Canadian Employment Law Today

6 | September 11, 2019 Cases and Trends Canadian HR Reporter, 2019 However, McGuinty's brother fell ill and wasn't able to continue working. e funeral home was too much for McGuinty to run on his own, so he decided to sell it to another set of brothers, Gary and Steven Eides, who owned a funeral home in a nearby town and a funeral chapel in another town. e sale was completed on Oct. 1, 2012 and included a transitional consulting ser- vices agreement (TCSA) that provided for McGuinty to stay on working as the funeral home's general manager for a period of 10 years until Sept. 30, 2022. It recognized Mc- Guinty as "the key employee" of the busi- ness and he was to be available to the new owners "during normal weekday hours of operation or regularly scheduled evenings and for such lengths of time as may be mutually agreed" including 37.5 hours per week "during weekdays only and excluding evenings unless agreed upon." e TCSA also granted McGuinty ex- penses for a company vehicle and fuel, five per cent commission on prepaid funerals booked before the sale closing when they were paid for and 65 per cent of the "mar- keting allowance" component of "in-house" pre-arranged funeral packages. However, early on into the arrangement, a dispute arose between McGuinty and the Eides brothers over how many hours were to be spent on funeral-related work versus cus- tomer relations, the use of the company ve- hicle and gas card for personal purposes, the length of time for which McGuinty received the five-per-cent commission on prepaid fu- nerals and whether the marketing allowance was for in-house funeral packages McGuinty himself arranged or for all in-house packages. Soon, a lack of trust developed between McGuinty and the new owners, and another employee — who was McGuinty's subor- dinate — was asisgned with tracking the amount of time McGuinty spent in the office. e new owners asked McGuinty to return the company vehicle and reimburse the busi- ness for personal gas charges, which Mc- Guinty believed was a breach of the TCSA. In early September 2013, McGuinty went into the funeral home and removed several personal items. Gary Eides believed he also threw out some files, so he decided to change the locks without advising McGuinty. Medical leave due to work-related stress Shortly thereafter, McGuinty went on medi- cal leave for two weeks, providing a note from his doctor. After a reassessment, Mc- Guinty provided a second note that said he was to be "off work for medical reasons while work issues are resolved." ere was no further contact between McGuinty and the owners until McGuinty was invited back on Oct. 4. However, when he returned, Gary Ei- des said he looked terrible and Steven didn't want him to come back — though Gary later denied this meeting took place. McGuinty remained off work and in late October attended a funeral for his cousin at the funeral home, when he discovered his desk had been moved from a prime location in the office to the basement. e owners claimed the desk had been moved months earlier and was used by a pre-arranged funer- al agent, but McGuinty took it to mean they didn't want him back. McGuinty met with Gary Eides on Dec. 13, 2013 and said he wanted to return to work. Gary Eides said he could return to work if he provided a doctor's note that said it was "appropriate" for him to return. McGuinty denied this meeting took place and never re- turned to work, filing a legal action claiming he was constructively dismissed — requiring him to pay for gas and return the company vehicle along with tracking his hours, limiting commission on prepaid funerals, changing the locks and moving his workstation were all substantial changes in his employment con- tract — and discriminated against because of his medical issues. He also claimed damages for breach of the TCSA and intentional inflic- tion of mental suffering. e Ontario Superior Court of Justice agreed that the company vehicle and gas is- sue was a breach of the TCSA, as not pro- viding those would mean no benefit to Mc- Guinty, the contract didn't specify it was just for business use and the funeral home paid all vehicle expenses for several months before the owners raised the issue. e court agreed that the requirement for McGuinty to pay for his personal gas and ve- hicle was a breach of the TCSA and a signifi- cant change in the employment contract — the cost of a vehicle lease, insurance and gas was about $12,000 to $15,000 per year, which was an effective reduction of salary of 12 per cent. However, when McGuinty objected to it, he didn't step down or raise the issue of breaching the TCSA, he continued working. As a result, he didn't treat the owners' con- duct as a repudiation of the employment con- tract, said the court. e court noted that the five-per-cent com- mission was meant only to be paid during the 10-year term of the TCSA, as the definite end date, the purpose of the commission — incen- tive for McGuinty to preserve the reputation of the business while he still worked there — and the fact the TCSA was a transition agreement made it clear it was only for the specific term of the agreement. In addition, the 65-per-cent marketing allowance wasn't restricted by the language of the agreement, and it made sense to provide an incentive for McGuinty to train employees if it applied to all in-house funeral packages. e court also found that, while McGuinty considered time spent on customer relations outside of the funeral home part of his re- quired hours, the TCSA made it clear he was to be available for work at the funeral home during regular business hours and occasion- ally evenings when agreed upon. Customer relations work outside of the funeral home didn't help with the transition of the business, which was the intention of the agreement. When the owners felt McGuinty wasn't spending enough time in the office, they were entitled to "some assurance that this work commitment was being met" through moni- toring of McGuinty's hours, said the court. Constructive dismissal However, though the funeral home own- ers were entitled to make some of the deci- sions, several of their actions taken together amounted to constructive dismissal: • Improperly terminating McGuinty's use of the company vehicle • Assigning a subordinate employee to track McGuinty's hours, thus undermining his authority • Denying McGuinty commissions to which he was entitled • Changing the locks to the funeral home without notifying McGuinty. Overall, the course of conduct by the new owners of the funeral home would "lead a reasonable person in [McGuinty's] postion to conclude that [the funeral home] no lon- ger intended to be bound by the TCSA." By not returning to work and staying on medi- cal leave "due to depression and anxiety caused by that very conduct," McGuinty accepted the funeral home owners' repu- diation of the employment contract, the court said. e court denied the claim for damages for intentional infliction of mental suffering, as the new owners' conduct stemmed from "an honestly held but mistaken understand- ing of the contractual obligation," particu- larly since they didn't know McGuinty was suffering from work-related stress issues un- til he went on medical leave. For this same reason, there was no discrimination based on disability, said the court. e funeral home was ordered to pay Mc- Guinty for his compensation and benefits for the remaining nine years of the TCSA — $900,000 in salary; $108,000 in vehicle ex- penses; $90,000 in medical benefits; $9,000 for an annual golf membership that was part of the contract; $125,350 in unpaid commis- sions from payment of pre-arranged funer- als; and $41,823.83 in unpaid commissions from pre-arranged in-house funeral pack- ages — for a total award of $1,274,173.83. See McGuinty v. 1845035 Ontario Inc. (McGuinty Funeral Home), 2019 ONSC 4108 (Ont. S.C.J.). « from A SAD ENDING on page 1 Owners didn't intend to be bound by agreement any longer

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