Garreton v. Complete Innovations Inc., 2016 ONSC 1178
DIVISIONAL COURT FILE NO.: 141/15
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
PATTILLO J.
BETWEEN:
MARCELA GARRETON Plaintiff (Respondent)
– and –
COMPLETE INNOVATIONS INC. Defendant (Appellant)
Counsel: Howard I. Markowitz, for the Plaintiff (Respondent) James Jagtoo, for the Defendant (Appellant)
HEARD at Toronto: February 16, 2016
PATTILLO J. (ORALLY)
1This is an appeal by Complete Innovations Inc. (“CI”) from the judgment of Deputy Judge Buie of the Small Claims Court dated February 24, 2015. The Trial Judge held that the plaintiff Marcela Garreton (“Garreton”) was dismissed from her employment from CI without cause and awarded her damages of $25,000 based on five months’ notice.
Grounds
2CI submits that the Trial Judge erred in coming to the determination she did for effectively two reasons:
She erred in concluding that CI did not rely on the employment agreement between the parties and in failing to determine whether the termination provision was void and unenforceable; and
She erred in concluding that CI did not have just cause to terminate Garreton.
Background
3The facts are briefly as follows.
4CI is in the business of providing mobile workforce tracking software for both Canadian and American clients. Following a six month contract, Garreton became a full-time employee of CI on March 11, 2010 as a “trainer” pursuant to a written contract of employment (the “Agreement”). Garreton was terminated for cause without notice on June 12, 2012. At the time she was 43 years old and earning a salary of $63,500 plus 10% bonus and benefits.
5The Agreement provided, among other things, that it could be terminated immediately without notice or payment in lieu thereof for a number of enumerated events including failure to discharge duties to CI and “for cause under common law or statute law or for breach of the terms of the Agreement.”
6The Agreement further provided:
Otherwise Complete Innovations Inc. may at any time terminate this agreement by providing the Employee with (1) one week notice if their duration of continuous employment with the Company is more than 3 months but less than 1 year. (2) weeks prior written notice of intention to terminate if the Employee duration of continuous employment with the Company is more than 1 year but less than (3) years. If the duration of continuous employment with the Company is more than 3 years each additional year will entitle the Employee to (1) one additional week of notice to a maximum of 8 weeks. … Complete Innovations Inc. shall maintain on your behalf your employee benefits for a period of not less than the period required by applicable statute.
7Garreton’s termination resulted from an incident with a co-worker on June 7, 2012. Garreton had purchased bagels for an internal training session she was to conduct. Another employee, who was not part of the training session, after obtaining permission from her supervisor, sought to take a bagel. Garreton asked her to wait until the attendees had got their food. The employee grabbed a bagel and Garreton grabbed her wrist. The employee then told her to “get the F…off!”, took the bagel and left (the “bagel incident”).
8The employee immediately reported Garreton to the CEO, who, after interviewing Garreton, suspended her with pay for two days. The letter advising of the suspension described the incident as “retaliating with physical violence.” It further stated that CI “views the incident noted above as a serious failure to adhere to the policies and procedures of your job.” The letter noted that the “formal disciplinary action” was the suspension with pay for two days. Garreton was told to report back to work on June 12, 2012.
9When Garreton returned to work on June 12, 2012, she was given a letter of termination which relied on the bagel incident and two earlier incidents concerning Garreton’s conduct in the workplace and for which she received warning letters.
10The earlier incidents involved insubordination to a superior and a complaint from a client about Garreton’s attitude during a training session. They were more than a year before the bagel incident.
11At trial, CI did not rely on the enumerated incidents of cause as listed in the termination provision of the Agreement. Rather, it submitted that Garreton breached s.2(1)(3) of Regulation 228/01 of the Employment Standards Act, 2000, S.O. 2000, c. 41 (the “Act”) which provided for “wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.”
The Standard of Review
12The parties agree that the standard of review on appeal is as set out in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 (S.C.C.). On a question of law, it is correctness. On questions of fact and inferences of fact it is palpable and overriding error and on questions of mixed fact and law, the evaluation is on a sliding scale: an error of legal principle apart from fact is correctness whereas the application of facts to correct legal principle is palpable and overriding error.
13Palpable and overriding error means “clearly wrong”, “unreasonable” and “not reasonably supported by the evidence.” See: HL v. Canada (Attorney General), 2005 SCC 25, [2005] 1 S.C.R. 401 at para. 110.
Failure to Rely on the Agreement
14At the outset of the disposition portion of her reasons, the Trial Judge stated at para. 19 that as CI did not choose to rely on the provisions of the Agreement to terminate for cause, it was not necessary to determine whether the Agreement was unenforceable and whether the termination clause was void from the outset.
15CI submits that the failure to consider whether the Agreement was enforceable was an error. Even if the termination was without cause, CI’s position is, it is entitled to rely on the termination provision in the Agreement that limits damages to two weeks’ notice.
16Garreton does not take issue with the submission that the Trial Judge failed to deal with the issue of whether the Agreement and specifically the termination provisions that applied in respect of notice was void and unenforceable. She submits that the termination without cause provision in the Agreement is void and unenforceable because it actually or potentially violates the Act as being contrary to its provisions. Specifically, she relies on the last paragraph of the termination clause and ss.64 and 65 of the Act.
17In my view, the Trial Judge erred in law in failing to deal with the issue of whether the Agreement was enforceable. CI raised as an alternative that if it was not justified in terminating Garreton for cause (which the Trial Judge found), it was entitled to rely on the notice provisions in the Agreement. Those notice provisions, if they apply, limit CI’s liability to two weeks’ pay plus benefits. The issue was raised and argued by the parties at trial. The Trial Judge should have addressed it.
18Section 5 of the Act prohibits the contracting out of the Act. Section 57 of the Act provides for the same notice as the Agreement for an employee like Garreton of more than one year but less than three years employment – two weeks.
19But Garreton argues that the termination provision is contrary to the Act and therefore void and unenforceable in two respects. First, based on the last paragraph of the provision, it offends Garreton’s entitlement under the Act. Further, the provision offends the severance provisions of ss.64 and 65 of the Act and therefore potentially applies to Garreton.
20The last paragraph of the termination provision provides as follows:
The termination provisions set forth above represent all severance pay entitlement, notice of termination or termination pay in lieu thereof, salary, bonuses, automobile allowances, vacation and/or vacation pay and other remuneration and benefits payable or otherwise provided to you in relation to your employment by Complete Innovations Inc. and any preceding employment by any company.
21I do not consider that the above provision affects Garreton’s entitlement at the time of her termination. She received her pay to the date of termination along with accrued vacation pay. The payment for two weeks’ notice and benefits was all she was otherwise entitled to, had CI followed the Agreement.
22Sections 64 and 65 of the Act provide that where an employee has 5 or more years employment and the company has a payroll of $2.5 million or more, the employee is entitled to effectively a further week for each year of employment for severance pay over and above termination pay. CI has a payroll of more than $2.5 million. Clearly therefore, the termination provision, which limits pay in lieu of notice to 8 weeks maximum and the above provision which includes severance pay in the notice are contrary to the Act in that they limit an employee who is terminated and entitled to severance pay to less than he or she is entitled to under the Act.
23While the termination clause is therefore void and unenforceable for a CI employee of more than 5 years, is it so for Garreton who was an employee of less than 3 years?
24Garreton relies on Wright v. The Young and Rubicam Group of Companies (Wunderman)¸ 2011 ONSC 4720. In that case, Low J. found that a notice provision in an employment contract was void for potentially violating the Act.
25In that case, as here, the contract provided for the proper notice under the Act given the employee’s years of employment but was contrary to the severance provisions in ss.64 and 65.
26In reaching her decision, Low J. relied on Machtinger v. HOJ Industries Ltd., 1992 102 (SCC), [1992] 1 S.C.R. 986; Shore v. Ladner Downs, 1998 5755 (BC CA), [1998] B.C.J. No. 1045 (B.C.C.A.) and the obiter comments by M. D. Forrestall J. in Slepenkova v. Ivanov, [2007] O.J. No. 4708 (S.C.J.) aff’d 2009 ONCA 526, [2009] O.J. No 2680 (C.A.). CI in turn relies on the more recent case of John A. Ford & Associates Inc. (c.o.b. Training Services) v. Keegan, 2014 ONSC 4989, [2014] O.J. No. 3995 (S.C.J.) where Price J., after considering the above cases disagreed with Low J.’s decision and held that the contract of employment, “must conform to provincial employment standards legislation for the particular employee, in the particular circumstances (para. 150).
27With the greatest of respect, I disagree with Price J.’s conclusion. In my view, the employment contract must be considered at the time it is executed. If the termination provision is not onside with notice provisions and severance provisions (if applicable) of the Act at the outset, then it is void and unenforceable. Potential violation in the future is sufficient. As Low J. states, “It is not that difficult to draft a clause that complies completely with the Act, no matter the circumstance.”
28Accordingly, for the above reasons, I find the termination provisions of the Agreement respecting notice to be void and unenforceable.
Cause
29Whether the seriousness of an employee’s conduct justifies termination for cause is a question of fact: McKinley v. B.C. Tel, 2001 SCC 38, [2001] 2 S.C.R. 161 (S.C.C.) at para. 49. Accordingly, the standard of review is palpable and overriding error.
30Having reviewed the evidence and the reasons of the Trial Judge, I am satisfied that she did not commit any palpable and overriding error in concluding that CI did not have cause to terminate Garreton. On the contrary, based on the evidence and her reasoning, I consider she was correct.
31The Trial Judge concluded that while not trivial, the first two incidents were not serious. In respect of the bagel incident, the Trial Judge was critical of the conduct of both Garreton and the other employee. She found however, that the bagel incident did not amount to “workplace violence” or was in the nature of an incident.
32The Trial Judge also found, based on the wording of the suspension letter provided to Garreton following the bagel incident, that CI’s suspension represented its discipline of Garreton for the incident and that to subsequently dismiss her from employment constituted double jeopardy. In my view, that finding was correct as well. An employee can only be disciplined only once for the same offence. See: Natrel Inc. v. Milk and Bread Drivers, Dairy Employees, Caterers and Allied Employees, Local Union 647, 2005 67419 (ON LA) at para. 40. Having disciplined Garreton for the bagel incident, CI could not then subsequently terminate her after she had served her suspension. On that basis too, the termination was wrongful.
33CI raises a number of alleged errors by the Trial Judge in reaching her conclusion that it had no cause to terminate. I do not consider that any of the items raised amounted either individually or collectively to palpable and overriding error by the Trial Judge. In my view, her reasons clearly indicate that she considered all three incidents in reaching her decision that they did not amount to cause. Although she referred to some outside research to help her define progressive discipline, that issue was one that was argued by the parties. The fact that counsel have not done a proper job in researching an issue does not preclude the court from further research. Further, given the issue and what the Trial Judge referred to, there was no requirement in my view that the parties be given an opportunity to respond to the research.
34Nor do I accept that the Trial Judge “ignored” the evidence that Garreton’s behaviour was getting worse. As noted, she carefully considered each incident. Further, I do not consider that the Trial Judge erred by concluding that the language in each warning letter ran counter to the concept of progressive discipline. To indicate that continued failure to meet job responsibilities will result in further disciplinary action or termination of employment when the incidents are of a minor nature is extreme to say the least. The Trial Judge was also concerned that CI did not investigate the second incident or provide Garreton with any direction on how to avoid the situation in the future. Finally, CI lists a number of what it asserts as errors arising out of the Trial Judge’s assessment of the bagel incident. In my view, having regard to the evidence, the Trial Judge’s characterization of the incident and the people involved was completely appropriate and correct.
35For the above reasons, therefore, the appeal is dismissed.
Costs
36I have endorsed the Appeal Book, “For reasons given orally in Court today, the appeal is dismissed. Costs to the respondent on a partial indemnity basis fixed at $8,235.00, plus HST.”
___________________________ PATTILLO J.
Date of Reasons for Judgment: February 16, 2016
Date of Release: February 19, 2016
CITATION: Garreton v. Complete Innovations Inc., 2016 ONSC 1178
DIVISIONAL COURT FILE NO.: 141/15 DATE: 20160216
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT PATTILLO J.
BETWEEN:
MARCELA GARRETON Plaintiff (Respondent)
– and –
COMPLETE INNOVATIONS INC. Defendant (Appellant)
ORAL REASONS FOR JUDGMENT
PATTILLO J.
Date of Reasons for Judgment: February 16, 2016
Date of Release: February 19, 2016