Here’s a selection of recent and noteworthy employment law cases from across Canada

This week, I’ve compiled a selection of recent and noteworthy employment law cases from across the country.

1. Court reverses adjudicator’s decision

A 30-year-service, recently appointed manager was fired for violating his company’s sexual harassment policy by sexually harassing an employee with whom he worked closely and who reported to him.

The labour adjudicator assigned under the Canada Labour Code had found that there was not cause for dismissal, substituting a four-month suspension.

The Federal Court of Appeal reversed that decision and sent the case back for a new hearing, noting that the adjudicator should have thoroughly analyzed sexual harassment, beyond just relying on the company policy, and should have considered that the manager did not change his behaviour when the subordinate objected.

The court also said the adjudicator failed to consider whether the power imbalance was likely to have impacted her consent and because of that imbalance whether his actions were unwelcome, even if the employee believed they were consensual.

The court noted that courts and adjudicators cannot rely on investigator’s reports into misconduct because the court must hear the witnesses and come to its own decision. Investigation reports are inherently hearsay and inadmissible.

2. The importance of consideration in contracts

This case, Sui v. HungryPanda Tech Ltd. at the B.C. Supreme Court, raises the important point that, for an employment contract to be valid, the employee must receive something of value in return for signing a punitive termination or any other punitive provision of an employment contract. Since nothing of value was received in this instance, the contract was set aside.

With an unenforceable contract, the employee, who had been with the company for a year and a half with a salary of $144,000, was entitled to full wrongful dismissal damages. He was awarded six months’ pay.

3. Term employment agreements prevail

In Bouchard v. Facility Condition, an engineer had sold his company and entered into a three-year consulting agreement with the purchaser. The parties had an employment agreement permitting termination without cause or notice at any time during the three years. When relations between them deteriorated, the engineer was fired on two weeks’ notice.

The B.C. Supreme Court found that the three-year consulting agreement and the employment agreement allowing for dismissal at any time were in conflict, and that the three-year agreement prevailed. Damages were awarded for the balance of the three years with no obligation on the employee to mitigate by looking for other work

This is an important lesson for employers on the risk of term employment agreements, because presumptively the employee is entitled to be paid until its end — even if their wrongful dismissal case, in the absence of that agreement, would have been for much less.

4. Wrongful dismissal action dismissed

The executive in a case brought against the Penticton Indian Band was terminated for cause for not being fully transparent in the context of his own salary. He did not ensure compliance with the employer’s financial administrative law when he accepted a retroactive pay increase.

The lesson from the decision by the B.C. Supreme Court is that, as a fiduciary, an executive employee cannot ever be in a conflict of interest and must always be fully transparent and honest and disclose any conflict of interest to their employer. It is best that they remain entirely uninvolved when their own interest is at stake. Otherwise, they risk dismissal for cause.

5. The importance of clarity in termination provisions

In this case, Briggs v. ABC Insurance Solutions Inc., a 36-year-old employee worked for a year and a half as a customer service manager of an insurance broker. Her employment contract said that she was to work at the office, but the employee claimed she was told the job was hybrid. The company said that the work-from-home policy was only in response to the COVID-19 pandemic and was no longer in effect.

Employees were all told in March 2023 that they had to return to the office by September. The employee claimed that this was not financially feasible but that she could continue to work from home, so the employer terminated her and paid her two weeks’ severance under their employment contract.

The court found the contract unenforceable because the termination provision was not absolutely clear. The employee was awarded four-and-a-half months.

This is another example of the courts’ tendency to invalidate employment contracts when they can find a reason to.

6. Awarding bonus pay in wrongful dismissal

A 58-year-old employee earning $125,000 after 21 years of service was awarded 24 months in damages for wrongful dismissal.

In determining her entitlement to bonus pay over the period of notice, the Ontario Superior Court provided the average of her previous three years of bonuses with a 23.5 per cent discount, because no employee at the company had received a bonus in the following year.

This case evidences the court’s tendency to award higher severance amounts. It is also curious, since damages in wrongful dismissal cases are supposed to represent what the employee would have earned over the severance period, that any bonus was awarded when the evidence was that there were no company bonuses paid to any employees in the following year.

7. Increase in severance awards

A 69-year-old senior manager who worked for 18 months was awarded eight months’ pay after suing for wrongful dismissal.

Like the last case, this one shows the increase in severance awards provided by Canadian courts.

If we enter a recession, it will be interesting to see if those awards decline because companies will be unable to afford them, or whether they increase because employees will have more difficulty securing alternate employment.

Strictly on the law, they should increase because a company’s poor fortune is irrelevant respecting severance awards, and the difficulty of securing employment is arguably the single most important factor in awarding severance