This week, we are bringing you a case from New Brunswick, though the principles of that case are likely universally applicable across Canada. In Abrams v. RTO Asset Management, 2020 NBCA 57, an employee was terminated after three decades of employment on a ‘without cause’ basis. It would later turn out that there was in fact cause for the termination. The employer had not stated that the employee was fired with cause in the termination letter or record of employment, which created liability consequences for the employer in terms of reasonable notice.
Cause for Termination Went Unmentioned in Documentation from Employer
The employee was in his 50’s when he was terminated. He had held the position of regional manager at the time of termination and had only worked for the employer for nearly thirty years. The employer dismissed the employee for, what the motion judge found, was “engaging in a relationship with an employee whom he was obliged to supervise”.
The manager of human resources provided a termination letter to the employee that the Court of Appeal later concluded: “effectuates, in explicit terms, a termination without cause”. The employer asserted, on appeal, that it terminated the employee for cause and only offered to dismiss him without cause if he accepted its offer of a transition package, under which he would have been provided pay in lieu of 3 months’ notice. The employee rejected the transition package and less than two weeks later, he was paid in lieu for four weeks’ notice. The employer then issued a record of employment in which it represented that the employee had been terminated “without cause”. The employee commenced an action in damages for wrongful dismissal a few months later, seeking 28 months’ notice as well as special damages.
The Lower Court Judgment Found for the Employer
In the motion for summary judgment decision, Abrams v RTO Asset Management, 2019 NBQB 129, the motion judge found that the evidence did “establish employee misconduct”. The motion judge went on to say that the employer made decisions based on his feelings for the employee, which had an impact on the employer’s business. The judge then concluded that the employer had cause for dismissing the employee despite the wording of the dismissal documents and granted judgment in favour of the employer.
The Appeal Court Allowed the Employee’s Appeal
The Appeal Court found that the motion judge did not make an error in concluding that there was cause for the employee’s dismissal. This finding was inconsequential though, no matter which termination scenario was accepted. If the employee’s dismissal was effected on a ‘without cause’ basis, the cause was evidently not part of the equation. If the dismissal was made on a ‘with cause’ basis, it was not effected in writing and was therefore legally invalid by virtue of s. 30(2) of the New Brunswick Employment Standards Act, notwithstanding the existence of cause.
The Appeal Court also noted that the motion judge did not expressly find that the employee had been dismissed with cause. However, it was determined that the motion judge did so implicitly, given the nature of the debate between the parties and her focus on just cause, to the exclusion of all other issues.
The Court of Appeal made a crucial determination that the employer had provided the employee with pay in lieu of four weeks’ notice and no such payment would have been made if the dismissal was with cause. Further, the employer issuing a record of employment that explicitly stated that termination was made without cause.
The Court of Appeal found the termination letter provided to the employee to be the most important part of the evidence in the determination that the employee was dismissed without cause. The letter unequivocally stated that the employment was terminated, effective immediately, on a without cause basis.
The Court of Appeal therefore allowed the employee’s appeal and awarded him 24 months of reasonable notice as well as special damages.
Calculating Reasonable Notice – Why the Employee was Entitled to 24 Months’ Reasonable Notice
The Appeal Court, in awarding the employee 24 months of reasonable notice, took the following factors into consideration:
- Length of service;
- Availability of suitable alternate employment; and
- The non-competition clause
The Court of Appeal then turned its mind to a jurisprudence driven range of reasonable notice. The court found that a range of 17 to 28 months, for long-term employees in their 50s, with upward movement within that range traceable to a combination of more advanced age and longer service, was warranted.
This case should stand as a warning to employers. If there is sufficient cause for dismissal, this must be made explicit in the termination documents. Failure to document a ‘for cause’ termination can, and likely will, create liability on the employer’s part to provide the employee with pay in lieu of notice.
For advice on these and other employment or labour law matters, contact the offices of Toronto employment lawyers Grosman Gale Fletcher Hopkins LLP. We regularly advise workplace parties on a wide range of legal workplace issues. Contact us online or by phone at 416-364-9599 to schedule a consultation.
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