COURT FILE NO.: CV-15-532352
DATE: 20180515
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ALTHEA BURTON
Plaintiff
– and –
ARONOVITCH MACAULAY ROLLO LLP
Defendant
Althea Burton, on her own behalf
Alex Van Kralingen and Mark Repath, for the Defendant
HEARD: March 26 & 27, 2018
P.J. Monahan J.
[1] Althea Burton (the “Plaintiff”) was employed as a legal assistant and law clerk by Aronovitch McCauley Rollo LLP (“AMR”) from March 3, 2003 to April 29, 2015, when her employment was terminated without cause. Relying on a termination clause in the Plaintiff’s contract of employment (the “Contract”), AMR provided the Plaintiff with compensation representing her entitlements under the Employment Standards Act, 2000.[^1] The Plaintiff maintains that the termination clause in the Contract is legally unenforceable and that she is entitled to common law notice, including compensation for income loss and other employment-related benefits and entitlements during the notice period.
[2] The validity and effectiveness of termination clauses similar to that found in the Contract, taking into account the minimum standards required by the Act, has been considered in a number of recent decisions of the Court of Appeal. Taking into account those decisions, in my view the termination clause in the Contract is consistent with the Act, since it provides that the Plaintiff is to receive the entitlements provided for under the Act in the event of a “without cause” termination. Nor is the termination clause unconscionable or otherwise legally invalid. AMR provided the Plaintiff with her entitlements under the Act when it terminated her employment on April 29, 2015, in accordance with the terms of the Contract. Since the termination clause is sufficient to oust the Plaintiff’s entitlements to notice at common law, the Plaintiff’s claim for additional compensation arising from her termination of employment cannot succeed.
[3] Although I conclude that the termination clause in the Contract is legally enforceable, I go on to consider what the Plaintiff’s entitlements at common law would have been in the event that I had found the termination clause to be invalid. I find that the Plaintiff would have been entitled to nine months’ notice upon termination as well as compensation in the amount of $10,000 for the lost opportunity to earn a bonus for the 2015 calendar year. However I would not have awarded her any compensation for foregone salary increases, the cost of her tuition at Tyndale College, or her medical and dental expenses. Further, I would not have reduced her entitlements at common law based on a failure to mitigate her damages.
[4] In the result, I would dismiss the Plaintiff’s action with costs.
Facts
[5] The Plaintiff commenced her employment with AMR as a legal assistant on March 3, 2003. Her salary at that time was $30,000 per year and, following a probationary period, she was enrolled in a group benefit program provided by a third party insurer and funded 100% by AMR. The Contract dealt with various other matters, including vacations, working hours, sick days, reporting structure, and confidentiality.
[6] Clause H, entitled “Termination by AMR Without Cause” (the “Termination Clause”), provided as follows:
(a) AMR may, at its sole discretion, terminate your employment without cause (a “Non-Cause Termination”). In the event of a Non-Cause Termination, AMR shall provide you with severance pay in accordance with the Employment Standards Act, as amended, and any successor legislation, if so required as at the time of a Non-Cause Termination; and
(b) Notwithstanding the foregoing, and for greater certainty, if the amounts which you would receive upon a Non-Cause Termination, as set out above, are less than the amounts to which you would be entitled under the Employment Standards Act, as amended or any successor legislation, then you shall be entitled to notice, severance pay, and any other payment required by the relevant legislation in force as at the time of the termination.
[7] During the course of her employment with AMR, the Plaintiff received regular salary increases, including a significant increase when she was promoted from a legal assistant to a law clerk in 2010. As at the date of the termination of her employment, the Plaintiff was entitled to a base salary of $70,000 per annum.
[8] In either 2009 or 2010, AMR instituted a “salary cap” (or maximum salary) of $70,000 for law clerks at the firm. Upon attaining that salary, although a law clerk could not further increase his or her base salary, they could earn a performance bonus, primarily by exceeding targets for billable hours during a calendar year. In certain years, AMR also provided what was described as a “salary cap bonus”, intended to provide some additional compensation for employees whose base salary was capped through the operation of the salary cap. AMR discontinued the “salary cap bonus” after 2012, but kept the performance bonus in place.
[9] The Plaintiff attained the maximum salary of $70,000 for a law clerk effective May 1, 2012 and her base salary remained capped at that level throughout the remainder of her employment with AMR. She received the following bonus payments over the final 4 years of her employment with the firm:
Year
Bonus payable
2011
Performance bonus of $5000
2012
Performance bonus of $5000 plus a “salary cap bonus” of $3500
2013
Performance bonus of $16,000
2014
Performance bonus of $10,000
[10] The events which led to the Plaintiff’s termination of employment commenced with a meeting between her and AMR’s office manager, Steffanie Hamilton (“Hamilton”) in mid-March 2015. At that meeting the Plaintiff expressed concerns over the salary cap and inquired as to whether the firm was considering increasing the maximum salary for law clerks. The Plaintiff’s uncontradicted evidence is that Hamilton recommended that the Plaintiff “do your homework and see what others are paid”.
[11] The Plaintiff subsequently discussed the matter with the other law clerks at AMR. Some of the clerks contacted colleagues at other law firms to inquire as to their compensation. They shared their findings with each other at a lunch on March 20, 2015. Immediately following that lunch the law clerks met as a group with Hamilton and a partner at the firm, Pamela Brownlee (“Brownlee”), to discuss their findings and concerns (the “March 20, 2015 Meeting”).
[12] The Plaintiff alleges that following the March 20, 2015 Meeting, AMR reduced the amount of work assigned to her. AMR disputes this allegation.
[13] On April 21, 2015, the Plaintiff met with Hamilton and Walter Aronovitch (“Aronovitch”), AMR’s managing partner, for her annual performance review. Before commencing a review of the Plaintiff’s performance for 2014, Aronovitch wanted to discuss “rumours” he had heard to the effect that certain of AMR’s law clerks, including the Plaintiff, were disclosing information regarding their salaries to one another. In Aronovitch’s view, the Confidentiality Clause in the Contract prohibited law clerks from discussing their salaries with each other.
[14] The parties have different accounts as to what occurred in the course of the April 21, 2015 performance review meeting. According to the Plaintiff, at the beginning of the April 21, 2015 meeting Aronovitch stated that he “had a bone to pick” with her. The Plaintiff alleges that Aronovitch confronted her in an extremely aggressive manner about the March 20, 2015 Meeting and the subsequent discussions regarding law clerk salaries. When the Plaintiff asked Hamilton to confirm that Hamilton had suggested that she make inquiries regarding her salary, Aronovitch abruptly cut Hamilton off and told the Plaintiff that she was “finger-pointing”. The Plaintiff claims that Aronovitch would not allow her to explain the circumstances surrounding the March 20, 2015 Meeting and the subsequent salary discussions. The Plaintiff indicates that she felt threatened by Aronovitch’s demeanour and thought it best to say nothing further.
[15] According to Aronovitch, when he asked about the Plaintiff’s discussions with other law clerks regarding their salaries, the Plaintiff developed a “confrontational attitude”, which included raising her voice and leaning over the boardroom table. Aronovitch states that when he continued to ask the Plaintiff about her discussions with other law clerks, she refused to answer and stated that she was “pleading the fifth”. Aronovitch then ended the performance review meeting.
[16] Following the April 21, 2015 performance review meeting, the Plaintiff sent an email to Aronovitch, Hamilton and Brownlee indicating that she and others had approached Hamilton in March 2015 regarding the salary cap that had been in place for a number of years. The Plaintiff explained that Hamilton had told her to “do your homework and see what others are paid”. The Plaintiff stated that, despite being informed of this previous conversation with Hamilton, Aronovitch had stood by his accusation that she was in violation of her employment contract for having discussions with other law clerks regarding her compensation. In her email, the Plaintiff indicates that she was not given the opportunity at the April 21, 2015 meeting to defend the accusations presented and she had refused to answer Aronovitch’s question as to whether or not the March 20, 2015 Meeting had taken place. She notes that at that point in the meeting her performance review was “abruptly ended”.
[17] On April 22, 2015, Aronovitch sent an email to the Plaintiff indicating that her performance review had been prematurely terminated as a result of the Plaintiff’s refusal to answer questions concerning her employment contract and her confrontational attitude through “finger-pointing, leaning over boardroom table, raising [her] voice.” Aronovitch indicated that if she wanted her performance review to resume, “the above issues must be remedied”. Aronovitch states that he did not receive a response to his April 22, 2015 email.
[18] Aronovitch indicates that in light of the Plaintiff’s conduct at the performance review meeting, and her failure to subsequently “acknowledge, apologize, or correct her insubordinate behaviour”, he made the decision to terminate her employment on a “without cause” basis. At a meeting on April 29, 2015, the Plaintiff was informed in writing that her employment was being terminated effective immediately. She was also provided with a payment of $39,372.92, on account of her entitlements under the Act, consisting of the following:
a. $10,000 representing the Plaintiff’s bonus for 2014;
b. $10,769.24 for eight (8) weeks of termination pay in lieu of notice;
c. $16,557.51 for twelve and a third (12.33) weeks of severance pay; and
d. $2045.97 for unused vacation pay for 2015, plus four percent (4%) of termination pay (in accordance with the requirements of the Act).
[19] In addition to the above payment, AMR stated that it would continue to provide the Plaintiff with all of her employment benefits for eight (8) weeks, until June 24, 2015. In fact, AMR actually continued paying for the Plaintiff’s employment benefits until January 2016.
[20] The Plaintiff commenced this proceeding via a statement of claim issued on July 14, 2015. In it, she claims that the Termination Clause is invalid since it fails to comply with the minimum requirements set out in the Act or, in the alternative, because it is unconscionable. Accordingly, the Plaintiff alleges that she is entitled to notice of termination at common-law, consisting of the following:
a. damages for wrongful dismissal, consisting of 14 months’ salary in lieu of notice of termination, less amounts already paid;
b. payment of $11,149.17, representing a 3% annual increase as paid by AMR to its employees before it placed the salary cap on the Plaintiff’s compensation;
c. payment of $15,000 on account of the Plaintiff’s bonus for 2015 and during the notice period;
d. payment of $15,000 to be applied to retraining;
e. payment of out-of-pocket amounts incurred for medical and dental expenses throughout the 14 month notice period.
[21] Prior to the commencement of the trial, the Plaintiff abandoned her claim for damages in excess of $100,000. Accordingly, the trial proceeded on the basis of the Rule 76 simplified procedure.
Issues
[22] The parties are agreed that the Plaintiff’s employment was terminated without cause. Therefore the issues to be decided consist of the following:
is the Termination Clause legally effective such that the Plaintiff’s entitlements upon termination are limited to those provided for under the Act?
in the event that the Termination Clause is invalid or otherwise unenforceable, what are the Plaintiff’s entitlements to reasonable notice at common law? In particular, is the Plaintiff entitled to any or all of the following;
a. reasonable notice, or pay in lieu of notice, in excess of the amounts already paid by AMR;
b. a bonus payment for 2015 and/or during the notice period;
c. compensation for foregone salary increase(s) on account of the establishment of a salary cap by AMR on the base salaries of law clerks;
d. payment for retraining costs; and
e. payment for out-of-pocket medical and dental expenses during the common law notice period?
- In the event that the Plaintiff is entitled to reasonable notice at common law, did she take appropriate steps to mitigate her damages during the notice period?
Enforceability of the Termination Clause
[23] Section 5 of the Act provides that no employer shall contract out of or waive an employment standard and “any such contracting out or waiver is void”. In Machtinger v. HOJ Industries Ltd.,[^2] the Supreme Court of Canada found that if a termination clause is null and void by operation of the Act, it is unenforceable for all purposes.
[24] One of the requirements of the Act is that an employer must continue to make benefit plan contributions on behalf of an employee during the period of notice required by the Act. The Plaintiff contends that the Termination Clause is invalid since it fails to provide for the continuation of such benefit plan contributions. In the alternative, the Plaintiff argues that the Termination Clause is unconscionable.
a. Requirement to Make Benefit Plan Contributions During Statutory Notice Period
[25] Three relatively recent decisions of the Court of Appeal have considered whether termination clauses with broadly similar wording to that used in the Contract satisfy the minimum requirements of the Act with respect to the obligation to continue to make benefit plan contributions during the statutory notice period.
[26] In Roden v. The Toronto Humane Society,[^3] at issue was the legal effectiveness of a termination clause which provided as follows:
Otherwise, the Employer may terminate the Employee’s employment at any other time, without cause, upon providing the Employee with the minimum amount of advance notice or payment in lieu thereof as required by the applicable employment standards legislation.
[27] In Roden, the employees whose employment had been terminated challenged the enforceability of the termination clause on the basis that it made no reference to the employer’s obligation in respect of benefit plan contributions during the notice period. Gillese J.A. held that the fact that the termination clause was silent with respect to the obligation to continue to make benefit plan contributions did not represent an attempt to “contract out” of the employer’s obligations under the Act. Instead, the termination clause referentially incorporated the minimum notice period set out in the Act, which would include the obligation to continue benefit plan contributions. Thus the termination clause did not attempt to provide something less than the legislated minimum standards under the Act and was legally enforceable.
[28] In contrast, in Wood v. Fred Deeley Imports Ltd.,[^4] the Court of Appeal found that the termination clause in that case did attempt to contract out of the employer’s obligations to continue to make benefit plan contributions during the notice period and was for this reason unenforceable. The termination clause in question provided as follows:
[The Company] is entitled to terminate your employment at any time without cause by providing you with the 2 weeks’ notice of termination or pay in lieu thereof for each completed or partial year of employment with the Company. If the Company terminates your employment without cause, the Company shall not be obliged to make any payments to you other than those provided for in this paragraph… The payments and notice provided for in this paragraph are inclusive of your entitlements to notice, pay in lieu of notice and severance pay pursuant to the Employment Standards Act, 2000.
[29] Laskin J.A. noted that, in general, courts interpret employment agreements differently from other commercial agreements. They do so mainly because of the importance of employment in a person’s life and the vulnerability of employees when their employment is terminated. Laskin J.A. also noted that the Act is remedial legislation, intended to protect the interests of employees. This means that the Act should be interpreted in a manner that “encourages employers to comply with the minimum requirements of the Act”. Moreover, termination clauses should be interpreted in a way that “encourages employers to draft agreements that comply with the ESA” and that, “faced with a termination clause that could reasonably be interpreted more than one way, courts should prefer the interpretation that gives the greater benefit to the employee.”
[30] Turning to the specific termination clause in that case, Laskin J.A. noted that the clause required the employer to provide 2 weeks’ notice of termination or pay in lieu thereof for each completed or partial year of employment. There was no explicit reference to the statutory obligation to continue to make benefit plan contributions during the notice period. However, the termination clause went on to provide that “the Company shall not be obliged to make any payments to you other than those provided for in this paragraph”, and also stated that the “payments and notice provided for in this paragraph are inclusive of your entitlements to notice, pay in lieu of notice and severance pay pursuant to the Employment Standards Act, 2000.” On its plain wording, the clause required the employer to provide termination pay only, thereby excluding the employer’s obligation to contribute to the employee’s benefit plans during the notice period. For this reason, the clause was an attempt to reduce the employer’s obligations below the minimum required by the Act and was legally unenforceable.
[31] Laskin J.A. contrasted the clause in Wood from that considered in Roden. In Roden the termination clause was silent with respect to the employer’s obligation to make benefit plan contributions during the notice period. However, the Roden termination clause incorporated by reference the employer’s obligations under the Act and did not attempt to exclude or limit the obligation to make benefit plan contributions during the notice period. In contrast, the termination clause in Wood was not merely silent about the employer’s obligation to contribute to benefit plans, but employed language that excluded that obligation. The payments the employer is required to make in Wood are the “only payments” to which the employee is entitled and are “inclusive” of her entitlements under the Act. In Laskin J.A.’s view, it was the “all-inclusive” language in the termination clause in Wood, and its absence from the termination clause in Roden, which distinguished the two cases.
[32] Most recently, the Court of Appeal in Nemeth v. Hatch Ltd.,[^5] considered whether the following termination clause provided the minimum entitlements under the Act:
The Company’s policy with respect to termination is that employment may be terminated by either party with notice in writing. The notice period shall amount to one week per year of service with a minimum of four weeks or the notice required by the applicable labour legislation.
[33] The first question that arose was whether the clause was sufficiently clear to displace an employee’s common law notice entitlement. In considering this question, Roberts J.A. noted that it was not necessary for the parties to use a specific phrase or particular formula, provided that the parties’ intention to displace common law rights could be readily gleaned from the language agreed to by the parties. In this case, by incorporating by reference the minimum notice required under “applicable labour legislation”, the clause clearly substituted a different notice period from that provided at common law. It was therefore clear that the parties had agreed to limit the employee’s common law notice entitlement.
[34] Roberts J.A. then considered the question of whether the termination clause provided the employee with his minimum entitlements under the Act. At issue was the fact that the termination clause was silent with respect to the employee’s entitlement to severance pay. However, in Roberts J.A.’s view, the silence of the termination clause on this point did not reflect an intention to “contract out” of the Act. This was because it did not include the “all-inclusive” language that had been fatal to the validity of the clause utilized in Wood. As such, the clause provided the minimum severance obligations under the Act and was not void pursuant to section 5 (1).
b. The Termination Clause Meets the Minimum Requirements of the Act
[35] Turning to the Termination Clause in this case, I would note, first, that the clause does substitute a different notice period upon termination from that otherwise applicable at common law. The Termination Clause provides that the Plaintiff shall be entitled to “notice, severance pay, and any other payment required by the relevant legislation in force as at the time of the termination.” As was the case in the Nemeth, this incorporation by reference of the minimum notice required under applicable law is sufficiently clear to displace the Plaintiff’s common law notice entitlement.
[36] I would further hold that the Termination Clause makes explicit provision for the continuation by the employer of benefit plan contributions during the notice period. This is reflected in the requirement to make “any other payment required by the relevant legislation.” These words must mean more than simply pay in lieu of notice and/or severance pay required by the Act, as both are already explicitly and independently referenced in the Termination Clause. In my view, the reference to “any other payment required by the relevant legislation” is sufficiently broad to include the requirement to continue to make benefit plan contributions during the notice period.
[37] This conclusion is reinforced by the observation that benefit plan contributions are generally paid to third-party benefit providers rather than to the employee herself. The reference in the Termination Clause to “any other payment required by the relevant legislation” is not limited to payments made directly to the employee. This can be contrasted with the clause in Wood which referenced “payments to you” in the phrase “the Company shall not be obliged to make any payments to you other than those provided for in this paragraph.” The open-ended wording utilized in the Termination Clause reflects a requirement that AMR continue to make benefit plan contributions to third party benefit providers on behalf of the Plaintiff during the statutory notice period.
[38] Moreover, the clear intention of the Termination Clause is to ensure that the Plaintiff receive no less than all of the amounts to which she is entitled under the Act. This is reflected in the opening lines of subclause H(b) of the Clause, which state that, notwithstanding payments provided for earlier in the Clause, “if the amounts which you would receive upon a Non-Cause Termination, as set out above, are less than the amounts to which you would be entitled under the Employment Standards Act, as amended or any successor legislation, then you shall be entitled to …any other payment required by the relevant legislation in force at the time of the termination.” This reflects an intention to ensure that payments due upon a non-cause termination are to be not less than the entitlements provided for under the Act.
[39] In any event, even if I am wrong in concluding that the Termination Clause expressly requires AMR to continue to make benefit plan contributions during the statutory notice period, there is no attempt to exclude any such obligation. The Termination Clause does not contain the exclusionary language utilized in Wood which purported to limit the employer’s obligations during the notice period to that expressly provided.
[40] Both Roden and Nemeth indicate that if a termination clause incorporates by reference the applicable employment standards obligations, mere silence with respect to the obligation to make benefit plan contributions will not impair the legal validity of the clause. Thus, even if the Termination Clause does not expressly require the continuation of benefit plan contributions, it is, at worst, merely silent on the matter. As such, in my view there is no basis for concluding that the Termination Clause represents an attempt to contract out of the Plaintiff’s statutory entitlements upon termination.
[41] I therefore conclude that the Termination Clause required AMR to provide the Plaintiff with no less than her minimum entitlements under the Act. AMR met this obligation when it provided the Plaintiff with 8 weeks’ termination pay in lieu of notice, 12.33 weeks’ of severance pay, and continued to make benefit plan payments on her behalf beyond the required 8 week notice period.
c. The Termination Clause is not Unconscionable
[42] The Plaintiff argues, in the alternative, that the Termination Clause is unenforceable on the basis that it is unconscionable. As the Court of Appeal noted in Titus v. William F. Cooke Enterprises Inc.,[^6] a party relying on the doctrine of unconscionability to set aside a transaction faces a high hurdle. Four elements are necessary in order to sustain a finding of unconscionability: (i) a grossly unfair and improvident transaction; (ii) the victim’s lack of independent legal advice or other suitable advice; (iii) an overwhelming imbalance in bargaining power; and (iv) the other party’s knowingly taking advantage of this vulnerability.
[43] The Plaintiff’s argument on this issue fails on the first criteria. A termination clause requiring an employer to provide the employee with his or her entitlements under the Act cannot be said to be “grossly unfair or improvident”. This is clear from the fact that the Court of Appeal upheld the validity of a termination clause with precisely this legal effect in Roden. In addition, in Machtinger, Iacobucci J. noted that the Act sets out “what the provincial legislature deems to be fair minimum notice periods.” Iacobucci J. further commented that one of the purposes of the Act “is to ensure that employees who are discharged are discharged fairly.”[^7] Given this characterization of the entitlements under the Act, I cannot see any basis upon which it can be maintained that a contractual provision requiring that an employee receive these very entitlements could be said to be unconscionable.
[44] Accordingly, the Termination Clause is legally enforceable and limits the Plaintiffs entitlement upon termination of employment to those provided for under the Act. AMR provided the Plaintiff with her entitlements in that regard when her employment was terminated. Accordingly, her claim for additional compensation must be dismissed.
Entitlements at Common Law
[45] In the event that the above conclusions are incorrect, I set out what the Plaintiff’s entitlements at common law would have been in the event that I had found the Termination Clause to be unenforceable.
a. Reasonable Notice
[46] At common law, an employee who is dismissed without cause is entitled to be provided with reasonable notice or payment in lieu of such notice. In determining the appropriate notice period, courts have considered the factors identified in Bardal v. Globe & Mail Ltd.,[^8] including the nature of the employment, the length of employment, the employee’s age and the realistic possibility of finding similar employment appropriate to the experience, responsibility and qualifications of the employee.
[47] In this case, the Plaintiff was 37 years old at the time her employment was terminated. She had worked for AMR for 13 years. She occupied a front-line as opposed to a management or supervisory position and evidence tendered at the trial indicated that there were extensive employment opportunities for such positions at the time of her termination in April 2015. The Plaintiff acknowledges that in the five months immediately following her termination, she was provided by AMR with job postings for over 100 positions for law clerks in the Greater Toronto Area. Although in her view many of the job postings were not suitable, she did apply for over a dozen of these positions and received two interviews.
[48] Another relevant factor in considering the appropriate notice period arises from decisions made by courts in analogous circumstances. While each case must be adjudicated on its own facts, previously decided cases can offer some guidance. Courts have tended to award notice in the range of nine months for employees whose circumstances were similar to those of the Plaintiff. For example, in Drake v. Blach,[^9] a 46-year-old medical secretary who had been employed for 12 years was awarded nine months’ pay in lieu of notice, while in Yiu v. Canac Kitchens Ltd.,[^10] a 37-year-old team lead for customer service with 11 years’ service was awarded nine months’ pay in lieu of notice.
[49] The Plaintiff argues that AMR’s conduct in the period leading up to the termination of her employment was an aggravating factor which should lead to an increase in the period of common law notice. In particular, the Plaintiff argues that during the March 20, 2015 Meeting, Hamilton invited her to “your homework and see what others are paid.” This was, in effect, an invitation to discuss her salary with other law clerks at the firm and elsewhere. It was thus unfair for Aronovitch to object to her salary discussions with her colleagues at the firm during the April 21, 2015 performance review meeting.
[50] Hamilton did not specifically deny making the comment attributed to her by the Plaintiff at the March 20, 2015 Meeting. I find that Hamilton did in fact invite the plaintiff to discuss her salary with colleagues at AMR. Given this direction from AMR’s office manager, I find it difficult to understand the basis upon which Aronovitch maintained that the Plaintiff’s salary discussions with her colleagues constituted a breach of the confidentiality provisions in the Contract.
[51] Nevertheless, AMR did not rely on any alleged breach of the Contract as the basis for the termination of her employment. Instead, AMR proceeded on the basis of a “without cause” termination and provided the Plaintiff with her full contractual entitlements. Nor did AMR engage in bad faith conduct or unfair dealing in the course of the termination of the Plaintiff’s employment. While AMR refused the Plaintiff’s request to reconsider the decision to terminate the Plaintiff’s employment on April 29, 2015, it was under no obligation to do so. As such, I find that AMR did not engage in the kind of conduct identified by the Supreme Court of Canada in Wallace v. United Grain Growers Ltd.[^11] as attracting a higher damage award.
[52] Applying the factors enumerated in Bardal to the specific facts of this case, I find the applicable period of reasonable notice to be nine months. Based on her annual salary of $70,000, this would have entitled the Plaintiff to a lump sum payment of $52,500 less the statutory notice and severance payments of $27,326.75 already paid by AMR, leaving an outstanding balance of $25,173.25.
b. Bonus Entitlement
[53] As the Court of Appeal noted recently in Lin v. Ontario Teachers’ Pension Plan,[^12] it is settled law that damages in lieu of reasonable notice should place an employee in the same financial position he or she would have been in had such notice been given and the employee had worked to the end of the period of reasonable notice. Further, damages for wrongful dismissal are not limited to claims for lost wages but may include payments on account of other forms of compensation including bonus plans.
[54] At the time of the termination of the Plaintiff’s employment, the AMR bonus plan provided that a law clerk who exceeded the threshold of 1400 billable hours for the year would be entitled to a bonus payment of $10,000. AMR does not contest the fact that the opportunity to earn this bonus represented an integral part of the Plaintiff’s compensation. The Plaintiff had received a bonus in each of the final four years of her employment, albeit in different amounts. Moreover, given the fact that her base salary was capped, the opportunity to earn a bonus was particularly significant to the Plaintiff. Indeed, it was her concern over the salary cap which had led the Plaintiff to initiate the discussions which eventually led to the termination of her employment.
[55] AMR maintains that the Plaintiff would only be entitled to a bonus for calendar year 2015 if she can demonstrate that she would have accumulated 1400 hours of billable work in 2015. It tendered evidence to the effect that when her employment was terminated in April 2015, she was nowhere near the threshold billable hours required for a bonus. There is no evidence of any contractual term creating an entitlement to a prorated bonus and therefore, in AMR submission, the Plaintiff’s claim for a bonus must fail.
[56] In my view, AMRs argument on this point fails to take account of the nature of the Plaintiff’s claim for a bonus during the statutory notice period. As Sharpe J.A. explained in Taggart v. Canada Life Assurance Co.,[^13] in cases where a terminated employee seeks compensation for entitlements under a benefit plan, the claim is not for the benefits themselves; rather, it is for common law contract damages as compensation for the benefits that the employee would have been in a position to earn had the employer not breached the contract of employment. The employee is claiming for the lost opportunity to continue to earn or receive benefits that would have been available in the event their employment had continued.
[57] I have earlier found that the Plaintiff would have been entitled to a common law notice period of nine months, namely, from April 29, 2015 until February 28, 2016. This notice period would have provided her with the opportunity to earn a bonus for the entire 2015 calendar year. As such, her claim is not for a prorated bonus but, rather, for the lost opportunity to earn a bonus for the year as a whole.
[58] AMR argues that at the time of the termination of the Plaintiff’s employment, she had billed approximately 325 hours in 2015 and thus it was unlikely that she would have met the 1400 hour threshold had she continued her employment for the remainder of the year. The Plaintiff argues that AMR had reduced her work following the March 20, 2015 Meeting and that, had the work assigned to her continued consistent with past practice, she would have had significantly higher billable hours by the end of April 2015.
[59] I am not in a position, given the record before me, to make a clear determination as to whether AMR in fact reduced the work assigned to the Plaintiff between March 20, 2015 and April 29, 2015. However, I do not believe it is necessary to make a finding on this point in order to address the Plaintiff’s claim for a bonus entitlement. This is because there was nothing in the bonus plan limiting the Plaintiff’s rights to earn a bonus upon termination of employment. The Plaintiff had earned a bonus in each of the previous four years, and the bonus was an integral part of her compensation. By terminating her employment on April 29, 2015, AMR deprived her of the opportunity to earn a bonus during the common law notice period. I find that she was entitled to be compensated for this lost opportunity.
[60] The amount of bonus earned by the Plaintiff in her final four years of employment had varied from a low of $5000 to a high $16,000. At the time of her termination, law clerks at AMR were entitled to a bonus of $10,000 if they exceeded the target of 1400 billable hours for the year. Accordingly, I find that the Plaintiff is entitled to a payment of $10,000 as compensation for the lost opportunity to earn a bonus for the 2015 calendar year.
c. No Compensation for Salary Increases
[61] The Plaintiff objects to the salary cap that was imposed on law clerks’ salaries at AMR. She argues that, absent this salary cap, she would have been entitled to salary increases. She seeks compensation for these foregone salary increases.
[62] The precise nature of the Plaintiff’s claim in this regard is unclear. In her original statement of claim, she had claimed a payment of $45,000, representing the additional income that she would have earned if AMR had not placed a cap on her salary. Following a motion to strike, which found this claim as originally framed to be legally untenable, the Plaintiff amended her claim such that she seeks payment of $11,149.17, representing a “3% annual increase as paid by [AMR] to its employees before it placed the salary cap on the Plaintiff’s compensation.”
[63] When questioned on this issue during the trial, the Plaintiff was unable to explain the basis upon which this 3% salary increase was being sought. In particular, the Plaintiff was unable to explain whether the claim was for salary increases that she ought to received prior to her termination, or whether her claim in this regard represented compensation for salary increases which she ought to have received during the notice period.
[64] In any event, I find that this claim cannot succeed. The salary cap was instituted in 2009 or 2010 and the Plaintiff acknowledged that she was aware of the existence of the salary cap by no later than May 2013. There is no evidence suggesting that she took issue with the salary cap prior to the discussions that took place in the spring of 2015. Assuming the institution of the salary cap represented a unilateral change in the terms of her employment, this would have given the Plaintiff the right to reject the change and sue for damages. However, as the Court of Appeal noted in Wronko v. Western Inventory Service Ltd.,[^14] where an employee accepts a change in the terms of employment, either expressly or implicitly through apparent acquiescence, the employment will continue under the altered terms. That appears to be what happened in this case. Although the Plaintiff subsequently became unhappy with the salary cap, she had continued her employment with AMR for a number of years on the basis that law clerk salaries were subject to a salary cap. An employee cannot continue to work under altered terms of employment and then, at some later time, retroactively claim to have been working under a different set of employment terms.
[65] In any event, even had I found otherwise, the Plaintiff did not commence her claim until July 14, 2015. This was more than 2 years after she became aware of the salary cap. As such, her claim was commenced after the second anniversary of the day on which a claim was discovered and is barred by the Limitations Act, 2002. [^15]
d. Claim for Retraining Costs
[66] The Plaintiff seeks compensation in the amount of $15,000 for her tuition paid for a Bachelor of Arts program at Tyndale College which she commenced in September 2015. She did not produce any receipts or documentary evidence showing the amounts she actually paid to the College. Moreover, the Plaintiff acknowledged that this was a general arts program and did not constitute retraining for a specific job opportunity. She explained that her intention upon completion of the program is to apply to a teacher’s college. The Plaintiff indicated that she had decided by the late summer 2015 that she needed to pursue a different path in light of her difficult experience following the termination of her employment by AMR.
[67] In certain circumstances, employees who are unable to find comparable employment in a current field of endeavor have been found to be entitled to pursue retraining programs to enable them to pursue alternate career opportunities. In my view, however, the general Bachelor of Arts program pursued by the Plaintiff at Tyndale College does not constitute a “retraining” program. It is intended to provide students with a general liberal arts education which, while certainly relevant for future job opportunities, is not designed with that goal specifically in mind. As such, I do not believe that the Plaintiff is entitled to compensation for tuition costs incurred in connection with the program at Tyndale College.
e. Compensation for medical and dental expenses
[68] The Plaintiff seeks compensation for medical and dental expenses incurred during the common law notice period. However she does not have any records indicating the nature or extent of any expenses incurred. Moreover, I note that she continue to be covered under the AMR benefits plan until January 2016, which is almost the entire period of common law notice to which she would have been entitled, approximately 9 months after the termination of her employment. The Plaintiff’s claim for compensation for medical and dental expenses cannot succeed.
Mitigation
[69] Where an individual’s employment is terminated without cause, the individual has a duty to mitigate her damages by seeking alternate employment. The employer bears the onus of proving the employee did not act reasonably in mitigating their damages. The general rule is that the employer must show the employee could have procured similar employment after termination, thereby limiting the damage caused by wrongful dismissal.[^16]
[70] In this case, there is no doubt that the Plaintiff diligently sought alternate employment in the period immediately following her termination by AMR. She attended at an employment centre in May 2015 and obtained advice with respect to the appropriate steps to take in a job search. Following that, she applied for over a dozen law clerk positions and obtained two interviews. However, she testified that the absence of a reference letter from AMR was an obstacle in her job search. One of her job interviews was cancelled when she was unable to produce a reference letter from AMR. She testified that the fact that she did not have a reference letter from her employer where she had worked for the past 13 years was a factor in limiting her ability to secure alternate employment. By the summer of 2015 she become depressed and decided to enroll in the Tyndale College program commencing September 2015.
[71] AMR concedes that the Plaintiff made reasonable efforts to mitigate up until the commencement of her program at Tyndale College in September 2015. However, AMR argues that by enrolling in Tyndale College she effectively removed herself from the labour force and failed to mitigate her damages beyond that point.
[72] I am not prepared to accept this argument. In my view it is not open to AMR to take the position that the Plaintiff’s efforts to mitigate were unreasonable when the Plaintiff did make extensive efforts to secure employment and AMR’s failure to provide her with a reference letter impeded her job search. Although there is no positive obligation on an employer to provide a reference letter, the absence of such a letter is a relevant consideration in determining whether the dismissed employee has reasonably mitigated their damages. I would also observe that by the late summer 2015 the Plaintiff had become depressed as a result of her lack of success in obtaining alternate employment. She indicated that the commencement of her studies at Tyndale College was important for her mental health.
[73] The burden is on the employer to establish that the employee failed to act reasonably in mitigating their damages. In the particular circumstances of this case, I do not believe that AMR has established that the Plaintiff failed to act reasonably in mitigating her damages. As such, I would not have reduced her entitlements at common law on the basis of a failure to mitigate.
Conclusion
[74] The Termination Clause in the Contract is legally enforceable and limits the Plaintiff’s entitlements upon termination of employment to those provided for under the Act. In particular, the reference in the Termination Clause to the Plaintiff being entitled to “any other payment required by the relevant legislation” includes an entitlement to the continuation of benefit plan contributions. Nor is the Termination Clause unconscionable. AMR provided the Plaintiff with her entitlements under the Act when her employment was terminated. Accordingly, her claim for additional compensation is dismissed.
[75] In the event that I had found the Termination Clause to be legally unenforceable, I would have found the Plaintiff to be entitled to nine months’ notice upon termination. I would also have found her to be entitled to a payment of $10,000 as compensation for the lost opportunity to earn a bonus for the 2015 calendar year. However I would not have awarded her any compensation for foregone salary increases, the cost of her tuition at Tyndale College, or her medical and dental expenses. I would not have reduced her entitlements at common law based on a failure to mitigate her damages.
[76] AMR is entitled to its costs in defending this action. I leave it to the parties to attempt to settle the quantum of costs payable. In the event that the parties are unable to so agree, AMR may make costs submissions of up to three pages (excluding Bills of Costs and offers to settle) within 21 days, with the Plaintiff providing her costs submissions on a similar basis within 21 days of the date for the delivery of AMR’s submissions.
P. J. Monahan J.
Released: May 15, 2018
COURT FILE NO.: CV-15-532352
DATE: 20180515
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ALTHEA BURTON
Plaintiff
– and –
ARONOVITCH MACAULAY ROLLO LLP
Defendant
REASONS FOR JUDGMENT
P. J. Monahan J.
Released: May 15, 2018
[^1]: S.O. 2000, c. 41 (the "Act"). [^2]: 1992 CanLII 102 (SCC), [1992] 1 S.C.R. 986 ("Machtinger") at paragraph 28. [^3]: (2005) 2005 CanLII 33578 (ON CA), 202 O.A.C. 351 (C.A.)("Roden"). [^4]: 2017 ONCA 158 ("Wood"). [^5]: 2018 ONCA 7 ("Nemeth"). [^6]: 2007 ONCA 573 at paragraphs 36 to 38. [^7]: Machtinger at paragraph 36. [^8]: (1960), 1960 CanLII 294 (ON SC), 24 D.L.R. (2nd) 140 (Ont. H.C.). [^9]: 2012 ONSC 1855. [^10]: [2009] O.J. No. 871 (S. C. J.). [^11]: 1997 CanLII 332 (SCC), [1997] 3 S.C.R. 701. [^12]: 2016 ONCA 619 at paragraph 84. [^13]: (2006), 50 C.C.P.B. 163 (Ont. C.A.). [^14]: 2008 ONCA 327. [^15]: S. O. 2002, c.24, Sched. B., sections 4 and 5. [^16]: Michaels v. Red Deer College, 1975 CanLII 15 (SCC), [1976] 2 S.C.R. 324.