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

There’s a number of ways an employment contract comes to an end.

1.      EE quits

2.      EE retires

3.      EE is dismissed by the ER with notice (contract notice or common law ‘reasonable notice’)

4. EE is dismissed without notice (for ‘cause’)

5. EE dies

6. Contract says when it ends (term or task contract)

Here we deal with Quitting and Dismissal With ‘Reasonable 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 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)

Court says ee comment that he will ‘act accordingly’ in response to employer’s proposed change to terms did not show a clear intention to quit.

2.         Gilbert v. Tandet Transport (235)

EE who does not report to work when recalled from layoff not a quit, because EE was still trying to obtain facts about nature of the recall.

B.        Dismissal With Notice (ch. 15)

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. Here we discuss common law ‘reasonable notice’.

Reasonable notice or “At-Will’ Employment: Which Model Do You Prefer?

We discussed the difference between the Canadian model of reasonable notice of termination and the very different model in the U.S. known as “At-Will” employment

The ‘at-will’ employment model means that either party (ER or EE) can end the employment contract at any time, for any reason, without giving prior notice

We considered the two assigned supplementary readings that discuss the American at-will doctrine by Katherine Stone and Richard Epstein (which were handed out in hard copy)

Katherine Stone explains the origins of the rule and how when judges first developed it, it was a rule that was actually helpful to employees (do you know how?) .. but it was then extended to the industrial jobs where it did not fit as well [You should read this piece and figure out Stone’s argument]

Epstein thinks that at-will model is the preferable model. We talked about why he thinks this.

You should be able to discuss the various arguments for and against the two models if asked about this

We then moved back to the Canadian model in which an employer dismissing an employee and not alleging cause must provide ‘reasonable notice’ of termination (or contractual notice, if the contract includes a written term saying how much notice must be given)

We noted that ER can decide if common law notice will be ‘working notice” or payment in lieu of notice. Wrongful dismissal is a claim that the EE did not receive “reasonable 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. This is an unusual case, I think)

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 not entitled to extended notice period when dismissed during economic downturn when jobs are hard to find.]

The most important factors are length of service and ‘character of employment’

We discussed: Cronk v. Canadian General Insurance  (supplemental reading)

Court rules that managerial people should get longer notice than non-managerial people

           Why?: What is the policy explanation for this distinction?

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, but he was overruled by the Court of Appeal, which said it could not change the practice of separating managerial from non-managerial employees, because doing so would cause too much confusion for employers

So in most cases ...  long service non-managerial ee will not get much more than 12 months notice (but see exception in Russo v. Lawrence Park (284), found to be entitled to 13 months’ notice (what were the facts in that case?)

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)

EE calculated his pay would be cut significantly under ER’s proposed job transfer to a new branch ..  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)

Having to report to a new person is not a demotion if your job duties remain substantially the same.

3.         Geographic Relocation

Generally, ER has implied right to move business for economic reasons. But may be breaching contract if change seriously impacts on ee’s ability to get to work

           E.g. If ees depend on transit ..and er moves off transit grid, may be CD, because court may read in an implied term in some cases that Er would not move away from transit

4.         Intolerable work environment

There is an implied term in contracts that ERs will ensure a safe workplace, including harassment free and that EES will be treated deently

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

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

Changing an Employment Contract Term

We noted that sometimes ERs may want to change a term of the contract, but the employee won’t agree to the change

We looked at case called Wronko v. Western Inventory (supplemental reading) in which ER tried to unilaterally change the notice term in the contract by giving the EE notice that it was going to do so. The Court ruled that an ER cannot change a term in the contract without the EE’s consent simply by giving the EE notice of the change. Rather, the ER must give notice that the entire contract is being terminated, and then when the notice is up, offer the EE a new contract on whatever terms the ER wants. In Wronko, the ER committed a constructive dismissal by changing the term.

We then considered another supplemental case called Stowar v. Telehop, in which the ER mistakenly offered to pay a dismissed EE five months pay rather than the 3 weeks’ notice the EE was entitled to under the ESA. The EE accepted that offer by signing a release in which the EE promised not to sue the ER. The Court ruled that the original offer to pay 5 months notice was a legally enforceable change to the contract (offer, acceptance, consideration).

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)