Canadian Employment Law Today

Canadian Employment Law Today | 7 Canadian HR Reporter, a Thomson Reuters business 2019 More Cases « from BAD CONTRACT WORDING on page 1 Employment law blog Canadian Employment Law Today invites you to check out its employment law blog, where editor Jeffrey R. Smith discusses recent cases and developments in employment law. The blog features topics such as GM's legal obligations after its plant closure, privacy in the workplace, and dealing with mental injuries to employees. You can view the blog at www.employmentlawtoday.com. Potential withholding of benefits sunk termination clause Joseph issued the assignments to Cormier on a day-to-day basis and paid her either by the hour or for each project, depending on the particular project. St. Joseph paid Cormier based on weekly invoices she submitted and didn't make any statutory deductions as it considered her an independent contractor. By 1996, Cormier worked full-time hours — 37 to 40 hours per week — during most of the year, with the exception of May and November, which were usually slow months in the advertis- ing industry. During the slow months, she sometimes worked for other companies, but worked solely for St. Joseph for the rest of the year. From 2004 to 2006, she worked exclusively for St. Joseph the entire year. In June 2004, St. Joseph hired Cormier as a full-time employee in the position of wardrobe stylist with a written employ- ment contract. She received an annual sal- ary and the company made all the deduc- tions and payments required for employee compensation. In January 2008, the company promoted Cormier to the position of fashion studio producer, which came with a new employ- ment contract and salary increase. e employment contract included a termina- tion clause that stated St. Joseph could ter- minate her employment without cause for any reason by providing the greater of two weeks' notice or pay in lieu including ben- efits, or the minimum legislative require- ments for notice or pay in lieu of plus twice the amount of severance pay required by employment standards legislation and benefits continuation for the notice period. New position, new employment contract Cormier received another promotion to the position of fashion studio manager in September 2012. is promotion also came with a new employment contract that stat- ed the day she was hired as a full-time em- ployee June 2004 would be considered her start date for calculation of years of service and vacation entitlement. e new contract also included a termination clause that pro- vided for termination without cause with the minimum notice or pay in lieu plus severance pay required by the Ontario Em- ployment Standards Act, 2000. In addition, the clause allowed for the continuance of company benefits during the notice period "subject to the consent of the company's insurers." e clause stated she would have "no other entitlement" outside of the legis- lative minimums indicated and the combi- nation of notice or pay in lieu of would be at the company's discretion. In addition to the new agreement, Cormier had to sign a non-solicitation clause that pro- hibited business with any St. Joseph clients with whom she had direct contact in the past year of her employment for 12 months after termination. A non-competition clause also prohibited her from engaging in a business in Ontario that competes with St. Joseph for six months after her termination. Four years later, in June 2016, St. Joseph informed Cormier that due to a downturn in business, the company was introduc- ing two weeks of additional vacation that would be unpaid in order to save costs. Cormier wasn't happy about this but took the two additional weeks of vacation with- out pay. Accordingly, St. Joseph deducted $125.54 from each of her biweekly pay- cheques to cover the unpaid time off. is practice continued for one year un- til June 1, 2017, when Cormier and many other employees were terminated with- out cause effective Oct. 27 — five months' working notice. St. Joseph explained that the cutbacks were due to the closing of Sears, one of St. Joseph's major clients. Five weeks later, on July 6, St. Joseph in- formed Cormier it was waiving the balance of her working notice and her termination would be effective the next day with a sev- erance package offer. Cormier refused the severance package, so St. Joseph provided her with three weeks' salary and 26 weeks' salary severance pay — double the employ- ment standards requirement for severance pay — with benefits coverage for another three weeks. Cormier, who was 52 years old at the time of her termination, was unsuccess- ful in finding a new job and felt she was hindered by the non-solicitation and non- competition agreements. She sued for wrongful dismissal, claiming damages for 24 months' reasonable notice — for service time dating back to 1994 — loss of bene- fits, reimbursement of the unpaid vacation program, and cellphone allowance during the notice period. e court found that while Cormier had some independence when she first was hired as a contractor by St. Joseph, by 1996 she was working essentially exclusively for the company and "it was her boss." is was characteristic of a dependent contrac- tor relationship, as evidenced by the fact that when St. Joseph officially hired her as an employee in 2004, not much changed in terms of control or exclusivity. As a result, Cormier had 23 years of a workplace rela- tionship with St. Joseph by 2017 and her common law notice entitlement should reflect this, said the court. In addition, the court noted that Corm- ier made efforts to find new employment, but these efforts were hindered by the non- competition and non-solicitation clauses with St. Joseph. ere was no failure to mitigate that should detract from Cormi- er's damage entitlement, said the court. Termination clause unenforceable e court also found that the termination clause in Cormier's employment contract wasn't enforceable, as while it provided for notice equal to the employment standards minimums, it said benefits would only be continued during the notice period if the company's insurers consented. is po- tentially denied certain benefits that were received before termination during the no- tice period, which was contrary to employ- ment standards legislation, said the court. "With respect to the employee benefits, the termination clause therefore provides Ms. Cormier with a lesser right than the rights set out in the Employment Stan- dards Act, 2000 and therefore, the entire termination clause is void," the court said. In addition, the court noted that the On- tario Employment Standards Act, 2000, prohibits employers from making deduc- tions from wages without written autho- rization by the employee or a court order. As a result, the deductions from Cormier's pay made as part of the unpaid vacation program were illegal and Cormier was en- titled to reimbursement for them. e court determined Cormier was entitled to 21 months' reasonable notice. Damages for salary, benefits, unpaid vaca- tion deductions, and cellphone allowance for this period minus amounts already paid left her total damages at $112,863.75. For more information see: • Cormier v. 1772887 Ontario Limited c.o.b. as St. Joseph Communications, 2019 Car- swellOnt 852 (Ont. S.C.J.).

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