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Contract Requiring Ex-Employee to Compensate Former Employer for Competing Ruled Enforceable in British Columbia

A recent decision of the B.C. Court of Appeal has endorsed a novel approach to post-employment competition by upholding an employment contract whereby the employee was required to compensate the employer if she competed soon after her employment ended. In Rhebergen v. Creston Veterinary Clinic Ltd., 2014 BCCA 97, a newly licensed veterinarian signed a three-year employment contract with an established veterinarian clinic in a rural community. Under the contract, the veterinarian was required to pay her employer a set amount if she set up a practice in the same area within three years of the employment contract being terminated. The veterinarian left the clinic after fourteen months and soon established a mobile veterinary practice in the area. The veterinarian went to court to have the payment clause declared unenforceable.

The Court recognized that there were two approaches in establishing whether such a clause was a restraint of trade, either a “functional” approach, which asks whether the clause attempts to, or effectively does, restrain trade, or a “formalist” approach, in which the clause must be structured as a prohibition against competition, which does not include “mere disincentives”. The formalist approach is more commonly used in Ontario, but the B.C. Court of Appeal adopted the functional approach in its analysis, and concluded that the clause was, in fact, a restraint of trade.

Notwithstanding that the clause was found to be a restraint of trade, the Court held that the clause was not a penalty because it reasonably compensated the employer for the costs incurred in training the new veterinarian. The Court split on whether the clause was ambiguous and therefore unenforceable. A non-competition clause is ambiguous if it is not clear as to activity, time or geography. The majority of the Court concluded that there was only one reasonable interpretation to the clause and it was not ambiguous. The clause was therefore enforceable by the employer, and the veterinarian was required to pay the amounts under the contract to her former employer as a result of her competition.

This case demonstrates the continually evolving nature of post-employment covenants, and the fact that courts will give employers some latitude to develop contractual “tools” to provide protection (or at least give financial compensation) in the event a former employee engages in competition soon after employment. The fact that the Court of Appeal was not unanimous demonstrates, however, that this is a complex area requiring careful drafting of contractual terms.

A copy of the B.C. Court of Appeal decision can be found here: http://www.courts.gov.bc.ca/jdb-txt/CA/14/00/2014BCCA0097.htm

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Contract Requiring Ex-Employee to Compensate Former Employer for Competing Ruled Enforceable in British Columbia

B.C. Introduces Pooled Registered Pension Plan Legislation

The British Columbia government introduced legislation on February 28, 2013 that once passed will make Pooled Registered Pension Plans (“PRPPs”) available to employees in the province. Features of the PRPP structure that may offer significant appeal to B.C. employers include:

  • Reduced administrative requirements – PRPPs will not be administered by B.C. employers, but rather by licensed entities, such as insurance companies
  • Low-costs realized through the pooled nature of the investments and central administration
  • Employer choices – PRPPs are not mandatory for B.C. employers, and once a PRPP is offered employer contributions are optional
  • Tax advantages for employers that are not available for other forms of workplace retirement savings plans
  • Employers not exposed to underfunding issues – the PRPP will function on a defined contribution basis, which limits employers’ funding obligations
  • Recruitment and retention advantages of providing a new option for retirement savings

The PRPP legislation is aimed to enhance pension coverage in B.C., where according to the Ministry of Finance News Release, approximately two-thirds of the workforce has no access to a registered pension plan.

Information about the federal government’s rules regarding PRPPs can be found here.

FMC will continue to monitor the legislation and provide updates on the implementation of PRPPs in British Columbia and across Canada. For more information please contact Colin Galinski at 604-443-7133 or colin.galinski@fmc-law.com.

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B.C. Introduces Pooled Registered Pension Plan Legislation

Denunciation, Deterrence and Retribution: Jury Awards Dismissed Employee $573,000 in Punitive Damages

The Vancouver Sun has reported that a British Columbia jury recently awarded employee Larry Higginson over half a million dollars in punitive damages, on top of a $236,000 award for wrongful dismissal, taking damages flowing from a wrongful dismissal to new heights in Higginson v. Babine Forest Products Ltd. and Hampton Lumber Mills Inc.

The Jury decision is not reported, however according to reports, Mr. Higginson had been employed for 34 years with the Defendant, Babine Forest Products Ltd., until he was dismissed on October 14, 2009, apparently for just cause. The employer alleged that Mr. Higginson failed to perform his duties as a manager. In response, Mr. Higginson alleged that cause had not been established and that the employer had set him up for termination of employment, had made his working environment miserable and had alleged cause to avoid the obligation to pay notice of termination of employment to long-term employees.

The Prince George B.C. jury found that the employer did not have cause to terminate his employment, and awarded damages in excess of $800,000 as a result of the wrongful dismissal.

Such a large punitive damages award has not been seen since the 2008 Ontario Superior Court of Justice awarded $500,000 to a wrongfully dismissed employee in Keays v. Honda Canada Inc.  However, in Keays, the Supreme Court of Canada (2008 SCC 39) overturned the punitive damages award on appeal.

A Notice of Appeal was filed in Higginson on July 18, 2012.

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Denunciation, Deterrence and Retribution: Jury Awards Dismissed Employee $573,000 in Punitive Damages

Get your jab! – British Columbia Government Imposes Flu Vaccination Requirement for Health Workers

This article originally appeared on occupationalhealthandsafetylaw.com.

In hopes of driving up immunization rates among BC health care workers, the Government of British Columbia is imposing strict flu-season requirements on workers who come into contact with patients at publicly-funded health care facilities or in the community. Starting with the upcoming flu season, applicable health care workers (including health-authority staff, physicians and residents, volunteers, students, contractors and vendors) will be required to either obtain a seasonal influenza vaccine or to generally don a mask at all times during the flu season.

B.C. Provincial Health Officer Dr. Perry Kendall, who recommended these measures to the Provincial Government, wrote that less than 50 percent of health care workers are immunized against influenza each year, despite being in contact with high risk populations such as seniors, pregnant women, young children, and the immuno-compromised. Citing evidence from long-term care facilities that health care worker vaccinations results in diminished illness and fewer deaths each flu season, the physician argued that “[g]etting the flu shot should be considered standard patient safety practice for all health-care workers who come into contact with patients – as important as following effective hand hygiene practices, staying home when ill or wearing a mask in the operating room.” British Columbia will be the first jurisdiction in Canada to implement such a policy.

According to media outlets, the unions representing health care workers are generally supportive of vaccinations, although the British Columbia Nurses Union has said it will not yet formally respond to the directive and has rather referred to its October 2011 Press Release on the issue where it stated that vaccinations should be promoted through education, rather than through a punitive approach by the employer.

A Government of British Columbia “Backgrounder”, cites influenza as causing the most deaths among vaccine-preventable diseases.

According to Dr. Kendall, in U.S. jurisdictions where similar requirements have been imposed, health care worker immunizations levels have reached approximately 95 percent.

The Government’s Press Release, Dr. Kendall’s Opinion Editorial and the BCNU Press Release on Influenza vaccinations can be accessed at:

http://www.gov.bc.ca/health/

http://www.newsroom.gov.bc.ca/ministries/health/factsheets/opinion-editorial-flu-shots-save-lives-protect-patients.html

https://www.bcnu.org/News/news.aspx?page=Bulletins_Oct 21, 2011

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Get your jab! – British Columbia Government Imposes Flu Vaccination Requirement for Health Workers

You Quit: Employee’s Claim of Constructive Dismissal Fails

On August 2, 2012, the British Columbia Supreme Court issued its judgment in the case of Danielisz v. Hercules Forwarding Inc. (2012 BCSC 1155). In Danielisz, the plaintiff was a customs broker with the defendant employer. At the time of her alleged constructive dismissal, the plaintiff was a Director of the employer (as the employer apparently required a licensed customs broker on its Board of Directors) and was manager of the customs department.

The employer’s office staff had a history of dissension and interpersonal difficulties. The Plaintiff claimed that she tried to overcome these difficulties, but that the other staff, including her subordinates, had ganged-up on her. She also claimed that her employer had undermined her authority by favouring lighter discipline for a staff member than the Plaintiff had originally imposed.

After a meeting at which the employer had tried to resolve some of the conflicts in the workplace, the Plaintiff commenced a sick leave which she claimed was caused by workplace stress. The Plaintiff ultimately went on Employment Insurance sickness benefits, attempted to make a claim with respect to the workplace stress to WorkSafeBC, and filed a complaint of constructive dismissal under section 66 of the Employment Standards Act. The workers’ compensation claim was denied, and the Plaintiff withdrew her complaint under the Employment Standards Act at the mediation.

Shortly after the mediation, the Plaintiff relocated to Kelowna, British Columbia, enrolled her son in school, obtained new employment and advised a co-worker by email that she was unwilling to return to the Defendant employer. However, in her communications with the defendant employer, the Plaintiff asserted that she would be willing to return to work with the Defendant at some point after her concerns with the workplace were resolved. In response, the Defendant employer asserted that the Plaintiff, by filing her complaint under the Employment Standards Act, had repudiated her employment agreement.  The employer proceeded to replace the Plaintiff. The Plaintiff then filed her action claiming damages for constructive dismissal.

Discussing the elements of the Plaintiff’s claim, the Court noted that whether or not a constructive dismissal has occurred depends on an objective assessment of all the evidence, rather than the employee’s subjective view of events. Further, the court held that where the allegations of constructive dismissal relate to claims of undermined authority or the behaviour of co-workers, the Plaintiff must show that the conduct in the workplace was such that a reasonable person in the circumstances should not be expected to persevere in the employment. Not every criticism by an employer or dispute among co-workers will sufficiently poison the work environment such that the employment relationship is undermined.

Applying these principles to the case at bar, the Court declined to find that the Plaintiff had been constructively dismissed. The Court found that the Plaintiff had been less than forthright about her own contributions to the negative work environment (finding that the “Plaintiff was engaged in ‘poisoning the work environment’ as much as she was ‘the targeted employee’”), and further, that the employer had not undermined her authority by imposing a lesser discipline on one of her subordinates. The evidence showed that although the Plaintiff’s immediate supervisor was an ineffective manager, he still reinforced her authority after this particular event.

The bottom line, to the Court, was that despite the unpleasant atmosphere, the work was getting done, the Plaintiff was not being forced to bear more than could be reasonably expected, and the Plaintiff had done little to try and improve the situation. Dismissing the Plaintiff’s claim, the Court found that the Plaintiff’s claim to WorkSafeBC and the complaint under the Employment Standards Act, combined with her relocation and new employment and conflicts in her statements to her employer and others, suggested that she had no intention of returning to work, and had rather hoped to extract some form of compensation from her employer. All of this, the Court held, amounted to a repudiation of the terms of her employment.  Her constructive dismissal claim was dismissed.

Danielisz v. Hercules Forwarding Inc., 2012 BCSC 1155 (CanLII)

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You Quit: Employee’s Claim of Constructive Dismissal Fails

Wither ‘Big Brother’? B.C. Privacy Commissioner Reins-in Government of British Columbia Criminal Record Checks

In keeping with her stance on overly-invasive employee background checks, British Columbia’s Information and Privacy Commissioner, Elizabeth Denham, has issued her findings and recommendations with respect to the B.C. Government’s policies, as an employer, for employee criminal record checks.

Finding that the government’s polices resulted in the unnecessary or overbroad collection of personal information, the Commissioner issued a number of recommendations aimed at limiting the amount of data collected by the provincial government, as well as the instances in which collection would be justified. The report also contains 16 recommendations for “Best Practices for Public Sector Record Checks”.

A “Best Practices” for private sector employers will be released at a later date.

The Privacy Commissioner’s July 25, 2012 Report can be accessed at: http://www.oipc.bc.ca/orders/investigation_reports/InvestigationReportF12-03.pdf

The Privacy Commissioner’s guidelines on social media background checks can be accessed at:

http://www.oipc.bc.ca/pdfs/private/guidelines-socialmediabackgroundchecks.pdf

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Wither ‘Big Brother’? B.C. Privacy Commissioner Reins-in Government of British Columbia Criminal Record Checks

Being Kicked in the Behind is No Laughing Matter: Employee’s Exaggerated Account of Workplace Altercation not Grounds for Summary Dismissal

Teresa Scholer was a fifty-five year old employee working in an entry-level position with the defendant employer. At the time of the termination of her employment, she had been working with the employer for approximately nine or ten months. In early 2010, Ms. Scholer was attending to her duties when she had an exchange with a co-worker. Inexplicably, after the exchange, her co-worker kicked Ms. Scholer in the buttocks. This event was captured by the employer’s video surveillance. The video surveillance also captured Ms. Scholer attempting to return the kick.

It was not clear from the video whether this was horseplay or something more aggressive. However, Ms. Scholer’s position was that she had been assaulted, and she complained to the employer that she was considering seeking criminal charges against her co-worker. She also complained about an earlier incident involving the same co-worker and about the fact that the co-worker had been scheduled for more shifts.

The employer viewed the surveillance, and considered that Ms. Scholer had not been honest about the incident, and had exaggerated it. Ms. Scholer was informed of the employer’s view of her description of events, but before Ms. Scholer was given an opportunity to review the surveillance, the employer terminated her employment, allegedly because she was difficult. Ms. Scholer was paid statutory notice of termination of employment, but the employer nevertheless insisted at trial that the termination had been for just cause.

The B.C. Provincial Court found that the employer had not established just cause. In particular, the Court found the employer’s focus on Ms. Scholer’s description of the incident, rather than the fact that she had been kicked in the buttocks, perplexing.  In all, the Court found that Ms. Scholer’s inaccurate description of the incident was neither in and of itself just cause for dismissal, nor was it a culminating incident that would justify the termination of her employment. There was no evidence that prior to her termination Ms. Scholer was aware that her job was in jeopardy. Finding that she was wrongfully dismissed, the Court assessed a notice period of four weeks given her particular circumstances including her short service.

Scholer v. Hart Drug Mart Ltd., 2012 BCPC 220 (CanLII)

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Being Kicked in the Behind is No Laughing Matter: Employee’s Exaggerated Account of Workplace Altercation not Grounds for Summary Dismissal

Human Rights Tribunal Has No Jurisdiction to Hear Equity Partner’s Human Rights Complaint in British Columbia

 The British Columbia Court of Appeal has unanimously held that the British Columbia Human Rights Tribunal did not have jurisdiction under the BC Human Rights Code to hear an age discrimination complaint filed by a lawyer against a national law firm – a limited liability partnership – in which he was an equity partner.

As part of the law firm’s partnership agreement, there was a mandatory retirement age of 65. The partner filed a human rights complaint on the basis that he was discriminated against by the partnership on the basis of age. The Court of Appeal rejected the argument that a partner could be “employed” for the purposes of the BC Human Rights Code and found that there was no “employment” relationship between the law firm and its partner.  As such, the partner could not advance a human rights complaint that he was discriminated against in “employment”.

The Court of Appeal set aside the decision of the Human Rights Tribunal and the BC Supreme Court, both of which had held that the partner was employed, for the purposes of the BC Human Rights Code, and thus was entitled to advance the age discrimination complaint.

A copy of the decision can be found here: http://www.courts.gov.bc.ca/jdb-txt/CA/12/03/2012BCCA0313.htm

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Human Rights Tribunal Has No Jurisdiction to Hear Equity Partner’s Human Rights Complaint in British Columbia

Bill 14 Receives Royal Assent: British Columbia Employees To Receive Workers’ Compensation for Bullying and Harassment

This Post also appears on occupationalhealthandsafetylaw.com.

Bill 14, or the Workers’ Compensation Amendment Act, 2011 received Royal Assent on May 31, 2012. Among other things, the Act expressly addresses bullying and harassment, and amends section 5.1 of the Workers’ Compensation Act. Section 5.1 currently requires that, in order to receive workers compensation benefits for a mental disorder, the mental disorder must have been an acute reaction to an event in the workplace. Come July 1, 2012, an employee will have a compensable claim for mental stress resulting from: traumatic events in the workplace; a significant work-related stressor; or a cumulative series of significant work-related stressors.

WorkSafeBC, the entity tasked with the administration and implementation of the Workers’ Compensation Act, must bring its Policies (which are applied by the Officers of the Workers’ Compensation Board in the course of adjudicating claims) into line with these changes to Section 5.1.

To this end, WorkSafeBC’s Policy and Regulation Division has developed a draft Policy which addresses the changes to the way claims of mental disorder are adjudicated. The Discussion Paper accompanying the draft Policy identifies the challenges of adjudicating claims of gradual onset stress, and notes the lack of experience with such claims at the Workers’ Compensation Board. However, the Policy, among other things, attempts to put some limits on the stress claims that may be advanced by employees by requiring that the stressor complained of must exceed the intensity or duration expected of the normal pressures associated with the workplace, and excludes interpersonal conflicts to the extent those conflicts do not include threatening or abusive behaviour such as bullying or harassment. Regardless however, it appears that Officers of the Board will retain a fair bit of discretion as to what stressors will, and will not, be accepted in the context of the new Section 5.1 and Policy, and employers can expect that the bounds of this discretion will be the subject of challenge at at least the Board and the Workers’ Compensation Appeal Tribunal.

In contrast to British Columbia’s new and broad approach to claims of mental disorder, Ontario, Newfoundland and Labrador, Nova Scotia, Prince Edward Island, New Brunswick and Manitoba have all implemented legislation which limits an employee’s ability to claim compensation for gradual onset stress.

WorkSafeBC estimates that the acceptance of claims under the new Section 5.1 will result in the acceptance of an additional 300 wage-loss claims annually, with an estimated cost impact of $18 to $20 million dollars.

WorkSafeBC is currently accepting stakeholder feedback on the proposed new Policy until June 15, 2012. The Discussion Paper and draft Policy can be accessed at: http://www.worksafebc.com/regulation_and_policy/policy_consultation/assets/pdf/Bill14/Bill14MentalDisorder.pdf

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Bill 14 Receives Royal Assent: British Columbia Employees To Receive Workers’ Compensation for Bullying and Harassment

Bill 44: British Columbia’s Alternative to Court Proceedings

In early May 2012 the British Columbia Legislature introduced the Civil Resolution Tribunal Act, creating a new adjudicative tribunal with jurisdiction to hear and decide some claims that are currently heard by the B.C. Courts.  The Act has now received Royal Assent and will come into force by regulation.

When the Act comes into force, the Tribunal will be structured to provide an alternative to traditional dispute resolution processes, such as the B.C. Provincial Court’s small claims division.  In the words of the Ministry of Justice, the Tribunal “will be structured to encourage people to use a broad range of non-litigation based dispute resolution tools to resolve their disputes as early as possible, while still preserving adjudication as a valued last resort.”

These non-litigation based dispute resolution tools include an on-line dispute resolution process and an initial case management phase in which the parties may seek a negotiated resolution.  Of particular note are Sections 19, 25 and 29 of the Act, which allow for the use of electronic communication tools in conducting all or part of a tribunal proceeding or facilitated dispute resolution process, and Section 20 which prohibits parties from being represented by legal counsel subject to certain exceptions.

Currently the Act applies only to strata property disputes and some small claims matters. It remains to be seen whether the Tribunal’s jurisdiction will increase over time.

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Bill 44: British Columbia’s Alternative to Court Proceedings

It’s Official: Family Day Holiday Coming to B.C. in 2013

Bill 53, or the Family Day Act passed its third reading and received Royal Assent on May 31, 2012. The Family Day Act creates a new statutory holiday for British Columbia employees. On May 28, the Government of British Columbia announced that Family Day will take place on the 2nd Monday of February in each year starting 2013.

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It’s Official: Family Day Holiday Coming to B.C. in 2013

British Columbia says bulling and harassment “are not acceptable at any level” with Bill 14

The British Columbia legislature recently tabled amendments to Bill 14—the WORKERS COMPENSATION AMENDMENT ACT, 2011—to address bullying and harassment in the workplace.  The amendments to Bill 14, among other things, expand workers’ compensation to expressly address mental disorders caused by significant work-related stressors such as bullying and harassment.  In addition, WorkSafeBC, the entity tasked with the administration of the Workers’ Compensation Act, R.S.B.C. 1996 c. 492, will, in consultation with stakeholders, be amending and updating its existing workplace violence policies and procedures to deal specifically with claims of bullying and harassment.  It is anticipated that these amendments will include a requirement for employers to implement formal prevention plans.  Bill 14 had its second reading in the legislature on May 3 and is not yet law.

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British Columbia says bulling and harassment “are not acceptable at any level” with Bill 14

Proposed New Limitation Period in British Columbia Announced

Bill 34 has been introduced in the British Columbia legislature to establish, for most claims, a basic limitation period of 2 years from the date of discovery of the claim. Currently wrongful dismissal claims in B.C. have a 6 year limitation period.

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Proposed New Limitation Period in British Columbia Announced

Minimum wage goes up in British Columbia

The general minimum wage in British Columbia will be increasing from $9.50 per hour to $10.25 per hour on May 1, 2012.

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Minimum wage goes up in British Columbia

Are Pension Benefits Deductible from Damages for Wrongful Dismissal?

The Supreme Court of Canada has granted leave to hear the case of Richard Waterman v. IBM Canada Limited,2011 BCCA 337, on whether employer-funded pension benefits that were paid after an employee’s termination should have been deducted from damages resulting from a wrongful dismissal. Both the British Columbia Supreme Court and Court of Appeal held that pension benefits paid during the notice period were not to be deducted from the damages awarded by the Court.

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Are Pension Benefits Deductible from Damages for Wrongful Dismissal?

Employer’s Changes to Retiree Benefit Coverage Struck Down by B.C. Court

A recent Supreme Court of British Columbia case raises the issue of whether employers may unilaterally change the terms of retiree benefits for already-retired employees.

In Lacey v. Weyerhaeuser Company Limited, five already-retired salaried employees of Weyerhaeuser (and its predecessor company) had a benefits package which included specific retirement benefits coverage paid for by the employer. On January 1, 2010, the employer unilaterally cut its contribution to the cost of their benefits coverage by 50%, and announced that the retirees would be responsible for bearing any future cost increases. The employer stated that these changes were being done to sustain the viability and affordability of the retiree plans and that the employer had the discretion as to whether to provide retirement health benefits.  The five retirees sued.

The affected retirees did not have a written employment agreement setting out what benefits coverage would be provided after retirement.  The Court, after reviewing the company policies and written and oral communications between management and the retirees, concluded that retiree health benefits were intended as a form of deferred compensation and not a gratuitous payment.  Effectively, the employer’s promise to provide the retiree benefits coverage created a contractual obligation to continue to provide that coverage to employees who had already retired. Based on the contractual language in force at the applicable time, the right to make changes to the retirees’ benefits did not extend to changing the terms of an employee’s retirement health coverage after the date of retirement. As such, the retirees were entitled to the extended health benefits coverage as it existed on their date of retirement, without alteration to the scope of coverage, coverage limits or deductibles, and all at the employer’s expense.

A copy of the decision can be found here: http://courts.gov.bc.ca/jdb-txt/SC/12/03/2012BCSC0353.htm. A notice of appeal was filed on April 2, 2012.

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Employer’s Changes to Retiree Benefit Coverage Struck Down by B.C. Court

Employee who Quit During Working Notice Period Still Entitled to Damages

Starting off 2012 with a bang, a unanimous judgment of the British Columbia Court of Appeal found that an employee who quit his employment during a working notice period given by his employer, was nevertheless entitled to damages for wrongful dismissal.

The employee, Mr. Giza, had been working part time for Sechelt School Bus Service Ltd. for approximately five years as a part-time driver. When the business changed hands, Mr. Giza and the new owners of the company butted heads on a number of issues. Ultimately, the employer decided to terminate his employment by leaving a letter in Mr. Giza’s bus purporting to give him five weeks of working notice. Upon finding the letter Mr. Giza left work and did not return.  Mr. Giza sued for wrongful dismissal. Both Mr. Giza and his employer were self-represented at trial.

The Trial Judge decided that although the 5 weeks’ notice given by the employer was not enough, Mr. Giza had effectively given up any right to pay in lieu of notice when he refused to work out the remainder of the notice period given by the employer.

The British Columbia Court of Appeal disagreed.  It held that the employee was entitled to 6 months’ notice – not 5 weeks.  Although the employee had “repudiated” his employment agreement by leaving, that did not deprive him of the damages that had been triggered by the employer’s termination of his employment.

In other words, Mr. Giza did not forfeit his right to damages in lieu of notice of termination of employment that arose from the employer’s failure to provide appropriate notice, and the employer did not forfeit the right to have his services during the period of working notice actually given.

As a result, the Court awarded Mr. Giza six months of pay in lieu of notice, less the five weeks he had refused to work after learning of his termination.

Giza is interesting because it shows that, at least in B.C., employees who leave during the working notice period will still be entitled to damages if the notice given by the employer is not sufficient. 

Giza v. Sechelt School Bus Service Ltd., http://www.canlii.org/en/bc/bcca/doc/2012/2012bcca18/2012bcca18.html

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Employee who Quit During Working Notice Period Still Entitled to Damages