to terminate without severance pay should be reviewed by an employment lawyer.

Termination Clauses and Contracting Out: Clarity Given by Recent Ontario Appeals Court Ruling

| March 13th, 2017 | No Comments »

Employment Standards Act Review:

The Employment Standards Act (2000) grants employees minimal guarantees. In terms of termination, the Employment Standards Act (ESA) provides one week of notice or pay in lieu for every year of service, for a maximum of 8 weeks. Severance pay is a separate payment that employers must provide if their payroll exceeds 2.5 million or if the employee was one of 50 employees that has been terminated within a 6-month period. In addition, employers are to provide all benefits throughout the notice period or pay in lieu. Employers are legally prohibited from contracting out of the ESA, unless the clause offers a greater benefit to the employee. In the instance where an employment contract offers less than the minimum provided under the ESA, then the provision in the contract is void. In this instance, the courts will award the employee common law notice (damages), which are often considerably more than minimal standards. A recent case heard before the Court of Appeals for Ontario highlights the importance of unambiguous language in termination clauses, as any ambiguity will render the clause unenforceable.

Facts from Wood vs. Deeley (OCA 2017):

 In the case, Wood served 8 years as a Sales and Event Planner, earning about $100 000 annually including benefits. Wood’s termination clause provided 2 weeks of notice for each year served (or pay in lieu) and stated that Wood is only entitled to the terms set within the termination clause of the employment agreement. Deeley ended up paying Wood 21 weeks worth of salary, which was more than the minimum Wood would have received under the ESA. Deeley argued that the extra payment provided after termination covered Wood’s benefits. Wood argued that the termination clause was unenforceable, however, because it excluded benefit pay and severance pay as per the wording of the clause. The Appeals Court of Ontario agreed, ruling that the clause was void because it contracted out of the ESA. Only the cause itself was to be considered in terms of enforceability, which means remedies implemented afterwards are irrelevant. Wood was awarded 39 weeks of notice pay (9 months), Wood’s common law entitlement.

Main Issues in the Termination Clause:

All-inclusive clause:

The language used in the termination clause effectively limited Wood’s entitlements to those provided in the clause. This meant that anything not covered in the clause but guaranteed under the ESA to not apply. The ESA entitles employees to their benefits during the notice period. The clause did not mention anything about Wood’s benefits and therefore was found to contract out of the ESA.

Ambiguous use of ‘notice pay’:

The termination clause Wood was subject to provided more than the minimum required notice pay under the ESA. However, notice and severance pay are two separate entitlements under the ESA, and combining both under “pay” here created ambiguity. For example, the termination clause entitled Wood to 2 weeks notice for every year of employment, or pay in lieu. If 10 weeks were given as notice, then the remaining 6 weeks were not enough to cover the minimum amount of severance pay that Wood was entitled to under the ESA. Rather, the termination clause should have allotted the necessary amount to each, severance and notice, rather than combining both under “pay”.

 

This case shows that employers are held to a rigorous standard in terms of drafting employment contracts. This reflects the purpose and intentions of the ESA. The ESA aims to protect employees that are unaware of their employment rights and the court seeks to interpret these clauses in ways that encourage employers to draft clauses that comply with minimal standards. As such, when determining the legal compliance of a termination clause, only the clause itself is considered and any remedies the employer seeks to implement at the time of termination will be irrelevant to the enforceability of the clause. It is important to seek legal advice from an employment law expert to ensure termination clauses are properly drafted. Any ambiguity will either be interpreted by the courts in the most favourable way for the employee or be deemed unenforceable, which entitles the employee to common law notice (damages). Again, common law notice (damages) is usually far more than minimal standards.

Are you entitled to bonus pay that would have been earned during your notice period in the case of wrongful dismissal?

| March 6th, 2017 | No Comments »

A notice period is required by an employer seeking to terminate an employee. Employers can either provide the employee with notice or pay that would have been earned had the employee worked throughout the notice period. When an employee is terminated without a notice or pay in lieu, this is a wrongful termination and a breach of the employment contract. The remedy is damages paid by the employer in the amount equal to the compensation that would have been earned by the employee during the reasonable notice period that is owed.

What about bonuses that would have been owed to the employee, but require the employee to be “actively employed” at the time the bonus is to be paid? A clause that requires ‘active employment’ during the time of payment does not apply in the case of wrongful dismissal. This was affirmed in the case of Paquette vs. TeraGo Networks Inc. (2016). Employees are generally entitled to bonuses that would have been paid during the notice period, regardless of whether or not the employee was actively working during the time. This is especially the case when bonus pay is essential to overall compensation (i.e. a significant proportion).

To gain a better understanding, it helps to review the Paquette (employee) vs. TeraGo Inc. case. Paquette was under an employment contract that required him to be “actively employed” at the time the bonus was to be paid. The bonus here was set to be paid every February for the previous year’s work. The judgement by the Superior Court of Justice awarded Paquette 17 months of damages for only base-salary and benefits. Paquette appealed this decision, arguing that he is also entitled to bonuses that would have been received had he actually worked for the duration of the notice time (17 months). The Court of Appeals (Ontario) awarded Paquette the bonus pay as well. Simply put, the notice pay is meant to place an employee in a similar position had there been no breach in the employment contract. Here, if Paquette was not wrongful dismissed, he would have collected his bonus at each payment date (February 2015 and 2016). In other words, Paquette had the right to work but was prevented from doing so as a result of the employer’s breach. For the year that Paquette did not work (2016), the bonus was calculated by taking the average of the previous years’ bonus payment.

If you are an employee that receives bonuses as an essential part of compensations (ie. a significant portion), then a clause requiring you to be employed at the time of bonus pay may leave you vulnerable if wrongfully dismissed. Employees in this situation are encouraged to seek legal advice to ensure you are fairly compensated for damages and are fully aware of your workplace rights.

Can an Employer Terminate an Employee Charged But Not Yet Convicted of a Criminal Offence?

| January 23rd, 2017 | No Comments »

An employer may be concerned about damaging their reputation by continuing to employ an individual that has been charged with a criminal offence. This may especially be the case if the employer is known to be involved with the community in which it operates its business. In trying to establish whether there is just cause for termination, a court looks at the following:

  • The amount of responsibility the employee has in relation to his/her duties
  • The degree to which the company’s reputation in the community may be harmed
  • Whether the accusation involved the use of company equipment

To illustrate, the case of Kelly v Linamar (Ontario Supreme Court of Justice) speaks to the above listed points quite well.

Kelly supervised 10-12 employees, managed deliveries and was in contact with customers on a regular basis. Linamar is located in Guelph, Ont., a small town of about 100 000 residents. Linamar had a great reputation in Guelph, especially with its contributions to children for educational donations, sponsoring many youth sports teams and assisting local schools in educational initiatives. Kelly was charged with possession of child pornography at the time he was employed by Linamar and the local media identified Kelly as an employee of Linamar.

Linamar terminated Kelly before he was convicted of this criminal offense and the court found the termination was justified. Considering the points above, Linamar was justified in terminating Kelly because:

The amount of responsibility the employee has in relation to duties:

Kelly was a supervisor and was in constant contact with customers. The fact that the community was aware of the charges against Kelly due to the local press made this a concern for Linamar and its brand.

The degree to which the company’s reputation in the community may be harmed:

Given that the charges dealt with allegations concerning children, this directly conflicted with the image Linamar had in the community. Linamar made efforts to positively impact the children of the Guelph community. Given the press releases and Kelly’s interaction with customers within the Guelph community, Kelly’s continued employment definitely posed a threat to Linamar’s reputation. This was the most significant factor in this case.

Whether the accusation involved the use of company equipment

Kelly did not use company computers to commit the alleged acts. Had he done so, this would undoubtedly be enough for termination.

This case illustrated the three key factors to be determined if employers are considering terminating an employee for being charged criminally for acts committed outside of the workplace. It is important to understand that such decisions should be made with careful consideration of all the factors. The unique facts of each case must be considered because an employee being charged with a crime that is morally reprehensible, such as the one described, does not on its own grant an employer cause to terminate an employee without compensation (notice pay).  Please seek the advice of an employment law expert if faced with a similar situation.

How To Choose the Best Wrongful Termination Lawyers

| January 18th, 2017 | No Comments »

wrongful terminationYou have questions about your wrongful termination, but how can you find a wrongful termination lawyer you can trust?

Do your research.  Like all service-based industries, it pays to spend some time and effort researching potential wrongful termination lawyers.

What to look for? Look for a wrongful termination lawyer who practices exclusively in employment, human rights and/or labour law, and licensed to practice in the jurisdiction in which you work or reside.  You probably do not want to entrust your case to a general practitioner as employment law is nuanced and changes frequently.

Look for someone who is regularly interviewed, published, and does speaking engagements with reputable organizations.  That way you are sure to find a wrongful termination lawyer who is up to date on the state of the law.

You may also wish to speak with someone certified by the Law Society of Upper Canada as an expert in the field.

Ask around.  Talk to friends, relatives, anyone who has experience with a wrongful termination lawyer. Get their impressions of the lawyer, the firm, their fees, and what their overall experience was like.

Beware of wrongful termination lawyers who want to meet with you for free.  Often you get what you pay for and these wrongful termination lawyers may just be fishing for lucrative cases.

Feel free to get a second opinion or meet with a few lawyers at different firms until you find the right wrongful termination lawyer for you and you case.

Finding a lawyer and a firm that you are comfortable with is key as a successful case depends on trust and communication between lawyer and client.

 

Author: Ellen Low, Whitten & Lublin

Employee Duty to Mitigate Damages After Being Terminated

| January 18th, 2017 | No Comments »

Being terminated from employment can be an emotional and impassioned time but it is important that employees remain mindful of their duty to mitigate damages. This simply means that an employee must make the necessary efforts to lessen their losses and, in turn, the amount of damages the employer is obligated to pay. In court, employees are required to initially show that they have taken reasonable steps to mitigate damages.

The duty to mitigate requires the employee to accept a comparable position if offered by the employer providing the working environment has not turned hostile. As established by past court cases, this offer may be made immediately or after some time has passed. The offer, however, must be a position that is comparable and not one that leads to embarrassment or loss of status. In determining whether a position is comparable, factors usually include wage/salary, location, status, and training. Employees must also seek and accept comparable offers of employment from other employers. If it is proven that a comparable position was offered by another employer and it was turned down, employees may not be entitled to damages from their previous employer.

If an employer challenges the employee’s efforts in mitigating damages, they must go beyond just proving that there was an availability of comparable jobs during that time. The employer must also show that the employee had a reasonable chance at obtaining such positions and that the employee failed to pursue the employment opportunities.

There are many other factors that can influence the amount owed in damages depending on the complexity of the situation. Such factors may include retraining and career changes, the decision for the employee to pursue their own business and so forth. It is thus important to speak to a legal expert to clear up any uncertainties and to ensure the amount paid in damages is fair.

Employees’ Wrongful Actions and Employers’ Liability

| December 20th, 2016 | No Comments »

wrongful actionsEmployers may be found liable for the wrongful actions of their employees under certain conditions. The wrong must be tortious – this is a wrongful action that can be brought to civil court – which includes torts such as trespassing, assault, theft, negligence and so forth. There are certain factors established by the courts in determining whether the employer is vicariously liable for the wrongful act(s) of their employee. These factors are analyzed thought the ‘Salmond’ test established by common law.

Salmond Test – Vicarious Liability

The ‘Salmond’ test seeks to establish whether the employer created an opportunity for the employee to commit the wrongful action through the duties required for the position. If the act was related to such duties, then the employer can be found liable. The test seeks to analyze the following:

  • The opportunity the employer gave the employee
  • The extent to which the wrongful act may have furthered the employer’s aims (i.e. making this action more likely to be committed by the employee)
  • The extent to which the wrongful act was related to friction, confrontation or intimacy inherent to the position/business
  • The power conferred on the employee in relation to the victim
  • The vulnerability of the victims in relation to the employee’s power

In general terms, the principle underlying the ‘Salmond’ test is whether the duties required gave an enhanced opportunity for actions of wrongdoing. This can be examined though a combination of the above factors in the ‘Salmond’ test. Employers are encouraged to seek an employment law expert for a full understanding of any situation raising concern. The above is by no means comprehensive.

An example that illustrates the relevant principles is Bazley v. Curry (SCC 1999). This case established that vicarious liability extends to enterprise risk. Simply, this can be viewed as the necessary duties employees are given to conduct business in the specific industry. This means that employers can be found liable for the risks inherent in the job itself, and not just acts that are authorized by the employer.

Bazley v Curry Example

In Bazley v. Curry, the employer was a child care facility. Employees here were caretakers of mentally disabled children. The nature of this business required caregivers to have a relationship of total intervention – bathing, preparing children for bed, and so on. Mr. Curry was the caregiver and Bazley was the child subjected to abuse by Mr. Curry. The employer here was found to be vicariously liable for the wrongdoing. In simple terms, this was because Mr. Curry was put in a position that made the abuse more likely when examining the duties of the job. The focus here is on the enterprise risk.  The nature of the business made these actions by Mr. Curry more likely to occur; the employer was therefore vicariously liable.

Final Thoughts

The courts place an increased responsibility on employers for the actions of their employees for two reasons. The employer has the means to compensate potential victims for the wrongdoing of their employees. Also, the court recognizes the employer’s ability to deter their employees from committing such wrongful acts. This may include performing criminal background tests or placing third-party supervision as deemed necessary for the position and enterprise, as this will mitigate risk and deter employee wrongdoing. It is important for employers to be diligent and take the necessary precautions to prevent wrongful actions by employees.

What is Wrongful Dismissal and Are You a Victim?

| November 20th, 2015 | 1 Comment »

A dismissal is wrongful if an employee has been terminated without adequate notice or fair payment in lieu of that notice. It is implied that a dismissed employee is entitled to “reasonable notice” of their eventual last day of work or the compensation they would have been entitled to over that period.

The focus of the wrongful dismissal case is the determination of the “reasonable notice” period. Our Court of Appeal has made clear that “determining the period of reasonable notice is an art not a science”. Courts consider a number of factors including, but not limited to, age, salary, tenure, educational background, recruitment to the job, specialty and whether similar positions are available in the marketplace at the time of termination. Payment in lieu of reasonable notice is what we commonly refer to as severance.

Be advised, reasonable notice is not always due to employees. An employer does not need to provide reasonable notice if they have clearly and legally limited notice. Moreover, employers do not need to provide any severance if they have “just cause” for dismissing an employee. For an employer to have just cause the employee must have committed a terrible act that strikes at the core of the employment relationship. Stated differently, to deprive a terminated employee of any severance they must have engaged in something as egregious as theft, serious dishonesty or harassment.

Rest assured, just cause is a very difficult for an employer to prove and employment contracts of even the largest and most sophisticated employers have been found inadequate in their attempts to limit notice.

Consider consulting the lawyers at Whitten and Lublin for an expert assessment of your wrongful dismissal case and severance entitlement.

Author: Paul Macchione, Whitten & Lublin

Fired from Your Job Based on Discriminatory Ground

| May 25th, 2015 | 2 Comments »

QUESTION #3

I have been fired from my job because my employer told me I don’t fit into their culture. Is this illegal or a form of discrimination?

ANSWER 

Termination Without Cause

Terminating you because you do not “fit” the company culture can be illegal on account of discrimination, but this requires an inquiry into why you do not fit.

When an employer terminates you and gives “fit” as the reason they are terminating you without cause: you are entitled to working notice, payment in lieu of notice or some combination of the two (“notice”). This act on its own is not illegal, as an employer has the discretion to end your employment.

However, an employer is not entitled to discriminate against an employee under a prohibited ground set out in Ontario’s Human Rights Code (the “Code”), to provide notice and to hide behind “fit” as the reason. 

Ontario’s Human Rights Code and Discriminatory Ground

Code grounds include, race, disability, sex, age, gender, family status, sexual orientation, ethnic origin and other personal characteristics. So, if you suddenly do not “fit” with the company’s culture based on some discriminatory ground, you are entitled to compensation above your notice requirements and/or reinstatement.

For example, the following employees likely have a good case against their employer for discrimination:

  • The group of waitresses in their 50’s that did not “fit” were replaced by women in their 20’s
  • The salesman that had excellent sales but no longer “fit” at the car dealership after his boss found out he was homosexual
  • The long-time accountant that did not “fit” when her firm noticed she was pregnant
  • The factory worker that did not “fit” when he was diagnosed with Parkinson’s disease

Discriminatory Ground and Advice from a Lawyer 

It is important to note that even if the discriminatory ground is only part of the reason you were fired that is enough to prove discrimination.

As you are likely aware, discrimination is often concealed or subtle and can be the consequence of unspoken beliefs and biases. You would be wise to seek the help of lawyer to help you prove that your termination for “fit” was in fact a veiled discriminatory practice of the employer and to make sure you were provided with the appropriate amount of notice.

Changes to the Human Rights Code and its impact

| March 18th, 2015 | No Comments »

In light of the 2008 changes to the Human Rights Code (Code), it is possible for an employee to file a wrongful dismissal lawsuit and receive Human Rights damages without first appealing to the Ontario Human Rights Tribunal. In Lee Partridge v. Botany Dental Corporation, the employee sued her former employer for wrongful dismissal and also requested compensation for family status discrimination under the Human Rights Code.

Ms. Partridge was an employee of Botany Dental Corporation for over 7 years. Her initial job title as a Dental Hygienist meant that her work hours were from 9:00 a.m. – 5:00 p.m. Once promoted to office manager she received the benefit of having flexible work hours. Soon after, Ms. Partridge went on maternity leave. Before her return, she was told that her position as office manager was not available to her and neither were the flexible work hours. The employer placed Ms. Partridge back into her initial title with extended hours and reduced pay. Ms. Partridge’s concern was her inability to set up child care arrangements where her work hours did not make it feasible. The Court agreed that she had been discriminated against on the basis of family status and was awarded human rights damages of $20,000.

Since the changes to the Code came into effect, Lee Partridge v. Botany Dental Corporation is of a select few of cases where the Courts have awarded damages of this kind.  The Courts have made an example of the employer’s obligation to accommodate legitimate child care needs not child care preferences. On the other hand, employees must prove that they have met their obligation of seeking reasonable child care arrangements but have found no feasible solution available.