Friday, January 29, 2016

Police Suspension With Pay: A Middle Ground

There is significant controversy right now about Ontario's Police Services Act, regarding the suspension of officers, with pay, when they are subject to disciplinary proceedings or criminal charges.

Because of the time involved in these proceedings, it's a reality which can legitimately be infuriating - in hindsight:  These processes can take multiple years, and then at the end, if it is determined that the police officer did indeed engage in serious misconduct, we scratch our heads and ask "So why did we pay him to stay home for the last x years?"

I would urge moderation.  At the outset of any process, we don't necessarily know how it will resolve.  And suspensions without pay can also render significant injustice.

The Private Sector Analogy

The closest private sector analogy to this issue would be discharge grievances in unionized environments.

If I'm a unionized employer, and I believe that an employee is guilty of significant misconduct, I might go ahead and discharge him.  His union may grieve, and eventually send the matter to arbitration.

In the mean time, the individual is out of the workplace, and not being paid.

At the end of the arbitration, the arbitrator is called upon to determine if the discharge was an appropriate action.  If the employer fails to prove the misconduct, then the employee will usually be reinstated with full back pay.

When the employee has been off work for two years, that's a large amount of money.  But on the flip side, that's two years without a steady income to provide for one's family - that's a lot of hardship for the employee and his family, on unproven allegations.

There's a secondary question, too.  Even if the employer proves misconduct, then the question becomes whether or not it was serious enough to justify discharge.  In many cases, an arbitrator will substitute a different penalty - for instance, reinstating the employee, but substituting an unpaid suspension for a period of time - often significantly less than the amount of time the employee was actually off, meaning that the employee is still entitled to significant back pay.

This model has its advantages, certainly, but it isn't perfect, and sometimes puts employees to very substantial hardship because of false or trivial allegations of misconduct.

Putting the Punishment Before the Process

We need to bear in mind that not every case is clear cut.  In some cases, it isn't clear that there was misconduct.  In others, it isn't clear that the misconduct will warrant the discharge of the officer.  Recall the discharged police officer who last year made the news because he sent a mocking letter thanking the police chief for his three year paid vacation?

His misconduct was at the margins:  He sent 'confidential' information about a person in custody to a mutual friend, for seemingly good intentions.  It was information that had the potential to interfere with an ongoing investigation, but ultimately there was no impact from the disclosure, and the officer took full responsibility for the action from the outset.  This was certainly a close case, and in the private sector I suspect that the conclusion would have been that a discharge was not warranted.

So consider where we stood at the outset of that 3 year process?  We know it's going to be a long time; we don't know how it will turn out; it's entirely plausible that he will receive a slap on the wrist or a short suspension, and be put back on the job.  Is it fair to impose 3 years of financial hardship on him before that process has run its course?

No.  That seems straightforward.  Punishing somebody in such a way, before it is found that they deserve it, is deeply unfair.

The Middle Ground

Either extreme, in my view, is likely to render injustice on a frequent basis.  On the one hand, suspensions with pay allow officers guilty of severe misconduct to continue drawing a salary so long as they can drag out the legal processes.  On the other hand, suspensions without pay have the potential to put innocent officers into dire financial situations.

My suggestion would be that the Police Services Act create an expeditious process for interim remedies:  If the Police Services Board is confident that the officer will be found guilty of conduct deserving of discharge, then it can go to an adjudicator for an order authorizing a suspension without pay until the disciplinary/criminal proceedings are complete.

The specific onus could be the subject of discussion:  I would propose a threshold of a 'strong prima facie case' for discharge - i.e. that the evidence is very strong that the misconduct occurred, and that the misconduct clearly calls for discharge.

This way, in the clearest cases, wrongdoers can be denied of this lengthy paid vacation...but in the less clear cases, we continue to give the accused the benefit of the doubt.

*****

This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please contact him for information on available services and billing.

Tuesday, January 26, 2016

The "Suitability" Test: Wrongful Dismissal from Probationary Employment

Many employers insist on a period of 'probation' in their employment contracts.

Sometimes it's clear on the face of the contract what that means - usually, that the employee can be dismissed without notice and without cause during the probation period.  Sometimes, it's less clear, with a verbal or written reference to a 'probation' period of a particular length of time.

The case law, in the non-union context, has tended toward a fact-based interpretation of the word 'probation'.  In a 2001 case, Easton, Justice Lederman concluded that the 'probationary' language in the contract suggested only that a raise at the end of the probationary period was contingent on satisfactory performance - and did not manifest in a right to terminate summarily without cause.  Thus, employment lawyers such as myself have encouraged employers to include very clear contractual language about what probation means.

Even probationary language, however, doesn't give the employer to dismiss, carte blanche, without any reason.  The courts have also consistently held that probationary employees are entitled to good faith evaluation of their work - that the employer cannot use a probationary clause to terminate for reasons unrelated to performance or fit in the workplace.  In practice, it turns into something of a "just cause lite" analysis.

Yesterday, the Divisional Court released its decision in Nagribianko v. Select Wine Merchants Ltd., a case where an employee was dismissed without notice toward the end of a six month probation period.

The Trial Decision

Nagribianko sued in Small Claims Court.  The Deputy Judge accepted that the meaning of the word 'probation' was not defined within the employment contract.  (It was defined in the employee handbook, but the evidence was that the handbook was not provided at the time the contract was signed, and thus not effectively incorporated into the contract.)

Accordingly, the Deputy Judge awarded four months' pay in lieu of notice.

The Appeal

The employer argued, and the Divisional Court accepted, that the word 'probation' has an established meaning in law, and that probationary employment can be terminated in accordance with the "suitability test" - a good faith analysis of whether or not the employee is suitable to the workplace.  This meaning existed without requiring a reference to the employee handbook.

As the employer had engaged in such a good faith analysis, the Divisional Court allowed the appeal and dismissed the action.

Commentary

The "suitability test", per se, arises from the unionized labour law context:  In cases of discharged probationary employees in union contexts, that is a very frequently applied test.

And there's no question that, where an employment contract purports to give the employer a right to dismiss probationary employees without notice, the courts will apply a similar test.

But there's a danger in directly importing labour (unionized) principles into employment (non-unionized) contexts:  In the union context, these matters are governed by collective agreements, with specific and detailed language, often derived from certain boilerplates.  And collective agreements will include language, even on a near-universal basis, which are not always present (or sometimes very seldom present) in a non-union employment contract.

So caution must be exercised when importing such labour principles, deriving from a collective agreement, into employment contexts, where the contract may well set out markedly different terms.  Thus, a term may have been consistently defined in a way in the labour law regime, but that does not result in a conclusion that the term has a settled definition at law in a broader way.

In particular, the question here is one that basically never arises in the labour context:  Does the contract effectively give the employer a right to terminate summarily without just cause?  If it does, then something akin to the suitability test would certainly be applicable.  But the Deputy Judge concluded that the language - which is different from that found in collective agreements - did not create such a right.

And there's a more fundamental problem with the Divisional Court's analysis, in the context of the facts described in the case:  A six-month probationary period, allowing termination without notice on the basis of the "suitability test", cannot withstand scrutiny under the Employment Standards Act.

ESA Entitlements

Under the ESA, most employees are entitled to at least one week notice of termination or termination pay, if they've worked for the employer for a period from 3 months to 12 months.  There are a number of exemptions, including for an employee who "has been guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer."

It's a high test - generally even harder to satisfy than the common law test for 'just cause'.

Thus, dismissing an employee with nearly six months of service, on the basis of the suitability test could absolutely not disentitle an employee to statutory notice or termination pay, and any probationary language that purports to do so, expressly or impliedly, would be void.

It would be impracticable, and inconsistent with well-established legal principles, to interpret vague probationary language as automatically excluding common law 'reasonable notice' but not statutory notice or termination pay.  Thus, a good employment contract with a longer-than-3-month probation period will typically have ESA saving language, specifying that the meaning of the probation language is to allow termination on provision of ESA minimums only.  (In fact, the employee handbook in this case had such language, but the Divisional Court did not disturb the finding that this was not integrated into the contract.)  Whereas a non-extendable probation period of less than 3 months might not have the same issue, defining itself as permitting termination without any notice whatsoever.

Impact

The clear articulation of the suitability test is useful, in general terms.  This is consistent with the long history of judicial findings that a probationary termination isn't completely beyond judicial scrutiny.

But the ESA issue does not appear to have been considered by the Divisional Court.  In order for this result to be consistent with the ESA, one would have to read the mere word 'probation' as integrating a right to terminate, subject to the suitability test, upon the minimum notice set forth in the Employment Standards Act.  I do not take the Divisional Court as actually proposing this, nor would it be likely to stand as a proposition of law if it did.

One Last Headscratcher

This is something that's slightly perplexed me about the 'probation' doctrine for a long time:  Since probation can't reduce an employee's entitlements to less than the minimum entitlement under the ESA, and a probation clause can't be triggered for straight economic reasons or otherwise arbitrarily...what's the point of probationary language?

An employer who dismisses a 'probationary' employee is going to be called upon to prove that it gave the employee a meaningful opportunity to establish suitability, and considered the employee's suitability in good faith.

By contrast, an employer who relies on an ESA-minimum termination clause (when enforceable) is not called upon to justify the termination in any manner whatsoever (except to the extent, perhaps, of excluding illegal reasons for termination).  If that's within the first three months, the employee is entitled to nothing.  If it's after the first three months, entitlements remain quite nominal.

The only advantage I can see to the probation language is that it's less likely to be disregarded by the courts.  But, even then, many of the problems that exist with termination clauses also arise for probationary language.

*****

This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please contact him for information on available services and billing.

Thursday, January 21, 2016

Antunes v. Limen Structures Ltd.: Court of Appeal Lifts Stay

You may recall the exciting case of Antunes v. Limen Structures Ltd. from a few months back, where a five-month employee received 8 months pay in lieu of notice (over $105,000), plus an additional half million dollars in damages, and costs and interest totalling over $40,000.

Limen filed a notice of appeal in respect of the additional half million, but did not initially appeal the other aspects of the judgment.  Filing the notice of appeal has the impact of generating an automatic 'stay' of the judgment, preventing the plaintiff from trying to enforce the judgment until the appeal has run its course.  This applies, by default, to the whole judgment - even the $145,000 of the judgment debt not being appealed.

Antunes brought a motion to lift the stay, in relation to all but the half million dollar award, to allow him to collect the uncontested part of the judgment.  Limen's response was to file a supplementary notice of appeal, appealing the rest, too.

The stay is rather concerning to Antunes, because Limen claims to be insolvent - and as time passes, recovery of the debt will likely become increasingly difficult.  Antunes continued the motion, arguing that the Court of Appeal should exercise its discretion to lift the stay, because the supplementary notice of appeal was a tenuous appeal solely for the purpose of delaying payment.

The Court recognized Limen's claim to be unability to pay the judgment, but appeared to doubt the bona fides of that claim:
The appellant has managed its affairs in such a way as to minimize its exposure to Mr. Antunes.  I accept that businesses can find themselves in financial difficulty for many reasons having nothing to do with the wrongful dismissal claim of a former employee.  But I take into account the "scorched earth" trial and appeal tactics taken by the appellant.
Limen contended that, if it paid the judgment and then won on the appeal, Antunes likely wouldn't be able to repay the employer.  Antunes' response was that he would be satisfied to have the funds held by his lawyer in trust pending disposition of the appeal - a fair resolution to concerns of uncertainty.

The Court lifted the stay, and didn't order any such trust:  The appeal itself (as it related to the wrongful dismissal) was weak on its face, and Antunes' financial hardship made it desirable for the Court to exercise its discretion.

*****

This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please contact him for information on available services and billing.

Friday, January 15, 2016

Summary Judgment and Creative Solutions

One of the consequences of the Supreme Court's decision in Hryniak is that, even beyond the significant expansion of the availability of summary judgment generally, the courts are allowed to exercise their discretion in designing fair and expeditious processes to determine issues that may not be otherwise amenable to summary judgment.

In the case of Bevilacqua v. Gracious Living Corporation, Justice Dunphy felt it necessary to craft such a process.

The Facts

Mr. Bevilacqua worked for Gracious Living for about 16 years, but was given a lay-off notice in September 2014.  Bevilacqua commenced litigation in October 2014, apparently claiming constructive dismissal.  This is a topic I've touched on several times:  Suffice it to say that, despite one outlier case decided in 2014, my view is that the current law in Ontario continues to be that a temporary layoff, in the absence of a contractual right upon the employer to do so, constitutes a constructive dismissal.

Gracious Living, shortly after receiving the claim, offered Bevilacqua his job back, on the same terms and conditions before.  Sound familiar?  Perhaps because it sounds much like the case of Mr. Chevalier, who ultimately had to pay a very substantial costs award to his former employer because he turned down the job under similar circumstances and continued to sue for wrongful dismissal.

Bevilacqua turned down the job, and he claims that it was a bad faith offer - that they had put him on 'temporary layoff' as a way of trying to get him out permanently, and the offer to return him to his job was not made in good faith.

That appears to be the only major factual issue in contention, though.

Justice Dunphy's Decision

Justice Dunphy concluded that, because of the narrowness of the issues that might benefit from viva voce evidence, it was appropriate to fashion a summary manner of dealing with the case.
Whether it be characterized as a motion for summary judgment with some viva voce evidence, a "mini-trial", or a modified hearing under Rule 76, I have the jurisdiction necessary to order a common-sense procedure for resolving these issues that satisfies the overriding principles of justice, proportionality, and access to justice.
The process is expedited, but specific and detailed, with a fixed timeline.  In the hearing, witness testimony time is to be quite limited.  Before the hearing, of the other witnesses, out-of-court cross-examinations can be conducted beforehand.  (As a Rule 76 motion, this is interesting:  The default is that no cross-examinations on affidavits is permissible in a Rule 76 motion.  That sometimes creates a tension with the new summary judgment rules.)

Rather than requiring a "full factum", Justice Dunphy called for concise written argument directed at the four core issues in dispute.

Justice Dunphy was particularly firm on one point:  "This hearing will NOT exceed one day."

Commentary

There's certainly value in Justice Dunphy's approach:  It will achieve a result expeditiously, while giving the court a reasonable opportunity to hear directly from the critical witnesses.

Still, since the release of Hryniak, I have seen plenty of summary judgment decisions (including my own) with more significant factual disputes than what appear to be the case here.

So what's the principled distinction to be made here?  In what cases will a factual dispute require a process of this nature, versus being decided by way of a normal summary judgment motion?

*****

This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation.  If you need legal assistance, please contact him for information on available services and billing.

Friday, January 8, 2016

Employees Drinking at Lunch

Hat tip to Professor Doorey for finding this interesting case.

Last week, Justice Nightingale decided the case of Volchoff v. Wright Auto Sales Inc., a wrongful dismissal case by a car sales manager, who was dismissed allegedly for cause.

Just cause is a high threshold, and it's relatively rare to see dismissals for cause.  It's even rarer to see the 'just cause' defence succeed at trial.  This is not one of those cases.

The allegation against Mr. Volchoff was that he attended at work while under the influence of alcohol, including driving company vehicles.  However, at trial, the employer's evidence was pretty thin, establishing only that, on one or two occasions, he had the smell of alcohol on his breath.  Mr. Volchoff readily admitted to having the occasional glass of wine at lunch at a local restaurant, usually before Manager's Meetings on Wednesdays.  (The employer held two meetings with Volchoff about that, and there's a dispute as to what happened in them.  Volchoff insists that there was no mention of a 'zero tolerance policy' at the first meeting, and that no other issues were raised despite him continuing to have his lunchtime wine before the weekly management meetings, and that the zero tolerance policy was first mentioned at the second meeting, following which Volchoff's evidence is that he stopped drinking wine at lunch.)

There were later and more serious allegations, arising in June 2014, including that he drove the employer's vehicles while impaired, but the evidence in support of these claims was extremely vague and non-specific - little in the way of times and dates when he was allegedly impaired, little in the way of evidence of actual impairedness (as opposed to evidence that his cheeks were red, for instance, which didn't trouble the judge in light of observing that Volchoff "displayed a natural rosy cheek complexion").  Some of the employees who expressed concern testified that they had raised their concerns many months before the issues in question arose in the first place.

Only one witness' evidence had any real specifics capable of sustaining the more serious allegations:  One Mr. Knaud testified that, after Volchoff returned from Manager's Meetings, he observed Volchoff to "have rosy cheeks, glazed eyes, slurred speech and the smell of alcohol", including while dealing with customers.  However, the plaintiff's counsel successfully challenged this evidence on cross-examination, and his credibility was further damaged by testimony that the judge characterized as "intentionally vague and not truthful", claiming not to recall anything pertaining to another complaint he made about Volchoff in June 2014:  He (and other employees) had objected to changes Volchoff had made in how internet-generated leads were treated

The employer claimed to have a 'zero-tolerance' policy for alcohol during working hours.  This would be reasonable for such an employer, but Mr. Volchoff claimed that this policy was never brought to his attention, even after he advised the employer that he occasionally had wine at lunch.

The judge believed Volchoff's evidence on the point.

If the employer had a zero-tolerance policy, it was never formalized and not brought to Volchoff's attention, and in any event there was no trail of progressive discipline, nor sufficient evidence that Volchoff was expressly advised that his employment was in jeopardy.  (The employer's evidence, again, included some evidence that he was told at the first meeting that there would be 'repercussions' if he continued to drink during working hours; however, the evidence was not corroborated by other employer witnesses who were present.)  There was no evidence to substantiate the more serious allegations against Volchoff, and no evidence that he was drinking during working hours when he had been told not to.

Thus, the just cause defence failed, and Volchoff was entitled to damages for pay in lieu of reasonable notice.

The Suspension Obiter

Justice Nightingale made reference to an investigative suspension, and highlighted the absence of other progressive discipline.
He was placed on a suspension with pay for one week pending investigation of his conduct.  An imposition of continued discipline including a further suspension, with or without pay, for a reasonable period of time, including a specific warning that any further violation would result in his termination, would have been appropriate to bring home to Mr. Volchoff his employer’s serious concerns, if it had them, with his conduct and make him realize his job was now in jeopardy if he continued. Progressive discipline, short of termination of employment, was clearly more appropriate in this case.
Professor Doorey, in his blog entry on the subject, finds this commentary to be very strange, for two reasons.  Firstly, there's no suggestion in the description of the evidence that there was a contractual basis for a disciplinary unpaid suspension, and it's fairly widely accepted that, in the absence of a contractual entitlement to do so, an unpaid suspension constitutes a constructive dismissal, unless the misconduct rises to the level of just cause for termination anyways.  (See Justice Echlin's decision in Carscallen v. FRI.)

Secondly, Justice Nightingale seems to conclude that the employee didn't actually do anything wrong:  There was no evidence to establish that he ever attended at work in a state that rendered him unable to properly carry out his duties; the evidence Justice Nightingale accepted led to the conclusion that he never violated employer directions; etc.  So why would a suspension have been appropriate?

To be charitable to Justice Nightingale, I read this less as a finding that a suspension "would have been appropriate", and more of a suggestion - made in slightly too specific terms - that, "if" the employer "had serious concerns", it had other options to drive them home with the employee before leaping to termination.  Which is fair, but for the 'constructive dismissal' issue from Carscallen, which would likely have made an unpaid suspension unavailable to the employer.  That being said, while there's no express reference to a contractual right to suspend, there's also nothing in the decision or described evidence that would foreclose such a possibility:  Thus, it would be very hard to read this obiter as conflicting with Carscallen in any serious way.

Contractual Integration of Policies

All things considered, particularly given Justice Nightingale's findings of fact, the result seems pretty straightforward, but there are two elements of the analysis which I find slightly troubling.

Firstly, Justice Nightingale was clearly looking for integration of the "zero tolerance policy" into the employment contract itself.
I am not satisfied that the zero-tolerance policy of the Defendant, whatever it was, was a term of the employment contract between the Plaintiff and the Defendant when he was first hired or, because of the lack of consideration, became one after he was hired.
This conflates the applicable legal principles.  Yes, contractual rights must be agreed upon by the parties, with consideration.  But the right to set a zero-tolerance policy may well be within an employer's implied contractual rights.

In any employment contract, the employer retains certain management rights.  An employee's duties of loyalty and fidelity require an employee to comply with management directions, generally.  (Of course, this isn't without exception.  If I tell my employees to do something illegal, they'll be entitled and obligated to refuse.  If I set a requirement that I am prohibited by statute from requiring, then that will likewise be unenforceable.  If I issue an order that conflicts - either expressly or impliedly - with the employee's existing contractual rights, then this may constitute a constructive dismissal.)

Many employment contracts do expressly integrate a policy manual or employee handbook, and reserve upon management the right to modify the policies from time to time.  This is probably not necessary (generally speaking) in order for management to have the right to set such policies, within reasonable limits, on a unilateral basis and without obtaining contractually binding assent of the employees.

IF the employer told Mr. Volchoff that he was not permitted to have any alcohol in his system while working, and Mr. Volchoff then continued to return to work after drinking wine at lunch, then the analysis doesn't stop with "It wasn't integrated into his contract."  Go on to "Did the employer have the contractual right to require this of Mr. Volchoff?"  The answer to that is probably 'yes'.  (Would they have the right to say "Don't drink cranberry juice at lunch"?  Likely not.  But setting reasonable requirements for the state in which Volchoff must be upon his return to work is very likely justifiable.)  Next, we would go on to determine whether or not the conduct rises to the level of just cause:  If there were reliable evidence of significant impairedness, and/or damage or injury from a collision, then there might be a worthwhile argument for cause.  But formal breaches of the zero-tolerance policy, in the sense of showing up to work with a low BAC from a glass of wine at lunch, would almost certainly require progressive discipline.

Of course, Justice Nightingale did not find that Volchoff continued to drink after being told not to, so this whole analysis is entirely hypothetical.

What is or isn't Discipline?

I am also slightly troubled by the phrase "continued discipline", in the suspension obiter remarks, which implies that the investigative suspension was disciplinary in nature.  This is an important distinction.  It is common, particularly in larger organizations, for the subject of serious allegations of misconduct to be suspended, with pay, pending the results of the investigation.  This is not disciplinary, and should not be regarded as so.  It does not imply any finding of fault, and is not intended to be punitive or corrective in any way.

Disciplinary suspensions, where they are appropriate, are different in nature.

There's also room to discuss 'early stage' discipline:  Let's suppose that I have a policy against swearing in the workplace, but I've never informed you of it or enforced it, and a culture of swearing has developed - which I have condoned.  I can't simply tally up all your swears for several months, say nothing to you about it, and then fire you one day because of the cumulative impact of them.  Rather, I need to start the ball rolling of 'progressive discipline'.

Yet my condonation of the act, and your lack of awareness of the policy, means that, in any objective sense, you're not doing anything 'wrong' at all.  So how can I discipline you for something that isn't wrong?

The initial stage is going to have to be an informal (but still clearly documented) caution:  We might argue about whether or not it's properly characterized as discipline.  I define discipline as being corrective in nature:  Bringing to your attention my expectations, and the way in which I expect you to modify your behaviour moving forward, is certainly discipline.  If you regard discipline as fundamentally punitive, then you might take a different philosophy.  (Simply, I don't regard a punitive model of discipline as being appropriate in an employment relations context.)


Employer Practices

I'm prepared to give the employer the benefit of the doubt in terms of how this termination came about.  It certainly sounds like some of the complaining employees had an axe to grind with Volchoff, but their complaints left the employer with the good faith impression that Volchoff had a long-standing and continuing drinking problem.  In light of the safety-sensitive nature of some of his work, it's difficult to ignore that impression, even if you can't prove it - particularly when Volchoff himself admitted to a little bit of drinking.  (It's widely viewed that people underestimate their own alcohol consumption.)

So they dismissed him.  And then he sued, and they wanted to allege cause, and their lawyer explained to them what would be necessary to prove cause, such as - likely - evidence of progressive discipline and clear indication that his continued employment was in jeopardy if he continued to drink.  The evidence of one of the people in a meeting that she's sure she told Volchoff that there would be "repercussions" sounds like the classic case of an employer looking to fit the contents of the meeting to the 'form' of a case for just cause, on an ex post facto basis.

But, even on this generous assessment, I don't have much sympathy for the employer.  For two reasons:  Firstly, they botched the process significantly.  If they actually had a zero-tolerance policy, they failed to properly implement it.  If they actually told Volchoff not to drink, period, then they should have maintained better written records of that direction.  If they actually cautioned Volchoff that his employment was in jeopardy, again, they should have done so clearly and in writing.

There's a way to go about these things.

And with the judge characterizing the defence evidence as being largely vague and unspecific, it almost sounds like the defence strategy was to paint the plaintiff as a lush - which would be a very poor strategy, in general, for a few reasons.  Firstly, if he really did have a serious drinking problem which frequently manifested at work, then issues should have arisen sooner, and it should have been much easier for the defence to point to specific work-related failings that resulted.  Secondly, smear tactics are generally frowned upon for employers in wrongful dismissal proceedings.  Thirdly, if he was an alcoholic, then that raises the spectre of human rights issues and the duty to accommodate.

So yes, I can understand the employer having concerns about continuing to employ somebody under those circumstances, but you need to investigate thoroughly, come to justifiable factual conclusions as to what the actual state of affairs is, and then come up with a strategy for addressing the issue - with competent legal advice, preferably.

Alcohol in General

This isn't the first 'drinking on the job' case I've posted about.  In 2013, I discussed the Dziecielski case, involving an individual who stopped for lunch on his way back to the office from a customer visit, had a few beers with lunch, then wrecked the employer's vehicle and was charged with impaired driving.  9 years earlier, he had signed off that he had reviewed the employee handbook, which specified that drinking during working hours was a "major" violation.

In that case, the employer was found to have established just cause, which was the right result in the circumstances, but I pondered some counterfactuals:  What if it was only one drink?  What if there had been no collision?  Would violation of the 'no drinking' rule still have warranted summary termination without a trail of progressive discipline?

These two cases certainly illustrate the importance of context.  In Dziecielski, we have an egregious scenario with significant drinking, a BAC of over 80, criminal charges, a collision in the employer's vehicle, and a policy which expressly prohibits drinking at all.  In Volchoff, we have an individual who was proven to have the occasional glass of wine with lunch, but with no criminal charges, no evidence of significant impairment or performance concerns, no collisions, and inadequate evidence of a formal policy.

Many employers take a dim view of drinking - at all - during working hours.  This isn't unusual.  Some don't.  As I noted in my discussion of Dziecielski, I used to frequently go to lunch with my old firm's partners (i.e. my bosses at the time) and have a pint or a glass of wine.  (At that time, I practiced in the same town as now-Justice Nightingale, and one or more of his partners would occasionally join us as well, incidentally.  What can I say:  There's certainly a charm to small-town law.)  Obviously, they didn't object to it - from time to time, they even bought.  But if I'd drank to excess, certainly that would have changed their view.

Either way, scale and context are important, and that's what the Volchoff case ultimately establishes.

*****

This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation.  If you need legal assistance, please contact him for information on available services and billing.

Wednesday, December 16, 2015

Another Chapter in the Mehedi v. Job Success Saga

More than a year ago, I posted about the case of Mehedi v. 2052761, involving an individual suing a company called "Job Success" for fraud - basically alleging that he paid them a lot of money for them to find a job, with guaranteed results which never materialized.

A brief overview of the procedural background:  It went to trial in 2011, and the judge accepted the defence evidence that there were no specific guarantees made.  Mehedi appealed, and in January 2012 the appeal was dismissed.  In February 2012, CBC ran a "Marketplace" segment about a related company to Job Success, going undercover with hidden cameras, and caught the same people who testified in the 2011 trial making exactly the kinds of guarantees which they had testified they don't make.

Ever call a telecom company and end up getting bounced from department to department, repeatedly, sometimes back to one you've already talked to, having to wait on hold for hours each time?  Imagine that you're on hold for months, and that's basically what happened next to Mehedi.

Self-represented, he brought a motion for judgment in March 2012.  This was the wrong move; the motion judge concluded that he needed to have the trial judgment set aside first, and suggested he obtain legal advice.  He obtained legal advice recommending that he try to file a motion to lead new evidence before the same trial judge, so he wrote to the judge.  He then received a letter advising that it was inappropriate to communicate with the judge directly, directing him to schedule the motion through the Court Registry.  The scheduling office told him that they didn't know the specific judges' schedules, and suggested that he obtain dates directly from the trial judge's office.  He went back to a lawyer at this point, who contacted the trial judge's assistant in late November 2012 to obtain dates - but unfortunately the trial judge was not sitting in civil court in the foreseeable future.  The assistant suggested bringing a motion to the Superior Court (before a judge to be assigned) to introduce new evidence.

So Mehedi brought a motion in March 2013, which was adjourned twice, eventually being heard in May 2014.  The Superior Court's answer?  Because the matter had gone to the Court of Appeal, the motion should be made at the Court of Appeal level.

So Mehedi followed that direction, and brought a similar motion at the Court of Appeal - heard in July 2014.  The Court's conclusion:  "Regretting the inconvenience Mr. Mehedi has encountered, I conclude that his motion to introduce new evidence should be brought in the Superior Court before a motions judge in the ordinary way."  Again.

The new development is that Mr. Mehedi brought his motion, which was heard by Justice Whitaker in November 2014.  Justice Whitaker dismissed the motion with very brief reasons, finding that he wasn't convinced that the new evidence would have made a difference in the overall disposition of the case.

So...back to the Court of Appeal, which released a new decision in October 2015, allowing the appeal.

While there's some interesting (from a lawyer's perspective) discussion of the appropriate test, the Court of Appeal was of the view that the test was satisfied either way (and that Justice Whitaker's reasons on the issue were not adequate).  The Court of Appeal re-opened the trial and remitted the matter back to the trial judge for consideration of the admissibility and impact of the new evidence.

Discussion

Reopening a trial after a decision has been rendered is highly exceptional:  There's a significant interest in finality, so the courts don't do it lightly.

But this factual situation is very unusual.

On the appeal, there was some debate as to the appropriate test to be applied.  It looks, though, like the Court downplayed the differences between the tests.

The Baetz test looks at whether the new evidence could reasonably have been obtained for trial, along with various other factors such as whether or not the moving party delayed in bringing the motion and the overall fairness to the parties and those who have acted in reliance on the judgment, in the circumstances.

The Sagaz test is often formulated with two questions:
(1)  Could the evidence have reasonably been obtained for use at trial?
(2)  Could the evidence reasonably have affected the outcome of the trial?

However, there are other comments in the Sagaz decision which allude to general fairness principles, as well as specific concerns about reliability of the evidence.  The Court of Appeal appears to question how much of a difference there really is between the two tests at all.

And, either way, it does indeed seem that the test is made out:  The new evidence was released by a third party after the hearing of the appeal, so it certainly wasn't available to Mehedi.  It certainly could have affected the outcome of the trial, which hinged in large part on the trial judge regarding it as "unrealistic and unreasonable" that the defendants might have made the promises which they were alleged to make; the trial judge would have had cause to rethink that conclusion if he saw this video evidence of them making similar representations to others.

And in terms of the general fairness issues, the delays were not Mehedi's fault; he began seeking this relief immediately when the evidence became available, and a very short period of time after the original appeal.

Interestingly, the Court of Appeal referred to the Irving Shipbuilding Inc. v. Schmidt case (where the employer improperly obtained an Anton Pillar Order against an employee, and proceeded to ransack the employee's home) as a precedent for the test.  If you'll recall my commentary on the motion to introduce fresh evidence in Schmidt, I referred to the Mehedi fact pattern as an "excellent example" of a case where the evidence couldn't have been available at the hearing.

Lessons Learned

I have a great deal of sympathy for the ordeal that the system put Mr. Mehedi through.  It's hard to excuse the different courts disagreeing as to the correct procedure; with increasing numbers of self-represented litigants trying to access the legal process, it's hard to excuse a process so complicated that the courts themselves can't parse it.

That being said, it may have been much smoother had Mr. Mehedi had the assistance of counsel throughout.  More thorough legal submissions to Justice Whitaker may have made a difference, eliminating the need for this appeal.  A lawyer might have been better-positioned to convince the Superior Court, on the first attempt at the motion, that it had jurisdiction to hear the motion notwithstanding the earlier appeal.  (Whenever you're seeking unusual relief at court, you're likely to hear the question, "Where do I draw the jurisdiction to grant the relief you're seeking?"  If you can't answer that question - and sometimes it's a very legally sophisticated question - then you're in trouble.)

Better advice, earlier, would certainly have prevented him from bringing the doomed motion for judgment without first moving to admit the new evidence.

There are times when lawyers and judges can legitimately disagree amongst themselves as to how an issue should move forward.  If lawyers always agreed on everything, we wouldn't need judges.  If judges always agreed on everything, we wouldn't need appeals.  As a lawyer, sometimes I have to make a decision on process, and then I have to defend that choice.  In the absence of a cogent justification for a procedural decision, it's easier for an adjudicator to say "You chose...poorly" and dismiss the proceeding than it is for the adjudicator to find a way to grant the relief.

Consider my recent post about Finney v. Cepovski, where the Landlord Tenant Board said (to paraphrase) "We can't award damages for utilities", so the landlord went to the Small Claims Court instead, which said "They were wrong; that process was the right one, and so the court can't help you."  At the LTB, I would have strenuously argued about jurisdiction, and may well have caused the adjudicator to think twice about declining to award damages.  Coming out of the unsuccessful LTB hearing, I would have suggested judicial review at the Divisional Court instead of a Small Claims Court action (which would have been the better avenue).  But even at the Small Claims Court, I'd have had arguments up my sleeve to try to convince the Deputy Judge to take jurisdiction anyways.

Sometimes, even with a lawyer, you still get locked out.  But it's less likely.  You're more likely to choose an available course of action in the first place with good legal advice, and more likely to be able to convince the applicable adjudicator that, in fact, the course you have chosen is the correct one.

*****

This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation.  If you need legal assistance, please contact him for information on available services and billing.

Tuesday, December 15, 2015

Long-Service Employee Signs Fixed Term Contract - And Regrets It

Brent Riskie worked for Sony Canada since 1989 - he was presumably around 19 or 20 when he started.  As of earlier this year, he had a Toronto-based management position.

Last year, he wanted to move to Ottawa for family reasons, and asked the employer to accommodate such a move, that he would largely work from his new home and travel to Toronto on an as-needed basis.

The employer was reluctant.  Riskie, and his immediate supervisor, pressed the matter.  Eventually, Sony agreed to do so, but only on a trial basis, and insisted that he sign a fixed-term contract in order to do so.  While negotiations were still ongoing, he completed his move.  The contract was signed July 28, 2014, with an expiration date of March 31, 2015.

His department went through a restructure in early 2015, and on February 18, 2015, he was advised that his contract would not be renewed.  He received statutory minimum notice and severance payments - approximately 7 months.

It sounds like he likely would have been restructured out regardless of the move, and probably would have been entitled to somewhere close to two years of pay in lieu of notice.  Instead...

Recently, Justice Dunphy upheld the fixed term contract, and denied him further recovery.

The Issues

The problem was obvious:  The employer was ostensibly entitled to just...not renew the contract.  So Riskie had to find a way around that, argue that the fixed term provision was of no force and effect.

To that end, he made a few arguments.  One was 'duress' - the framework is interesting, but this doesn't look like a close case for it.  The fact that he might have felt obligated by his personal circumstances to move and accept whatever terms were put to him...doesn't affect Sony's entitlement to insist on those terms.

Two other arguments were stronger, though.  One was that the contract was unenforceable for lack of consideration, and the other was an ESA compliance issue.

Lack of Consideration

As I've noted many times before on this blog, an employment contract needs to give an employee something 'new'.  If you hire me, and then ask me to sign a contract after you've hired me, then the question is 'what am I getting out of this contract that I don't already have'?  In the absence of 'fresh consideration', the contract fails the test for enforceable promises at common law.

So the interesting quirk here is that he actually moved before the new contract was signed.  So it looks an awful lot like the 'fresh consideration' cases:  He's doing the job from Ottawa, and now he's signing a contract which...ahem...entitles him to work from Ottawa.

It's a compelling argument, at face value.

On the other hand, there's a very strong moral argument going the other way:  He knew, when he made the move, that he was going to be required to sign such a contract, and that the employer wasn't acquiescing to the move without terms on it.

Justice Dunphy focuses on that, and characterizes the 'fresh consideration' argument as "a technical argument devoid from any real-world substance".  (That's true of a lot of consideration-based arguments.  It's a very technical legal concept.)

At law, it is a fairly straightforward reality that none of that actually matters, if the employer actually did acquiesce to his terms and allow him to move notwithstanding the absence of a signed contract.

The saving grace in Justice Dunphy's reasoning on the point is this:  "it was a case of “take it or return to Toronto”".

It there's the evidence to substantiate that understanding, that Sony permitting him to work from Ottawa while negotiations were ongoing was without prejudice, and that they reserved the right to recall him to Toronto if negotiations failed, then Justice Dunphy's conclusion is right.  And I don't know what evidence was before the court - but I don't think that you can take such a reservation as implied from the fact of ongoing negotiations.

ESA Compliance

Here's another interesting one.  There's an early termination clause in the language of the contract, in the same paragraph setting out the term of the agreement, allowing the employer to terminate it on 30 days' notice.

On its face, that was deeply problematic:  A termination clause cannot contract out of the statutory minimums, and for a 26 year employee, there's a minimum notice period of 8 weeks.  (Not to mention statutory severance.)  So this early termination clause was clearly void.

This raises the question of 'severability' - when the court finds that a given provision is void by operation of law, how does that affect the rest of the contract?

There's a conceptual challenge with writing out a small part of a contract:  A contract is agreed to between the parties as a whole.  It has long been said that a court will not rewrite a contract between the parties.

On the other hand, it's fairly compelling to remove the illegal portions of a contract and leave in place the legal portions.

There have been a variety of legal doctrines employed to resolve this tension, which are either limited or controversial.  The "blue pencil" approach has often been used to determine whether or not it is possible to sever language, and how to do so:  Can a fair and coherent contract be left between the parties merely by striking out the problematic language?  By contrast, there's 'notional severance', which allows the court to controversially insert language in order to remove the illegal effect from the contract.

I've very seldom seen the 'blue pencil' approach openly discussed in employment law cases:  It is clear from the seminal Machtinger case from the Supreme Court of Canada that, at minimum, an unenforceable termination clause must be struck in its entirety.  It is incumbent upon an employer to ensure the legality of its contractual language, and the employer cannot turn to the courts to try to fix the contract after the fact.

And the question seldom arises as to how far beyond that unenforceable language we need to do.  Where it has arisen, the cases sometimes involve clear 'severability clauses' guiding the court's interpretation.  For example, in the recent decision in Miller v. Convergys CMG Canada Limited Partnership, the British Columbia Court of Appeal enforced a severability clause which spelled out that the different numbered paragraphs in the agreement were separate promises, and if one was unenforceable, the rest should be left intact.

In the absence of a clear severability clause, the question can be much more difficult.  But it seems to me fairly unusual to do what Justice Dunphy did with Mr. Riskie's contract, striking out the 'early termination' language while leaving the rest of the same paragraph intact.  Was it a separate promise?  Consider for a moment that, had the same severability language from Miller been present in this contract, it would have clearly required the whole paragraph to be struck.

Also consider that a fixed-term contract without an early termination clause can be exceedingly onerous for the parties.  In general terms, and in the context of a 26-year relationship, there are compelling reasons to think that one might have to read a 'fixed term' promise together with a corresponding 'early termination' promise.

Nonetheless, Justice Dunphy regarded them as being "logically and textually independent of each other", and found that they "are not a package that must stand or fall together."  Accordingly, despite the flaws in the early termination language, the fixed term was enforceable.

Lessons to be Learned

There are some very interesting legal issues in this case, dealing with severability and consideration, but the more significant issue is likely practical:  Be careful what you sign.

It's possible that the relocation to Ottawa was so important to Riskie that he would have done it even knowing the consequences.  Maybe he even sought legal advice on the terms, and no doubt would have been advised (a) that the early termination clause was probably not enforceable but (b) that changing from an indefinite-term contract to a fixed-term contract could have an immense impact on his existing rights upon termination.

What Riskie probably didn't anticipate was a restructure unrelated to his own circumstances.  Likely, he was confident that Sony would see that the new arrangement was viable, and that he would be able to continue to carry out his duties effectively.  "I'm not worried about getting fired, because I'm a great employee."  But when a restructure occurred for other reasons, his circumstances - and his contract - put him squarely in the line of fire.

This is why and how I encourage pushback on clauses limiting termination entitlements, particularly for employees in senior roles:  It's not about trying to get that golden parachute; it's about job security, making the employer think twice before deciding to get rid of you as a cost-cutting measure.

*****

This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation.  If you need legal assistance, please contact him for information on available services and billing.