The End of Employment Without Cause: Quitting, Retiring, and Dismissal With Notice

Chapters 12, 13 (241-246, 250-253), 15 (279-287, 288-302)

We will discuss three ways contract can end without Cause being alleged by Er (there are more that that, but we will concern ourselves with these three):

1. EE quits

2. EE retires

3. EE is dismissed by the ER with notice

A. Quits

Implied term in contract that EE give “reasonable notice” of quit, but in practice ERs rarely try to enforce that term .. not worth it, since little damage usually to ER is EE just fails to show up one day

But sometimes ER does sue EE for breach of failure to give notice, such as Tree Savers (Page 236)

When is a Quit Not a Quit?

Often it is easy to see when someone quits ... they say “I quit”, and they leave and never come back

But sometimes not clear whether someone quit ... Courts have said quit must be completely voluntary

So if EE ‘encouraged’ to quit by ER, or they will be fired, courts have said that is not a quit

Trouble for ER is this: if Er thinks an ee has quit, and therefore refuses to let them work when they show up, ER may be found to have dismissed the EE, and can be ordered to pay reasonable notice. So ER needs to be sure the EE intended to quit.

CASES:

1. Pollock v. First Heritage (234)

6 ees upset by proposed change to compensation model by ER – they ask to speak to ER about it, but Er refuses- EEs then tell ER that they will “act accordingly” .. ER interprets this to mean that they quit

Court: not a quit ... a reasonable manager would not have interpreted words as an intention to resign .. EEs were still offering to work on original terms of employment contract .. Therefore, ees win reasonable notice damages (don’t get jobs back)

2. Gilbert v. Tandet Transport (235)

EE laid off, but then recalled – but he found another job in meantime .. tries to ask ER if he is being recalled to a full-time job, or a part-time job so he can decide whether to stay at new job, or return to old job .. .but can’t reach ER ... he doesn’t show up on recall date, and ER says “ok, you quit”

Court: No intention to quit here ... EE still trying to get information that would allow him to make an informed decision ... therefore, Er must give reasonable notice

B. Retirement

Until recently in Ontario, it was lawful to dismiss an EE who turns 65 (or older) because of their age ..

Human Rights Code only protected against discrimination on the basis of ‘age’, but ‘age’ was defined as 18-64

But Liberals changed definition of ‘age’ in Code by removing the “-64”, so age is now any age 18 or older. This means that ‘mandatory retirement’ is now illegal in Ontario

Er can still fire someone who is older than 65, but if any part of the reason for the firing is the EE’s age, then this will be a violation of Section 5 of the Human Rights Code.

C. Dismissal With Notice

Both the common law (“reasonable notice”) and the Employment Standards Act (“statutory minimum notice”) require that an ER give an EE notice before they dismiss them

1. Statutory Notice Under ESA (Chapter 13)

Idea of notice of termination was created by common law judges, but over the years governments decided it was a good idea ... so they included it in minimum standards legislation

How Much Notice?

Section 57 describes the notice period .. it is capped at 8 weeks’ notice for an employee with 8 years’ service or more ... ER chooses if EE works the notice or receives pay in lieu of notice

When is Notice Required? (see section 56)

1. When EE is dismissed (and not for “willful misconduct”, described on p. 248)

2. When EE is “constructively dismissed” (ER breaches contract and EE treats the breach as having ended the contract)

3. When EE is laid off for a period longer than a “temporary layoff”

A “temporary layoff” is one that lasts longer than 13 weeks in any consecutive period of 20 weeks (see p. 243, Number 1. Don’t worry about numbers 2 and 3)

Result: If EE is laid off, their options are:

1. Accept the layoff, and hope to be recalled

2. Quit, and sue ER in court for breach of constructive dismissal, since a layoff is a breach of contract by ER (unless contract includes an expressed term allowing a layoff, and most don’t)

3. Wait for the 13 weeks in a 20 week window threshold to be met and then ask for ESA termination pay

Severance Pay

In addition to ‘notice’, an EE may also be entitled to “severance pay” under ESA (s. 63-66)

Severance pay must be paid by an Er who meets one or both of the following conditions:

1. annual payroll of $2.5 million,

2. terminates 50 or more ees in a 6 month period due to a closure of all or part of the business

If severance pay owing, then it is basically 1 week’s pay per years of service (or part thereof) to a maximum of 26 weeks. Severance pay is due in addition to notice pay. Easy example of this on p. 252

There are exemptions, when severance pay not owing, including when EE engages in willful misconduct or EE is offered reasonable alternative employment which would have led in EE not being laid off

2. Common law “Reasonable Notice”

Common law ‘reasonable notice’ will often be longer, sometimes much longer than ESA minimum notice .. some ERs will offer EEs more than they are entitled to under ESA .. but an EE who thinks they deserve more than ESA notice and more than ER has offered them would need to file a ‘wrongful dismissal’ lawsuit in court

Wrongful dismissal is a claim that the EE did not receive “reasonable notice”

Just like Re: ESA notice, ER can decide if common law notice will be ‘working notice” or payment in lieu of notice

ERs often give payment in lieu because they are concerned that EE will be disruptive if permitted to work (see Elg v. Stirling Doors (p. 286), where ER gives working notice, but then fires EE ‘for cause’ who was being disruptive during the working notice ... Court: orders Er to pay reasonable notice because it did not have cause to dismiss EE ... Court says Er provoked EE by giving her working notice)

How Much Notice is “Reasonable Notice”?

Courts have made up criteria for assessing how much notice should be paid

Most important case was called Bardal v. Globe & Mail (described on p. 282)

1. Ee’s age

2. Character of employment (ee’s position)

3. Length of service

4. Ee’s level of compensation

5. Availability of similar employment given ee’s experience training and qualifications

These factors are supposed to provide a fair estimation of how long it might it take ee to find similar alternative employment

but only a rough measure ... Not intended to actually require notice for the period it takes ee to find a job

This point made in Bain v. ICBC (p. 283)

Ee (7 years service] dismissed during very bad period in job market ... Er offers 7 month’s notice ... He argues he should get 20 months ... Because market so bad, he won’t be able to get another job

Court: market conditions are relevant .. But only one factor among many that should be considered and shouldn’t be given too much weight ... Er shouldn’t be liable for general economic climate [orders 12 months’ notice]

Most important factors: length of service and ‘character of employment’

Cronk v. Canadian General Insurance (supplemental reading)

Facts:

55 years old .. Clerk ... Worked for er from 1958 to 1993, with a gap of a few years in 1970s when she quit to raise family (then returned) ... Dismissed with 7 months notice during reorganization.. She sues for wrongful dismissal

Courts decided long ago that managerial people should get longer notice than non-managerial people

Why?: senior managerial ees have harder time finding comparable senior management jobs than people will less skills

So long time rule: managerial ees can get up to 24 months notice (occasionally slightly more than this), non-managerial ees can get up to 12 months (sometimes a bit more)

Lower court judge in Cronk challenged the presumptions underlying this approach:

· He said the idea that non-managerial ees should be presumed to have an easier time getting a job is wrong .. Since have more skills and often education ... May have easier time getting another job .. Depends on individual circumstances

· Here: she is 55 years old .. Worked whole life with er ... Few skills ... May very well never work again .. why should we assume that she will have easier time getting new job than 35 year old MBA in management job? .. Judge orders 20 months notice

Court of Appeal:

Overturns this decision ... Because rule now entrenched in thinking of ers ... If courts end distinction , would make notice period unpredictable for ers ... Therefore ... court orders only 12 months notice

So in most cases ... Long service non-managerial ee will not get much more than 12 months notice

In Russo v. Lawrence Park (284), 67 year old ee with 25 years’ service as parking lot attendant and little english found to be entitled to 13 months’ notice .. But even 13 months is unusual for non-managerial EE

Constructive Dismissal

On pages 289-294, there is a discussion of constructive dismissal ... I have already explained what this is: for review

Any time ER commits a serious or fundamental breach of the terms of the contract .. EE can act as if they have been fired ... quit, and sue for wrongful dismissal ... Er never says “you’re fired”, but law treats ER’s breach as if ER had fired the EE

Remember .. constructive dismissal only comes up if the employee is prepared to quit ... if the er changes a term of the contract the employee can accept the change ... in which case the employment just continues under the new amended terms

Text provides examples of sorts of Er conduct that can amount to a constructive dismissal

1. Change to Compensation

if er cuts pay .. will usually be serious enough breach to be CD ... although sometimes courts have said a small reduction in pay due to business problems (and not a demotion) may not be CD

Farber v. Royal Trust (p 290)

Bank manager’s job eliminated and Er offers him new job at a branch .. compensation would be tied to performance of branch ... historically that branch had underperformed

EE calculated his pay would be cut significantly .. he quits and sues for CS ... turns out that the branch did very well and he would not have suffered a cut in pay, but that was not known at time he quit

Court: Er commits CD when it makes a fundamental change to compensation model ... Farber was demoted .... fact that turns out he would not have suffered a cut in pay doesn’t matter, because he could not have known that when he made the decision

2. Change in Duties

Er can usually reorganize duties of ees for business reasons ... but if changes in effect result in employee being demoted to a less prestigious job with less responsibility, then usually a CD

Carnegie v. Liberty Health (p. 291)

Er tells EE she will have to report to a different person (who used to be her peer), and she quits arguing this amounted to a demotion ... even though her job duties remained the same

Court: Not a demotion .. therefore not a CD ... a change in reporting duties not in itself a demotion ... need to look at what tasks are

3. Geographic Relocation

If er changes the location where an ee works it may be breaching contract ... but will depend on how significant change is and whether it seriously impacts on ee’s ability to get to work

If ees depend on transit ..and er moves off transit grid, may be CD ... courts sometime find that senior managers accept possibility that they will have to move

4. Intolerable work environment

There is an implied term in contracts that ERs will ensure a safe workplace, including harassment free

Therefore if ER creates or permits harassment at workplace ... harassed EEs may treat that as CD

Note: if harassment is on prohibited ground in HRC, then ee can also file a human rights complaint ... but if harassment not on prohibited ground ... then no HRC, but can sue for breach of employment contract

Stamos v. Annuity Research (p 292)

Manager rude and verbally abusive to ee – when she reports to owner, she’s told to shut her door and avoid manager ... she quits and sue for CD .. so abuse was by EE, not “ER”

Court: Er CD her by failing to take action to stop the harassment

Damages for wrongful dismissal

What damages can court order in a wrongful dismissal case?

1. “Reasonable Notice” [just discussed. This is wages that should have been paid during the period of notice that should have been given]

2. Payment for all other benefits and entitlements EE would have received had they been given proper notice [benefits coverage, pension contributions, stock options, etc] (see p. 295-96)

3. “Wallace” Damages (or Damages for Bad Faith in the Manner of Dismissal)

Discussed on p. 299 .. Refers to a case called Wallace v. United Grain Growers

Supreme Court in Wallace said that ERS have a duty to fire people in a fair and decent manner ... (not dealing with reason for dismissal, just the way in which the ER carries out the decision to dismiss)

If ers are not sensitive and decent in the manner in which they fire someone ... Then the court can ‘extend’ the notice period .. Beyond what it would have been otherwise

p. 301, description of types of conduct that courts have found violate the duty to dismiss fairly

There have been other cases where Er was just rude & insensitive during the dismissal interview ... Courts looking to see if ER acted in bad faith .. not enough if ER makes an honest mistake, such as in the Gismondi case on p. 301

Er didn’t follow its normal policies in assessing whether Gismondi should get a new job or be fired .. Court says ER might have made a procedural error, but no bad faith here .. Therefore no additional “Wallace damages”

4. EE can also recover something called “Aggravated” or “Punitive” Damages

Aggravated damages are for harm suffered by EE to their mental well-being and self-esteem as a result of ER’s treatment during the employment contract

Usually awarded when Court finds that ER engaged in tort called “intentional infliction of mental suffering”

Described on p. 297 in case called Prinzo v. Baycrest

1. er’s conduct was outrageuous

2. conduct calculated to harm ee

3. conduct results in provable illness

In Prinzo, er committed this tort by constantly harassing sick EE about coming back to work, and then firing her when she returned

Court ruled that ER’s harassment of EE was “almost sadistic” .. caused her high blood pressure, diabetic symptoms ... awarded $15,000 dollars for aggravated damages in addition to 12 months notice

The tort also found in Zorn-Smith v. bank of Montreal (p. 298)

Where er impose what court thought were completely unreasonable demands on ee that caused her to have to take leave for stress disability ($15,000 plus 16 months’ notice)