Canadian Employment Law Today

October 16, 2013

Focuses on human resources law from a business perspective, featuring news and cases from the courts, in-depth articles on legal trends and insights from top employment lawyers across Canada.

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CELT Oct 16 2013.qxp:celt 467.qxd 13-10-04 8:58 AM Page 3 CANADIAN EMPLOYMENT LAW TODAY Fired employee's termination provision revised without consent Employee's draft contract signed by minority owner and employee later rejected revised contract from principal owners Contract" which recorded his understanding of terms discussed in the meetAN ALBERTA employer must pay a former ing. It stated he would be the president employee more than $76,000 after termi- of Prestige effective April 1 with a salary nating a contract to which the employee and traveling account, plus a 20 per cent never agreed, the Alberta Court of bonus "on the pre-tax profit of the comQueen's Bench has ruled. pany's fiscal year." Severance pay would David Lovely, 48, had more than 20 be one year's salary as long as he wasn't years in the travel busiterminated "due to illegal ness and had intended to or overtly unethical EMPLOYMENT start a travel business in actions." CONTRACTS Edmonton when he Lovely met with the arrived there in 2006 from owners and their corpothe U.S. On Jan. 13, 2008, he received a rate lawyer on March 13. Lovely pretemporary work permit that allowed him sented his draft contract and to work only for a corporation he incor- negotiations proceeded to amend a few porated himself so he could start his of the terms. Four days later, Bychowski agency. However, in February 2008 he contacted Lovely and told him his colmet with Wally Bychowski, who was one leagues were excited about the project of the principal owners of McDonald & and wanted him to start right away. Bychowski, an Alberta corporation that Lovely agreed as long as an employment ran an insurance brokerage. The owners contract was in place before he started, also had a side business called Prestige so they finalized the agreement over Travel, which provided subsidized travel lunch. On March 20, Lovely brought his as a reward for customers of the broker- draft contract and a job description to age. the brokerage office and met with one of In early March 2008, Lovely had the minority owners of McDonald & another meeting, this time with all four Bychowski, who signed the documents. owners – two principal and two minority Lovely asked the owner to photocopy the -- of McDonald & Bychowski. They were documents on Prestige letterhead to interested in hiring Lovely to run Pres- show immigration officers for the purtige and turn it around from a money- poses of a work permit. losing business to a successful one. In mid-April, the company presented Further discussions were held and Lovely with a draft employment contract the owners asked Lovely to draft a busi- which had changes, including a proviness plan before they negotiated a final sion that the company could terminate agreement. However, Lovely balked at the contract after one year without this, saying that would be a major task notice or cause and no severance would that he would only do if they officially be provided if Lovely had been judged to employed him. Lovely also said it would have failed to meet the overall objectives take two years to make Prestige prof- set out in the contract. Lovely rejected itable, so he needed an employment con- this contract as he didn't agree with the tract that would last at least that long. new severance provision and there was no business plan in place yet and thereEmployee drafted contract fore no business objectives. Lovely drafted a written document Lovely was initially denied a Canaentitled "Prestige Travel Employment dian work permit but was then given one | BY JEFFREY R. SMITH | in May 2008 after he submitted the job description the minority owner had signed. In his subsequent documents and communications, he referred to himself as president of Prestige. His business plan indicated Prestige would not make a profit until the third quarter of 2009. The business plan didn't unfold as expected over the next several months due to various factors. When Prestige's office manager opposed Lovely's plan and Bychowski backed her up, it eliminated any chance of Lovely's business plan reaching its progression milestones. In January 2009, Lovely asked the minority owner for a raise to which he was entitled under his March 20, 2008, contract. However, McDonald & Bychowski did not give him the raise. Terminated under revised contract On March 29, 2009, the two principal owners of McDonald & Bychowski met with Lovely and terminated his employment. The termination letter referred to the April 2008 employment contract – that Lovely rejected – and its severance provision. It stated the business objectives were not met and therefore Lovely would receive no severance pay. Lovely asked them for the severance pay stipulated in the March 20, 2008 contract, but they refused, saying they had no obligation to do so as they hadn't signed it. Lovely sued for the one year's salary he claimed he was entitled to under the contract he had drafted and the minority owner signed on March 20, 2008. McDonald & Bychowski maintained it never agreed to that contract and the one it presented to Lovely the following month was the one in force. The court found McDonald & Published by Canadian HR Reporter, a Thomson Reuters business 2013 Continued on page 6 3

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