Brake v. PJ-M2R Restaurant Inc., 2016 ONSC 1795
CITATION: Brake v. PJ-M2R Restaurant Inc., 2016 ONSC 1795
COURT FILE NO.: 12-55963
DATE: 2016/03/14
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N
Esther Brake
Plaintiff
– and –
PJ-M2R Restaurant Inc.
Defendant
Miriam Vale Peters and Joanie Roy, counsel for the Plaintiff
Jean-François Lalonde, counsel for the Defendant
HEARD AT OTTAWA: December 2 – 5, 2014 and December 14 – 16, 2015
REASONS FOR DECISION
K. PHILLIPS J.
[1] Esther Brake worked for McDonald’s restaurants for more than 25 years. A substantial part of that career was spent in the employ of the Defendant, PJ-M2R Restaurant Inc., a McDonald’s franchise holding company with several restaurants in Ottawa.
[2] On August 2, 2012, PJ-M2R terminated Ms. Brake’s employment.
[3] This trial is about whether PJ-M2R had cause to dismiss Esther Brake. She asserts that she was wrongfully constructively dismissed and seeks damages for common law notice and severance in accordance with the Employment Standards Act (ESA). The Defendant responds that it had every right to terminate her employment since, despite considerable effort to assist her in meeting the standards expected of her position, she simply failed to do so and had to be let go.
Part I – The Facts:
[4] I find the following facts to have been proven on a balance of probabilities:
a) Esther Brake began working for McDonald’s restaurants in 1986 in Corner Brook, Newfoundland. In 1999, she moved to Ottawa and began working for the Defendant. In recognition of her experience and the associated value that she was bringing with her to PJ-M2R, she was accepted into the PJ-M2R milieu as if already having 7 years of full-time service to that entity. I find that as of August 3, 3012, Ms. Brake had the equivalent of 20 years employment history with the Defendant.
b) From 1999 to 2004, Ms. Brake worked for PJ-M2R in a variety of capacities. While there were some ups and downs throughout these years, she remained in the Defendant’s full-time employ. Finally, in 2004, Ms. Brake was promoted to the position of store manager with respect to one of PJ-M2R’s McDonald’s locations.
c) In 2008, Ms. Brake was transferred to manage PJ-M2R’s Kanata McDonald’s. As part of her duties there, she also managed a nearby McDonald’s located within a Wal-Mart. Eventually, in November, 2011, Ms. Brake was assigned exclusively to the Wal-Mart location.
d) From 2000 to 2007, Ms. Brake received an overall rating of “excellent” in all of her evaluations. Some representative excerpts from various performance reviews over this period include:
• “Esther you have excellent standards and make the effort to stay current in the operational aspect of the business.”
• “Esther the last six months have not been easy due to the anticipated closure of Carling. We had limited resources to work with, which affected the results. During all of it you have stood like a rock persisting thru [sic] the obstacles.”
• “Esther I am very happy with the progress you have shown in the last year and more specifically in the last six months.”
• “Esther… it has been a pleasure taking on a challenge like Kanata with you. … Your focus is to continue to push and support the team.”
• “Esther you have achieved excellent results by your hard work, high standards and commitment. You have always shown a passion and willingness to learn and continue your progress.”
• “Esther you have achieved some excellent results in the P&L’s and sales increase overall in the year…. Esther all of the above results highlights [sic] your management style: Involved, demanding and a doer.”
• “Esther, it has been a true pleasure working with you this past year. You were able to achieve most of your goals and even surpassed some. Thank you for everything you do and have done to be successful.”
• At the close of 2007, Ms. Brake was rated as an “excellent performer” who “demonstrates each of the behaviours described in a generally effective manner all of the time. She demonstrates high standards in her values and behaviours.”
e) In 2008, Ms. Brake managed Kanata and the Wal-Mart location, and received an excellent review. Mr. Perry McKenna, the Defendant owner, wrote in the annual performance appraisal that “Kanata had an outstanding year, outperforming the market by good margins.” Mr. McKenna rated Esther “excellent” in the various performance metrics including Sales, “Quality/ Service/ Cleanliness” (QSC) and “People and Profit”. Mr. McKenna made the following comments in Esther’s 2008 evaluation:
• “Congratulations on your outstanding Crew Commitment Survey result of 97%. That was the best score ever achieved for my company. I believe it’s a direct results [sic] of your influence on the management team and some of the key crew people.”
• “Esther, I’m very happy with the trend you are on. You are now starting to feel comfortable with running Kanata and WM. You have developed some of your managers and they are starting to follow your lead and standards.”
f) High overall ratings continued throughout 2009. Esther was rated “excellent+” and Mr. McKenna wrote that:
• Esther was “on a great CSO trend…” [CSO is a McDonald’s restaurant measurement metric known as “Customer Service Opportunities”. The lower the score the better].
• “Esther, your work ethics, high standards, pride, and job knowledge are exceptional.”
g) In 2010, Ms. Brake received an overall “excellent” rating. In the evaluations, the following comments were made:
• “Esther, this is the best start to a new year I’ve ever seen you put together. You have the store running the best I’ve seen. Your CSO scores are below the national and regional average and way ahead of last year… Also for the first time, both the McDonald’s and PJ-M2R scorecards are outstanding.”
• “Esther you have achieved and continue to have a strong level of commitment with you[r] crew.”
h) In November 2011, Ms. Brake received her first negative performance review. I accept her evidence that she was “dumbfounded” and “shocked”. She did not expect this review, and was “blown away”. I accept Ms. Brake’s evidence that in all her years of service she never had any indication that her position was in jeopardy or that her performance as a store manager was anything less than excellent. In fact, only one month prior to the November 2011 review, Mr. McKenna arranged for Esther to attend a managers’ convention in Niagara Falls.
i) During the November 2011 review, Mr. McKenna told Esther that she would be transferred to the Wal-Mart location. This was presented as an opportunity for her to improve her performance. The Wal-Mart location was significantly smaller with far fewer sales, and consequently had far fewer staff. I accept the evidence of Ms. Brake to the effect that the Wal-Mart location was more difficult to manage. There was high staff turnover and less staffing, which meant that the manager on duty was expected to cook, serve customers and keep the restaurant clean.
j) The Wal-Mart location had been trending badly since at least April 2011. According to McDonald’s corporate documentation, the Wal-Mart location had failed 8 out of 12 customer service opportunities over that year. It ranked 1,410 out of 1,437 restaurants in Canada.
k) That the Wal-Mart location was trending badly was well known to the Defendant. In fact, it was acknowledged that for Ms. Brake to have any success there she would first have to turn the place around. Mr. McKenna agreed that the Wal-Mart location was struggling. He expected that “someone with Esther’s experience should have been able to turn around a restaurant like that.”
l) In any event, Esther was moved to the Wal-Mart location around November 28, 2011. I accept her evidence that from then onward she was consistently working 12-hour days, 7 days per week. She never asked for overtime.
m) On April 16, 2012, Ms. Brake was summoned to a three-month review meeting. Again, Esther received another overall rating of “needs improvement.” At the meeting, Ms. Brake was informed that as a result of her performance, she would be participating in McDonald’s progressive discipline program known as Goals Achievement Process (“GAP”).
n) Ms. Brake was presented with a document, which explained how GAP worked.
According to the first page of the GAP document:
Due to the fact that your performance has declined to an unsatisfactory level, you are now being placed on McDonald’s Goals Achievement Process.
The Goals Achievement Process is a 90 day process designed to assist you in improving your performance to a Satisfactory level. As part of this process, you’ll be expected to achieve the mutually agreed-upon goals established by you and your Restaurant Manager and/or Operations Consultant. Within the first 30 days, you’re expected to perform specific actions to meet these goals and be rated Satisfactory or better. If you achieve your goals and you’re rated Satisfactory while on the Goals Achievement Process, you’ll be taken off the process. On the other hand, if you don’t meet these goals within 60 days, you’ll be placed on a 30 day probation or notice period. If, after that period, you haven’t achieved your goals and you’re still rated Needs Improvement, your employment may be terminated.
This process is designed to be a positive motivator and to help you to improve your performance. Nonetheless, a basic premise of the Goals Achievement Process is that an employee is making genuine effort to accomplish his/her goals and to overcome performance slippage. An employee who fails to demonstrate such an effort may be removed from the Goals Achievement Process and employment may be terminated. If you don`t understand your goals and objectives and how to attain them, your Restaurant Manager and/or Operations Consultant will offer counseling and assistance. We urge you to obtain this assistance if required.
o) I find that the GAP program was not implemented in accordance with its terms, either in letter or spirit. The thresholds that Ms. Brake was ordered to meet were arbitrary and unfair. As an example, I find that the Defendant’s use of the CSO metric to be inconsistent and illogical. The CSO score is used by McDonald’s on a global basis to measure quality, service and cleanliness. The CSO is expressed as a percentage of visits that miss one or more of the five critical drivers: quality, friendly, accurate, fast and clean. The lower the CSO rating, the better the score. In 2009, Esther’s CSO score had been 41%, and she was marked “excellent”. In an earlier evaluation in 2009, she received a 60% for CSO and was graded “satisfactory.” In the November 2011 review, Ms. Brake achieved a 48% CSO rating and was given a “needs improvement”. There is no explanation in the evidence for the arbitrariness and inconsistency in the interpretation of the CSO results. They appear to be taken to mean whatever one wants them to mean.
p) The Defendant’s GAP goals were objectively more difficult than the standards set over the course of Esther’s employment. Prior to GAP, Ms. Brake had been required to achieve a 25% CSO score at her restaurants. The Defendant was now requiring her to achieve a 0% CSO score at the Wal-Mart location at each of the 30, 60 and 90-day GAP evaluation periods. The Wal-Mart location had historically been trending at a 35% CSO. A perfect score at the Wal-Mart location would have been highly exceptional.
q) As another example of the arbitrariness at play in the GAP process implemented here, I note that it was declared by the Defendant that during the GAP period that Ms. Brake needed to score 90% or higher on a Short Operations Review (“SOR”). An SOR is an evaluation of quality, service and cleanliness at a restaurant from a guest’s perspective. It is a 3-4 hour, unannounced visit that is scored. According to McDonald’s own corporate standards, “McDonald’s standard for SOR visits is a score of 80% or higher in each category- Quality, Service and Cleanliness.” For reasons that were never satisfactorily explained, the Defendant set a 90% goal for Ms. Brake. On June 27, 2012, Lina D’Angelo, McDonald’s field service manager for head office, arrived at the Wal-Mart location for an SOR. According to the 60-day GAP evaluation prepared by the Defendants and presented to the Plaintiff on July 4, 2012, Esther had a “poor score during the SOR held on June 27.” But the actual SOR report prepared by Ms. D’Angelo indicated that the visit was “great” and that the restaurant had passed with 91.8% for quality, 82.5% for service, and 93.7% for cleanliness.
r) Ms. Brake was not informed of her performance while on the GAP program in a timely way. Although she should have received a 30-day evaluation around the end of May, she was evaluated on June 13, 2012 nearly halfway through her 60-day period.
s) In any event, the die was cast. As early as late June the Defendant Perry McKenna was seeking advice as to whether Ms. Brake would be better off in a lower position within the organization. This conclusion was ultimately the one the Defendant settled on despite the fact that all agree that Esther achieved her 90-day goals. She eventually achieved a 0% CSO and a QSC of 90% or higher.
t) On August 2, 2012, Ms. Brake was told by the Defendant that she had failed the GAP program and that they needed to discuss her future. Ms. Brake argued that she ought to be allowed to stay on as a manager. Mr. McKenna responded that that was not an option; she had to “take a demotion or go”. Ms. Brake was offered the position of first assistant. The salary would be the same but the benefits would be meaningfully inferior. Moreover, she would be reporting to some of those whom she had trained and supervised, many of whom were much younger and less experienced. On cross examination, Mr. McKenna agreed that Esther was entitled to be embarrassed by the demotion.
u) Ms. Brake refused to accept the demotion and left never to return. The termination of her employment “for cause” was sent to her in writing soon thereafter.
v) Ms. Brake had long had another job at Sobey’s as a cashier, a fact that was always known to the Defendant. After August 2012 she increased her hours at Sobey’s. In addition, Ms. Brake made other efforts to mitigate her damages. From October 2012 until mid-January 2013, she worked 30-36 hours per week at Tim Horton’s. Her hourly wage was $11.25. I accept Ms. Brake’s testimony that she attempted to start a babysitting service and cleaning service. She made phone calls, put up posters and posted an advertisement for both businesses on Kijiji. I further accept that by January 2013, Ms. Brake realized that the businesses were not working and that she needed to find another source of income. Accordingly, she applied for several positions including as a McDonald’s mystery shopper, store manager and front store supervisor at Shopper’s Drug Mart, overnight supervisor at Home Depot, part-time cashier at IKEA, store manager at Mark’s Work Warehouse, supervisor at Costco, assistant store Manager at Loblaws, store manager at Dollarama and various other positions at Bed, Bath and Beyond, Swiss Chalet, LCBO and Target. Ms. Brake has not been offered a management position with any company since her termination. In March 2013, Ms. Brake accepted a position as a cashier at Home Depot. She works approximately 35-38 hours per week and earns a wage of $12.50 per hour. She continues to work there to date.
Part II – Legal Principles:
i) General Principles for Contracts of Employment
[5] In Reference Re Public Service Employee Relations Act,[^1] Chief Justice Dickson wrote that:
Work is one of the most fundamental aspects in a person’s life, providing the individual with a means of financial support and, as importantly, a contributory role in society. A person’s employment is an essential component of his or her sense of identity, self-worth and emotional well-being.[^2]
[6] In Wallace v. United Grain Growers Ltd.,[^3] the Court recognized that a contract of employment is different than other commercial contracts in that there is a power imbalance between the employer and employee which “informs virtually all facets of the employment relationship.”[^4]
[7] At common law, an employer has the right to dismiss an employee for just cause. Cause has been described as conduct that is incompatible with those duties that go to the root of the employment contract such that the employer is not expected to continue to keep the employee in its employ.[^5]
[8] The employer bears the onus of demonstrating on a balance of probabilities that cause exists for the employee’s discharge. The conduct at issue must be “real incompetence or misconduct,” not “simple dissatisfaction with performance” or concerns about future conduct.[^6]
[9] There must be a balance between the conduct and the sanction imposed. As the Court stated in Brien v. Niagara Motors Ltd.[^7]: “The essential question is: Does the punishment fit the crime? Dismissal for just cause is the capital punishment crime of employment law.”[^8]
ii) General Principles for Constructive Dismissal
[10] When an employer unilaterally makes a substantial or fundamental change to an employee’s contract of employment and the employee does not agree to the change and leaves the job, the employee has not resigned, but has been dismissed. The employer’s act of making such unilateral changes amounts to a repudiation of the contract of employment, and the employee is entitled to consider herself constructively dismissed. The employee can then claim damages from the employer in lieu of reasonable notice.[^9]
[11] The Supreme Court of Canada in Farber v. Royal Trust Co. confirmed that a demotion and a change in salary and other remuneration are substantial changes to the terms of employment so as to constitute constructive dismissal.[^10]
[12] Where an employer offers the employee a chance to mitigate damages by returning to work for him or her, the central issue is whether a reasonable person would accept such an opportunity. The critical element is that an employee cannot be forced to mitigate his damages with an employer in an atmosphere of hostility, embarrassment or humiliation.[^11]
iii) General principles for reasonable notice
[13] When an employer dismisses an employee without cause or if an employee has been constructively dismissed, the employer must provide reasonable notice or compensation in lieu thereof. The purpose of notice is primarily compensatory.[^12] Rather than applying a strict actuarial or accounting estimate, the Court must determine a figure that seems fair and reasonable in light of all the circumstances.
[14] Notice is calculated by determining the income and benefits lost by the employee over the notice period, adding any mitigation expenses and then deducting from that amount the mitigation income earned by the employee.[^13]
[15] In determining the appropriate length of a notice period, the Court considers what are commonly known as the Bardal factors, as set out in Bardal v. The Globe & Mail Ltd.[^14] These factors include the character of the employment, the length of service of the employee, the age of the employee and the availability of similar employment having regard to experience, training and qualifications of the employee.[^15]
Part III – Analysis:
[16] While probably not a perfect employee in every respect, I cannot agree that Ms. Brake was incompetent at her job such as to warrant dismissal from it. She was an overall competent manager with a long track record of successful contribution at the standard expected of her position. The performance appraisals filed over a considerable timespan can lead to no other conclusion.
[17] There is some evidence that Ms. Brake ran into some difficulty in late 2011 and into 2012. That time period cannot be looked at in isolation; Ms. Brake had built up such lengthy history of effective contribution to PJ-M2R that she was entitled to fairness and reasonable assistance in meeting her employer’s apparently now unmet expectations. In any event, even if cherry-picked out from the larger context, those difficulties do not in my view amount anything close to gross or serious incompetence. There is no evidence that could possibly lead to any conclusion that the Defendant’s business interests were being compromised by Ms. Brake’s employment. The difficulties at Wal-Mart, for instance, precede Ms. Brake’s arrival there as manager and involve circumstances outside of her exclusive control. Besides, by the end of the GAP program she had met the Defendant’s new and improved standards. She was trending upward at an extraordinary degree when the decision to demote her was put on the table.
[18] Even if taken at their highest and in aggregate, the complaints about Ms. Brake’s employment performance outlined by the Defendant do not amount to cause for dismissal. There was far more right about her performance than wrong with it. Every witness testified to her outstanding work ethic. The worst I heard about her work in any real sense was that she was brusque and did not always do well in managing the “younger generation that requires more pleases and thank yous”. Indeed, Esther Brake is most impressive; a single mother who devoted herself to the advancement of the Defendant’s interests for many years with considerable success.
[19] Ms. Brake was not given any clear and reasonable opportunity to correct the alleged issues that the Defendant was having with her employment performance. She was transferred to a flailing branch and expected to turn it around and perform there in excess of the standards that had been accepted of her in the past. The GAP program as implemented by the Defendant was arbitrary and unfair. There was no objective basis for the goals set; they were meaningfully more onerous than usual and in excess of those set by McDonald’s generally. These extraordinary expectations were both unjustified and impossible to meet.
[20] Ms. Brake was not even kept informed of her performance under the GAP program in the way the program itself stipulates. I do not see the rationale in advising an employee of her 30 day performance nearly half-way to the 60 day mark given the overall timespan involved.
[21] I find that Ms. Brake was set up to fail from the beginning of the GAP program. Not even the fact that she did ultimately manage to meet the Defendant’s heightened expectations could save her in the end. Well before the completion of the GAP, Ms. Brake’s removal from her manager position was a foregone conclusion. Given the length of her employment and her loyal history of contributions to the organization, she was entitled to expect more assistance in overcoming her newly alleged shortcomings. I find the GAP program as implemented by the Defendant was less an instrument of help than it was a way to record Ms. Brake’s anticipated inability to meet the Defendant’s shifting expectations in order to justify a decision that had effectively already been made.
[22] I heard from many witnesses. In a very real sense, I got to know the culture at PJ-M2R and how Ms. Brake came to fit into it. I find that it would have been unreasonable in the circumstances to have expected Ms. Brake to accept a demotion and continue working for the Defendant. I recall the evidence of employees Mr. Weaver and Ms. Todd as being downright insulting to Ms. Brake and her personality and abilities. In many respects the same could be said about the evidence of both Perry and Jo-Ann McKenna. In my view, it is perfectly understandable in the circumstances that Ms. Brake would find working under Matt Ridgeway, the young man she trained, as embarrassing or even humiliating. Much more than money was at stake here. Clearly, by August 2012, through no fault of the Plaintiff that I could discern, any relationship that ever existed involving these parties had irredeemably come to an end. I am persuaded that Ms. Brake’s decision to consider herself constructively dismissed notwithstanding the offer of continued lesser employment was objectively reasonable. She could not have been expected to continue with PJ-M2R given the way they had treated her.
[23] I find that in the overall circumstances, PJ-M2R unilaterally made a substantial and fundamental change to Esther Brake’s employment contract and that in doing so constructively dismissed her without cause.
[24] At the time she was constructively dismissed, Esther Brake was 62 years old (she is now 65). She had worked for McDonald’s in some capacity for the majority of her working life. She had effectively worked for the Defendant for 20 of those years. She has little in the way of formal education. She rose to a management position through perseverance and hard work. Her knowledge and skills are mostly applicable to only the McDonald’s environment, a work place that very much has its own unique culture, language and ways of doing things. Since her dismissal, despite her reasonable best efforts, she has not managed to secure a reasonably comparable managerial position. I find that her subsequent employment represents a reasonable effort on her part to mitigate her losses. However, I also find that her ability to find employment does not take away from the loss she suffered from being dismissed without cause. The cashier position she occupies now at Home Depot is so substantially inferior to the managerial position she held with the Defendant that the former does not diminish the loss of the latter.
[25] Given the Plaintiff’s age, the length and nature of the employment, the manner in which she was dismissed by the employer, the low likelihood that she will ever again attain a similar managerial position and the impact on her of being unjustly dismissed in the context of her character, reputation and circumstances, I conclude that a fair compensatory notice period in this case is one of 20 months. That 20 months is inclusive of any statutory severance required by section 64 of the ESA.
[26] Ms. Brake shall have pay in lieu of notice equivalent to her remuneration over a 20 month time period. In addition to a salary of $53,000, Ms. Brake’s annual remuneration consisted of a $6,000 car allowance, $1,307.76 for a cellular phone, and $2,391.84 in miscellaneous health benefits. Her total annual compensation was therefore $62,699.60. The 20 months of compensation in lieu of notice amounts to $104,499.33.
[27] Pre-judgment interest shall apply from August 3, 2012 and post-judgment interest shall accrue in accordance with the Courts of Justice Act, R.S.O. 1990, c. C-43, as amended.
[28] The parties may make written submission as to costs within 30 days.
Mr. Justice Kevin B. Phillips
Date: March 14, 2016
CITATION: Brake v. PJ-M2R Restaurant Inc., 2016 ONSC 1795
COURT FILE NO.: 12-55963
DATE: 2016/03/14
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Esther Brake
Plaintiff
– and –
PJ-M2R Restaurant Inc.
Defendant
REASONS FOR DECISION
K. Phillips J.
Released: March 14, 2016
[^1]: Reference Re Public Service Employee Relations Act (Alta.), 1987 88 (SCC), [1987] 1 S.C.R. 313. [^2]: Ibid at para. 91. [^3]: Wallace v. United Grain Growers Ltd., 1997 332 (SCC). [^4]: Ibid at paras 90-92. [^5]: C.R. v. Schneider National Carriers, 2006 532 (ON SC) at para 29. [^6]: Ibid. [^7]: Ibid. [^8]: Ibid at para 220. [^9]: Farber v. Royal Trust Co., 1997 387 (SCC), [1997] 1 SCR 846 at para 33. [^10]: Ibid at para 36. [^11]: Evans v. Teamsters Local Union No. 31, 2008 SCC 20 at para 30. [^12]: Farber, supra note 108 at para 48. [^13]: Brien, supra note 83 at para 268. [^14]: Bardal v. Globe & Mail Ltd., 1960 294 (ON SC), [1960] OJ No 149 [^15]: Ibid at para 21.