Canadian Employment Law Today

Cases and Trends Cases and Trends Canadian HR Reporter, 2020 6 | | May 20, 2020 May 20, 2020 company called SAGE Renegade and started redirecting much of SAGE Medica's business to it. He told customers it was an "internal ex- pansion" and "rebranding" of SAGE Medica's business. Nothing initially changed for Dr. Halupa, as her job duties and company equipment continued as before. She continued to be paid by SAGE Medica until November 2018, when SAGE Renegade started issuing her pay cheques instead. Salary, hours reduced On Feb. 1, 2019, Borlinha informed Dr. Ha- lupa that, on Feb. 15, her salary would be re- duced by nearly 14 per cent and her position would be changed to "four days per week or 80 per cent capacity." This would be in effect until April 30 "in hopes that SAGE can bring you up to 100 per cent capacity" at that time. Brolinha also said they would review the ar- rangement in one month's time but reassured her that she would be an important part of the rebranded organization and she was "lucky" to have been "chosen" to continue with SAGE Renegade. This reduction in Dr. Halupa's hours and salary came after nearly a year of frequently be- ing paid late — usually between nine and 56 days late. This turned out to be a harbinger of things to come for Dr. Halupa, as when the cal- endar turned to Feb. 15 no pay was forthcom- ing from SAGE Renegade. Instead, Borlinha provided her with a record of employment (ROE) indicating termination from SAGE Medica on that date. Borlinha then gave Dr. Halupa an invoice for services she was to provide to SAGE Ren- egade over the next two months, at which point the company would pay her. The con- ditions of employment and job duties re- mained the same. Dr. Halupa continued to work under the terms of the invoice until April 10, when Bor- linha advised her that April 15 would be her last day of work. She didn't receive a formal termination letter or additional pay in lieu of notice. Dr. Halupa filed a claim for wrongful termi- nation seeking compensation for lost wages, pay in lieu of notice, vacation pay and damages for bad-faith conduct by SAGE Medica, SAGE Renegade and Borlinha. She reported that she felt betrayed and manipulated, leading to nightmares, anxiety and depression. The court first addressed the issue of Dr. Ha- lupa's period of employment. Despite the fact that the source of Dr. Halupa's pay cheques changed, the court found that SAGE Medica and SAGE Renegade were common employ- ers for her. Both corporations were controlled by Borlinha and Dr. Halupa's job duties and terms of employment remained the same. In addition, the movement of business from SAGE Medica to SAGE Renegade was presented to customers as rebranding and an internal move, so Dr. Halupa's employment was con- tinuous between them and essentially an un- broken employment relationship, the court said. In addition, the court found that the issu- ance of an ROE and then an invoice for future services on Feb. 1, 2019 was an attempt to "re- characterize Dr. Halupa's employment as an independent contractor relationship." How- ever, there was no real termination of her full- time employment and her service time went to April 15. Common employers Since Dr. Halupa's service with both SAGE companies was uninterrupted and there was no cause for her termination, the court de- termined she was wrongfully dismissed and entitled to damages representing pay in lieu of notice. It considered her specialized duties with SAGE and the fact she supervised a team of staff, as well as the fact she was "highly- educational and in a specialized field" — not- ing that she had been unable to find similar employment more than two months after her termination — and her relatively short five years of service. The court concluded that Dr. Halupa was entitled to eight months' notice of termination. The court also found that the two compa- nies treated Dr. Halupa "in an unduly insensi- tive manner in a myriad of ways leading up to her termination, including: missing or late pay cheques; trying to reduce her salary and hours; filing an ROE without explanation and ex- pecting her to still work; trying to unilaterally change the employment relationship without notice; terminating her employment without notice after reassuring her that her job was safe." This warranted aggravated and punitive damages, said the court. The court also noted that SAGE Renegade told Dr. Halupa that it would be reducing her salary effective April 15, but it failed to pay her on that date and terminated her employment instead. As a result, her salary for the purpos- es of calculating reasonable notice damages should be her regular salary before the April 1 notification, said the court. As for liability, the court determined that Borlinha personally shared liability for dam- ages with the two companies, as he was not just implicated but responsible for the bad- faith conduct in the manner of Dr. Halupa's dismissal. Borlinha also benefitted personally from mistreating her, as trying to reduce her pay and not providing her with notice or pay in lieu of notice helped his companies, of which he was the sole director. SAGE Medica, SAGE Renegade and Paul Borlinha were jointly ordered to pay Dr. Ha- lupa eight months' salary in lieu of reasonable notice of dismissal, unpaid wages for the two weeks in February for which she wasn't paid plus vacation pay, aggravated damages of $30,000, punitive damages of $25,000 and le- gal costs. The total award owing to Dr. Halupa was $147,399.30. For more information, see: • Halupa v. Sagemedica Inc., 2019 ONSC 7411 (Ont. S.C.J.). « from SUDDEN PAY CUT on page 1 Job duties didn't change under new corporation CREDIT: ANDREYPOPOV iSTOCK

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