Disingenuous Offers Of Re-Employment Leads To Aggravated Damages Against An Employer
The Supreme Court of British Columbia recently released its Reasons for Judgment in Ensign v. Price Alarm Systems (2009) Ltd., 2017 BCSC 2137, where an employer’s multiple, but clearly disingenuous offers to re-employ a terminated long-term employee attracted aggravated damages as well as damages for wrongful termination.
The Details of the Case
The plaintiff, a 12 year employee of Price Alarm Systems, was terminated from his employment and was only provided with 2 months’ working notice. The plaintiff, despite reasonable efforts to find alternative employment was unable to do so and remained unemployed as at the date of the trial, approximately one year later. Before and after the plaintiff commenced the legal action against his former employer, the defendant made three formal offers to re-employ the plaintiff in a different capacity within the company, all of which were refused by the plaintiff.
The plaintiff earned an income of approximately $30,000.00 per year which was comprised of a base salary, commissions, three weeks of paid vacation, a gasoline allowance, extended health and dental benefits and complimentary alarm monitoring from the defendant. The plaintiff was terminated without cause after a determination by the defendant that he was under-performing in his position and concluding that the position was no longer necessary.
Two weeks prior to the conclusion of the plaintiff’s working notice, he retained counsel who sent a formal demand letter to the defendant suggesting that the plaintiff was entitled to an amount representing 14 – 18 months’ notice. The defendant’s lawyer sent a response advising that they were relying on a “missing” employment agreement executed by the plaintiff that limited the required notice to Employment Standards Act minimums, or 8 weeks. Also included in the response to the demand letter was an 18 – page offer of re-employment with the defendant which contained a number of arduous conditions, including, but not limited to:
- a three month probationary period;
- various provisions that were contrary to the Employment Standards Act and/or the Human Rights Code;
- extreme restrictive covenants;
- terms that permitted termination of the plaintiff “for any reason or no reason without cause”; and
- imposition of a commission plan that was “subject to change in the employer’s sole and absolute discretion [which] shall not constitute a constructive dismissal of the [plaintiff’s] employment”.
This offer was rejected and the plaintiff commenced a legal action claiming damages for wrongful termination and for aggravated damages for the defendant’s “high-handed, callous, unduly insensitive and bad faith conduct.” In response, the defendant defended the action claiming that the plaintiff was terminated in accordance with his still “missing” employment agreement and that the plaintiff had failed to mitigate his damages by refusing to accept their offer of re-employment.
Approximately one month later, the defendant sent a further offer of re-employment to the plaintiff which was identical to the original offer except that the three month probationary period had been removed. A third offer was then sent approximately two months later which remained virtually identical with only slight amendment to the termination terms. This offer too was rejected by the plaintiff.
Relying on the Bardal factors as a means of determining reasonable notice, the Court looked at (1) the character of the employment; (2) the length of service; (3) the age of the employee; and (4) the availability of similar employment having regard to the experience, training and qualifications of the employee. Based on these factors, the court awarded the plaintiff with 12 months’ pay in lieu of notice, minus the two months of working notice that he had already been provided. The Court further held that the plaintiff’s rejection of the “offers” of re-employment as presented by the defendant was justified under the circumstances and considering the arduous conditions that the offers by the defendant imposed on the plaintiff’s employment going forward. Additionally, the court accepted the argument that the offers were designed to set up a circumstance whereby the plaintiff was being set up to fail. Additionally, the court accepted that the plaintiff had taken all reasonable steps to find suitable alternative employment but was unable to do so.
The Court relied upon Lau v. Royal Bank of Canada, 2017 BCCA 253 (CanLII) in regard to the plaintiff’s claim for aggravated damages:
 The law respecting aggravated damages in wrongful dismissal cases is well summarized in Vernon, and was recently amplified in Lau v. Royal Bank of Canada, 2017 BCCA 253 (CanLII). The principles include:
- work is one of the most defining features in a person’s life, providing not only a means of financial support but also an important sense of identity, self-worth and emotional well-being;
- hence any involuntary termination of employment can have far-reaching repercussions and can be especially devastating when it is accompanied by acts of bad faith in the manner of discharge;
- employers therefore have an obligation of good faith and fair dealing in the manner of dismissal, the breach of which can, in appropriate cases, warrant an award of compensatory damages for mental distress sustained beyond the “ordinary” injured feelings, emotional upset and psychological impact of termination;
- in order for aggravated damages for mental distress to be awarded in wrongful dismissal cases, there must be a proper and sufficient evidentiary foundation for such an award;
- while proof of a recognized psychiatric illness is not required, and medical evidence is not strictly necessary, there must be at least some reasonably-compelling evidence from the plaintiff and preferably also from other parties such as family members or others concerning the serious and prolonged impact that the manner of termination had upon the plaintiff and his or her mental state;
- at a minimum, in the course of dismissal employers must be candid, reasonable, honest and forthright with the employee and should refrain from conduct that is unfair or in bad faith by being untruthful, misleading or unduly insensitive;
- other conduct that might trigger an award of aggravated damages could include unfounded allegations of improper conduct, unwarranted attacks on reputation, misrepresenting the reason for the termination, improper intent to deprive the employee of entitlements; however
- generally, the courts should be cautious in their awards of damages for mental distress.
The court agreed with the plaintiff’s position that the defendant was “playing games” and making “sham job offers”, which demonstrated a tactic that the defendant was attempting to “bully the plaintiff into dropping his case” instead of simply providing a proper severance package.
As such, the court held that ‘there can be no doubt that this is the type of conduct and impact upon a wrongfully dismissed employee that an award of aggravated damages is designed to address” and awarded the plaintiff $25,000.00 in aggravated damages.
The Lessons to be Learned
This case is demonstrative of the hardline tactics that some employers use in attempting to thwart paying reasonable notice to their terminated employees. When an employer attempts to circumvent the established laws and principals of employment law and what constitutes reasonable notice, they do so at their own peril and risk. Here, beyond having to pay its terminated employee the reasonable notice that it otherwise would have owed, the employer had to pay an additional $25,000.00 in aggravated damages, a value of which constituted almost another years’ notice to the plaintiff, plus significant legal costs owed to the plaintiff and also paid to their own lawyers.