By Howard Levitt
How severance can be paid and more
I have already discussed some of the main employment law themes of 2022, but here are some additional cases that changed the law in the last year:
In Wisser vs. CEM Management Consultants Ltd., the Alberta Court of Queen’s Bench ruled in favour of an employee based on the “oppression remedy,” which is more commonly used in all provinces in disputes involving officers, directors and creditors who have been oppressed by the majority shareholder.
“Mr. Wisser had a reasonable expectation that the corporation’s business and assets would not be unfairly re-structured to benefit management at his expense. I find that he is a proper person to advance the oppression claim as described herein. The only thing accomplished by re-starting their business under a new corporate identity was to shed any liability for Mr. Wisser’s severance.”
Discretion must be exercised reasonably
Employers often terminate employees and then use their discretion to not pay out bonuses, arguing the discharge showed their discretion was reasonable. In other cases, for various reasons, employees are not paid bonuses that they reasonably should have received based on the employer’s exercise of its discretion.
In Bowen vs. JC Clark Ltd., James Bowen and Jonathan Wiesblatt were portfolio managers of a hedge fund and commenced an action seeking more than $1.3 million in performance fees that they claimed were owed for the portion of the year before their firing.
The Ontario Court of Appeal rejected the company’s position.
“I do not accept the respondent’s position that the discretionary nature of the bonus provision in paragraph 5 of the employment agreements means that the employer was entirely unconstrained as to how that discretion was exercised,” the court said. “Where an employment agreement provides for a discretionary bonus, there is an implied term that the discretion will be exercised in a fair and reasonable manner”
Only cause involving wilful misconduct results in no severance
In this case, Mark Render slapped the buttocks of a female co-worker and claimed it to be an accident, but then joked about it with his coworkers. The court held that not all just cause terminations amount to wilful misconduct under the act and awarded Render his ESA minimums.
Employment contracts must strictly comply with the ESA to be binding
There have been cases over the past two years that have, as I have noted, invalidated virtually all termination provisions in employment contracts, particularly in Ontario, as falling, even in one minor respect, below some provision of the ESA. The courts have generally held that if the contract, at any future point, in any respect, could fall below the statutory minimum, the entire termination provision will be struck.
In Rahman vs. Cannon Design Architecture Inc., because the employee, Farah Rahman, was sophisticated and had received independent legal advice before signing her contract, her case had been the exception, but, like most exceptions, it was appealed.
“In my view, the motion judge erred in law when he allowed considerations of Farah Rahman’s sophistication and access to independent legal advice, coupled with the parties’ subjective intention to not contravene the ESA, to override the plain language in the termination provisions in the employment contracts,” the Ontario Court of Appeal said in extinguishing whatever hopes the employer had.
Length of service does not determine severance and COVID-19 can be a factor
The Ontario Court of Appeal in Pavlov vs. The New Zealand and Australian Lamb Co. Ltd. upheld a 10-month severance award for a 47-year-old employee with only three years of service. The court recognized the impact of COVID-19 on Pavlov’s re-employability.
The case reminds employers that length of service is only one of many factors the courts review in determining severance, and there is no official or unofficial “rule” linking severance and service.
Employer COVID-19 safety measures are not a constructive dismissal
Given the number of employees across this country forced to wear masks in the workplace, this case was significant and is consistent, in many respects, with court and arbitration rulings supporting employers during COVID-19 in vaccine mandates and other measures to ensure workplace safety.
Sexual harassment in Ontario is not a separate legal action
Maria Incognito sued Skyservice Business Aviation Inc. as well as its vice-president of sales, Peter Bronby, alleging he had sexually harassed her both at work and outside.
This would not prevent an employee claiming sexual harassment as an aggravating factor in another lawsuit, such as one for wrongful dismissal. The court’s decision also does not provide solace for companies that take no action upon learning of harassment in their workplace.
How severance can be paid
The Alberta Provincial Court in Hubbard vs. 651398 British Columbia Ltd. found an employer and employee had a verbal agreement that he would take tools and materials instead of monetary severance. The court found this to be a valid compliance with ESA legislation.
I caution that the wording of the ESA in each province must be canvassed before relying on this case and note it was a decision of the provincial, rather than a Superior Court.