2135-00-ES John Benjamin, Applicant v. Tel-E Connect Systems Ltd., and Ministry of Labour, Responding Parties.
Employment Practices Branch File No. 34 002361
BEFORE: Brian McLean, Vice-Chair.
APPEARANCES: John Benjamin appearing on his own behalf; Andrea Hoppe for the employer; Laurie Eisenberg for the Ministry of Labour.
DECISION OF THE BOARD; May 29, 2001
This is an employee application for review of a decision by an employment standards officer not to issue an order to pay against his former employer.
The Board held a hearing in Toronto on April 12, 2001 to receive the evidence and representations of the parties.
The applicant, Mr. Benjamin, was an employee of the responding party, Tel-E Connect Systems Ltd. (“Tel-E Connect”). His employment was terminated by the company in or about November 1999 for alleged wilful misconduct. He filed a complaint with the Employment Standards Branch asserting that he was entitled to termination pay and unpaid bonus. An employment standards officer investigated his complaint and determined that no monies were owing. This is Mr. Benjamin’s application for review against that determination.
Mr. Benjamin was employed or engaged by the company since December 1996 as a senior account executive. The company sells telephone systems for Northern Telecom and it was Mr. Benjamin’s job to sell such equipment to the company’s customers. In addition, Mr. Benjamin had a company of his own (J.B. Consulting) in which he sold long-distance services to companies. This appears to have been permitted by Tel-E Connect as they were not (at least not initially) in the business of selling long-distance services.
The circumstances which gave rise to the termination of Mr. Benjamin’s employment occurred in November 1999. Mr. Benjamin made a sale of telephone systems to a customer. Unfortunately, he made a mistake in the pricing which left the company with less profit on the sale than Tel-E Connect considered appropriate. Mr. Benjamin went to the company's Chief Financial Officer, Mary DiGioia, and advised her of the problem. Ms DiGioia advised Mr. Benjamin that the company would not take a reduced profit on the sale. Mr. Benjamin went back to the customer and advised it of the mistake. However, the customer had already taken internal actions as a result of the sale price agreed to and was unable to accept a higher price.
Mr. Benjamin was in a predicament. He decided to solve it by reducing his take on a sale he had made to the same customer under the umbrella of his personal company, J.B. Consulting. By reducing J.B. Consulting’s profit, the customer would be able to purchase the equipment at the price agreed to and Tel-E Connect would be paid an appropriate amount. While this scheme by itself may have displayed a lack of judgment, the more difficult problem arose because the sale J.B. Consulting had made was not a sale for long‑distance services. The customer and J.B. Consulting had agreed that J.B. Consulting would sell its old telephone system on the customer’s behalf. The problem was that this transaction was made by Mr. Benjamin’s company so that he and not Tel-E connect would profit. While Mr. Benjamin may have been permitted to sell long-distance services in his personal capacity, J.B. Consulting was not permitted to sell old telephone systems because Tel-E connect was in that business.
When the President of Tel-E Connect, David Tavares, learned from the customer about Mr. Benjamin’s proposal, he was extremely upset. He met Mr. Benjamin and advised him that in the company’s view, Mr. Benjamin’s conduct amounted to theft. His anger was exacerbated by the fact that Mr. Benjamin had been warned about similar conduct on a previous occasion. On that occasion, Mr. Benjamin was warned in writing that any repetitions of the conduct would result in the termination of his employment. Mr. Tavares told Mr Benjamin to go home for two days so that he could think about whether he wished to remain an employee of the company.
Mr. Benjamin did not go home. Instead, he went to his office and began to pack up the files in his office. Those files contained customer information. Mr. Tavares advised him that customer files were the property of the company and Mr. Benjamin went home.
It appears that he took customer files with him.
The next day, despite the employer’s instructions, Mr. Benjamin came into the office. As a result, the company terminated his employment. Following the termination of employment, Mr. Benjamin and Mr. Tavares had a physical altercation in the company’s parking lot which resulted in the police being called. However, these events are not relevant to my determination.
In argument, Mr. Benjamin conceded that the odds were “stacked against him” in this aspect of his appeal. I agree. I have no hesitation in finding that Mr. Benjamin was guilty of wilful misconduct and therefore not entitled to termination pay. His conduct in taking a personal profit from the sale of the customers’ old telephone system was itself wilful misconduct, as was his taking of company customer files. In addition, it was wilful misconduct when he appeared for work after being specifically advised not to. It is no defence for Mr. Benjamin to say, as he did, that he “is a salesman” and was just working. His conduct amounted to gross insubordination. I therefore dismiss this aspect of Mr. Benjamin’s application for review.
Mr. Benjamin also made claims for unpaid bonus which are not affected by the fact that his employment was terminated for wilful misconduct.
The company had two different bonus plans over the period at issue in this application. Under both plans, bonuses were paid based on the ability of a sales team to exceed sales targets. A sales team was composed of one senior salesperson, like Mr. Benjamin, one medium level salesperson and one junior salesperson. Since there is a high turnover, there may be times when a team has less than three people. However, if a team loses two people, it is no longer a team since there are no one-employee teams under the company’s system. Under the first plan, bonus was calculated over six months. Under the second applicable plan, bonus was paid out based on quarterly performance.
Mr. Benjamin’s first bonus claim was for the first six months of 1999. The dispute arises because one of the members of one team, “Ross”, was taken off his team and put on another team. Later another team member, “Mike”, also left the team. Mr. Benjamin’s claim was that Ross’s and Mike’s numbers (their budget and sales) should have travelled with them to the “new” team and that Mr. Benjamin’s bonus should be based on the sales and budget of the team as if Ross and Mike had never been there. The company asserts that its practice was that Ross’s and Mike’s sales and budget were applied for the time that they were on the team.
Nothing that Mr. Benjamin told the Board suggests that the company did anything wrong in the way it calculated bonus. While it is certain that the company’s bonus rules could have been much clearer, it is also certain that there was a practice in place about how the sales and budget of employees who left a team were to be dealt with. Mr. Benjamin does not convince me that this practice was not adhered to in this case and accordingly, I dismiss this aspect of his application for review.
The final claim was for third-quarter bonus. This claim is more problematic for the company. In this case Mr. Benjamin’s team was composed of three members. The junior member left the team because she resigned her employment. Nevertheless, the team exceeded its target and earned a 17% bonus. The company paid the employees. Mr. Benjamin’s complaint is that the company paid him approximately 1/3 of the team’s bonus, rather than approximately 1/2. His claim for the approximately 1/2 bonus arises out of the fact that there were only two people on the team at the end of the quarter. The word “approximately” is used because bonus payments were not split equally. Instead, employees received a share in proportion to their salaries they earned. For example, an employee earning $1,000. per month as a base salary would receive slightly more of the team’s bonus than an employee earning $900. per month.
Rather than split the bonus, the company retained the share which would have been paid to the employee who left. The company’s policy was based on the fact that it wished to encourage a team to find a third member to a team and to train and retain junior sales members.
I am satisfied that Mr. Benjamin was paid appropriately. He was paid his portion of the bonus based on his contribution, as expressed through his salary, to the team. He is not entitled to the bonus earned by the employee who left because, in my view, that employee was entitled to that money. In my view, the company improperly withheld that bonus which was owing to that employee who earned it. However, the fact that the company improperly withheld bonus payment from a former employee does not entitle Mr. Benjamin to these monies.
For all of the foregoing reasons, this application for review is dismissed.
“Brian McLean”
for the Board