Brian Grosman, Q.C., Senior Partner of the Toronto law firm of Grosman, Grosman & Gale LLP has recently appeared on radio and television where he discussed a number of current issues dealing with "Corporate Loyalty: A Trust Betrayed".

• Does an employer have the right to fire an individual if the employee reveals damaging information about the company?

• Does a corporation have to earn the loyalty of its employees or can it be bought?

• What are the obligations of a loyal employee?

• What are the company's obligations to employees facing mergers and takeovers?

• Is it possible to operate in an honest and ethical way, maintain loyalty and stay competitive and profitable in this era of corporate takeovers and scandals in the marketplace?

Grosman pointed out:
"As more and more legal battles are fought over issues such as conflict of interest and breach of confidentiality, the integrity of corporate management is increasingly subject to public scrutiny." He asks the question, "Has loyalty lost out in the brave new workplace to short-term goals and a desire for quick profit?"

In his ground-breaking book "Corporate Loyalty: A Trust Betrayed" published by Viking Penguin Books Canada Limited, Brian Grosman explores the nature of loyalty in the corporate environment, looking at the issues through the lens of actual case studies. In that book Grosman discusses corporate actions which have been successful in fostering loyalty during difficult times. He also looks at those unsuccessful actions which have resulted in employee alienation and loss of loyalty.

Grosman concludes that:
"Employees and the general public are now demanding ethical behaviour from corporate and political leaders. The time is ripe to develop new approaches, to rediscover the nature of loyalty and to recognize the need for more responsive corporate leadership."

Brian Grosman has been a pioneer in employment and labour law as well as workplace loyalty. He offered new perspectives on this important subject during his recent interviews with Andy Barry of CBC Morningside and on CITYtv (Pulse 24).
 

SYNAGOGUE THAT TERMINATES RABBI'S EMPLOYMENT
ORDERED TO PAY 30 MONTHS SALARY, BENEFITS
AND PUNITIVE DAMAGES BY ONTARIO COURT

Rabbi Ben David is 62 years of age, married with five children. He came to St. Catharines, Ontario, in 1969. In that year he was offered a position by the Congregation B'Nai Israel of St. Catharines to work as a teacher and cantor at the synagogue. At this time he signed an employment agreement. As he progressed from teacher and cantor to eventually becoming Rabbi, he was asked to sign agreements from time to time that related to the term of his employment.

In November of 1994 the Rabbi was given written notice that the congregation would not be renewing the last contract at the expiration of its term which had approximately seven months to run.

The Rabbi was shocked by the termination of his employment because it never occurred to him that any of the many documents that he signed over time could be used to terminate his employment on relatively short notice. He testified that the contracts that he signed that were presented to him from time to time were, according to his belief, related to the amount of remuneration that he would be receiving and never expected that the synagogue would do anything to compromise his position as the Rabbi and spiritual leader of the congregation. Accordingly, when he initiated legal proceedings against Congregation B'Nai Israel it was on the basis that he was an employee with an indefinite term and entitled to reasonable notice. The synagogue relied on the documents that the Rabbi had signed from time to time. The last of those documents indicated that the synagogue was entitled to give him notice that they would not renew what was a relatively short term agreement.

Once the Rabbi commenced legal proceedings against the defendant synagogue, the synagogue, for the first time, alleged that he was terminated for just cause. The allegations for cause came as a complete surprise to the Rabbi because none of these complaints were brought to his attention while he was employed by the defendant synagogue. Quite the contrary, he was provided with a flowing letter of recommendation prior to the termination of his employment. These allegations of cause continued until they were withdrawn shortly before the trial.

The issue before the court was whether these agreements and particularly the last agreement signed by the Rabbi over the term of his employment were legally enforceable. In the event that the agreements were not legally enforceable, what was the Rabbi's entitlement to reasonable notice at common law? What was the Rabbi's damages that he suffered for wrongful dismissal?

Mr. Justice Festeryga, who presided over the trial, reviewed the agreements signed by the Rabbi from the time of his first employment with the synagogue in 1969 to the termination of his employment in 1994. Some of the agreements were for a term of one year, some contained renewal clauses, others did not. There was a lapse of time during the Rabbi's tenure when there was no agreement in force. Then there are agreements for two year terms, some with renewal clauses, some without renewal clauses. Each of these agreements set out the remuneration that the Rabbi would receive over the term of that agreement. Some of these agreements also provided notice periods if the agreement was terminated by the synagogue. In some cases the notice period is set out at six months and in others three months. The last contract purported to be for a term of one year commencing the 1st September, 1994 and concluding on the 31st August, 1995. The termination clause required six months notice and allowed the Rabbi three months notice to relocate.

On November 21, 1994 Ronald S. Williams, Chairman of the Board of Governors wrote to the Rabbi giving him notice that the congregation would not be renewing his contract at the expiration of its present term. That was the first indication the Rabbi had that the congregation would not be renewing his contract and that his employment would be terminated.

The Judge found with regard to all of the agreements that the Rabbi signed that it was never his intention to be employed for a limited term but that he believed that he was merely dealing with adjustments in his salary and benefits. He found that the agreements were presented in a manner which led the Rabbi to believe that these were not important documents to be relied upon. Some of these contracts were signed and others were not. There were times when the Rabbi worked without a contract having been signed. These documents were presented to the Rabbi while he was teaching or while he was otherwise occupied. Mr. Williams, Chairman of the Board and a lawyer presented these agreements to the Rabbi on the basis that this was "the usual sort of thing, not to be taken seriously".

The Rabbi had received during his employment assurances from the board that they wanted him to continue as long as he cared to. This assurance, in the Judge's view, supported the Rabbi's position that it was a long term relationship rather than a series of short term contractual arrangements. The Judge also found that the Rabbi was never told or made specifically aware of the fact that these agreements that he was signing were for a fixed term. This fixed term was never explained to him. The Judge said that the Rabbi had complete trust in his congregation and he believed that he would be dealt with fairly. He further found that the Rabbi had good reason to believe this because of the assurances that had been given to him over time.

The Judge then determined that these agreements were not enforceable.

In light of the fact that the Rabbi had served the congregation in various capacities for 26 years and at the time his employment was terminated he was 59 years of age. He awarded 30 months salary and benefits, less the notice of approximately seven months salary that was provided by the synagogue on the Rabbi's termination.

Then the court went on the determine whether, under these circumstances, the plaintiff Rabbi should be awarded punitive damages. The Judge considered Vorvis v. Insurance Corp. of B.C. (1989), 25 C.C.E.L. 81 (S.C.C.) and Wallace v. United Grain Growers Limited (1997), 36 C.C.E.L. (2d) 1 (S.C.C.), among other leading cases.

After he reviewed the cases he decided that punitive damages ought to be awarded in this case. He condemned the conduct of the defendant synagogue as being cruel, abusive, insolent and hurtful to the plaintiff Rabbi. He went on the say that even though the defendant synagogue provided the Rabbi with a flowing letter extolling the integrity, and religious commitment of the plaintiff Rabbi it nonetheless instructed its counsel to plead justifiable cause and make unfounded allegations against the Rabbi, his integrity and standing in the community. The Judge said that "They were a personal attack on the plaintiff and his family to hurt them. To add to this the defendant dismissed the plaintiff's wife to exacerbate the hurt to the plaintiff." The court fixed punitive damages in the sum of $20,000.

This case not only has awarded one of the longest notice periods ever awarded in Ontario but has made it clear, at least in the case of a long term employee, that an attempt to limit that employee's rights by a series of short term ill-conceived contracts will not limit that employee's recovery and common law entitlement.

The case was heard on November 16, 17 and 18, 1998 in St. Catharines, Ontario. The plaintiff, Joseph Ben David was represented by Brian A. Grosman, Q.C. and John Martin of the Toronto employment law firm of Grosman, Grosman & Gale LLP. The Congregation B'Nai Israel was represented by Messrs. Donegan and Greenspan of St. Catharines. Judgment was released on April 12, 1999.

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