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Court awards six months’ pay in lieu of notice to employee terminated after six months

In this case, the BC Supreme Court awarded an employee six months’ pay in lieu of notice after he was induced to leave his job for a new position, only to be dismissed six months later.

pay in lieu of notice“Severance is one month per year of service”, right?

Wrong. Our courts have made it clear that there is no such “rule of thumb”, and that they will consider several factors beyond length of service, including the employee’s age, position, and availability of similar employment. In addition, other relevant factors can include inducement to leave prior secure employment, which can dramatically increase an individual’s entitlement and result in far more than a month of notice per year of service.

Greenlees v. Starline Windows Ltd. provides yet another example of where a short service employee was awarded far more than the so-called rule of thumb would suggest. In that case, the British Columbia Supreme Court awarded an employee six months’ pay in lieu of notice after he was induced to leave his job for a new position, only to be dismissed six months later.

Background

The plaintiff, James Greenlees (“Greenlees”), was employed by the defendant, Starline Windows Ltd. (“Starline”), as a sales professional.

Prior to working for Starline, Greenlees was employed as an outside sales representative for Trevor Jarvis Contracting Ltd (“Trevor Jarvis”), earning a total income of approximately $100,000.00 per year, including commissions.

In January 2017, Greenlees received a cold call from Starline’s sales manager, Robert Parkinson (“Parkinson”), who invited him to a meeting to discuss a potential job opportunity with Starline. At the time Greenlees was not actively looking for alternative employment but he nevertheless agreed to the meeting.

Over the course of two meetings, Parkinson told Greenlees “his vision for growth for the company and opportunities for the future.” Greenlees was told that he would be working primarily on new construction projects with occasional work on renovation construction projects. He was also told that the new construction projects had the potential of earning him over $100,000.00 per year whereas the renovation projects would generate a lower income.

At the end of the second meeting, Parkinson presented Greenlees with a written offer of employment which Greenleaf subsequently accepted.

A week or two after starting work at Starline, Greenlees was advised by Parkinson that he would be working on renovation projects rather than new construction projects. He was told that this was temporary and Greenlees would be restored to working on new construction projects at the end of his probationary period. Greenlees agreed to wait it out.

At the end of the probationary period, Greenlees was not restored to new construction projects. When he spoke with the new sales manager about what he had been promised by Parkinson, he was advised that the new construction projects position was no longer available and that Greenlees would remain in the renovation construction department.

On September 14, 2017, Starline terminated Greenlees’ employment on a without cause basis. On termination, he was offered one week’s wages and $161.97 on account of commission income. Starline refused to provide him with a letter of reference.

Greenlees began to look for work immediately following his termination. He registered with three recruitment firms and on job seeking websites, applied to at least forty-two companies, and was invited for interviews with eight of those companies. He turned down two, one because the salary was significantly less than he was previously earning, and the other because he would be uncomfortable selling cannabis products. The other five interviews did not result in job offers. He was unemployed for a period of seven months.

Greenlees brought an action against Starline for wrongful dismissal.

Decision

The Court held that Greenlees’ discussions with Parkinson produced a reasonable expectation regarding income and responsibilities; therefore, they should carry some weight as inducement affecting the notice period. The Court added that, while it accepted that there was some inducement, this case was “close to the line” and while some increase in the notice period is justified, it’s only a “modest weight.”

The Court also considered the limited availability of alternative employment following Greenlees termination. The Court noted that

“while the notice period is not to be equated with the period a dismissed employee was off work searching for new employment, the court may draw an inference as to the limited availability of reasonably comparable alternate employment from the fact of a lengthy job search following a relatively short period of employment.”

The Court found that Greenlees’ job search was “diligent” and he was not “overly picky”. The Court also concluded that Greenlees efforts to find alternative employment may have been hampered by Starline’s refusal to provide him with a reference letter. Under the circumstances, the Court held that “the factor of limited availability of alternate employment following termination warrants an increase in the notice period.”

Taking into account the inducement and the limited availability of alternative employment, the Court concluded that Greenlees was entitled to six months’ notice.

Takeaway

The above case is a cautionary tale to employers with respect to their recruiting tactics. Approaching someone in a secure position and making representations to lure them away can significantly increase the amount of notice that will be owing if you subsequently let them go. The case also highlights the willingness of courts to award a longer notice period where the employee can demonstrate a particular difficulty in securing alternative employment.

It should be borne in mind, however, that these factors are only relevant when assessing reasonable notice pursuant to common law. If there was an enforceable employment agreement with a valid termination clause, then inducement and difficulty in finding new employment would have been irrelevant, and the employer’s severance obligations could have been greatly reduced. Which is why an individual that is lured away from secure employment should be cautious when agreeing to such clauses; we often work with individuals to negotiate clauses which reflect the security they are giving up.

By Stuart Rudner and Anique Dublin

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Stuart Rudner, Rudner Law

Employment Lawyer and Mediator at Rudner Law
Stuart Rudner is a leading HR Lawyer, mediator and a founding partner of Rudner Law, a firm specializing in Canadian Employment Law. At Rudner Law, their approach is simple. They want to understand your circumstances, your concerns, and your goals. They will then ensure that you understand the legal regime along with your rights and obligations. Once that is done, they work with you to design a cost-effective strategy that meets your needs. They want to be your trusted advisor.Read more
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