In this recent BC employment law case, the plaintiff recovered wrongful dismissal damages after long service. Just cause was not alleged at trial, but had been considered based on the plaintiff's sending offensive jokes of a sexual nature by email.
Facts: (the court wrote)
[2] The plaintiff is 62 years old. He was employed by the defendant for approximately 18 and a half years and, at the time of his termination, was a Senior Manager, Commercial Real Estate Lending. The defendant is one of Canada's largest credit unions. When the plaintiff was terminated, his total remuneration was in the range of $100,000 to $150,000 per year.
[11] Since the defendant is not relying on just cause as a defence to the claim for wrongful dismissal, the issues to be decided are:
1) What is a reasonable notice period in these circumstances?
2) What measure of compensatory damages is appropriate? Under this heading, I must consider not only salary, but also:
a) whether in assessing damages, the Court should include in Mr Szczypiorkowski's total remuneration the bonuses he had been receiving over the years;
b) whether the Court should reduce the amount because the plaintiff has failed to mitigate his damages; and
c) whether the Court should apply a discount to the notice period contingent on the likelihood that the plaintiff will find work before the end of the notice period.
3) Has the plaintiff established that the Court should award punitive damages?
Findings:
Reasonable Notice: The court found that in the circumstances an 18 month notice was appropriate, given the plaintiff's age, length of service, and the character of his employment.
Bonus Claim:
The court applied the normal test for awarding bonuses - whether the bonus was a benefit that was an "integral part of the employee's wage or salary structure". The court concluded that in this case the test was satisfied:
[71] On this point, in Gillies v Goldman Sachs Canada Inc. 2000 BCSC 355 (CanLII), (2000), 2000 BCSC 355, 49 C.C.E.L. (2d) 236 at para. 63 ["Gillies"], the Court confirmed four factors in deciding whether a bonus was an integral part of a plaintiff's compensation. The Court should consider, in the words of that decision, whether
1) A bonus is received each year although in different amounts;
2) Bonuses are required to remain competitive with other employers;
3) Bonuses were historically awarded and whether the employer had never exercised his discretion against the employee; and
4) The bonus constituted a significant component of the employee's overall compensation.
[72] The employee bears the onus of persuading the Court that had the employee worked throughout the notice period, he would have been entitled to receive a bonus as a matter of contract, on the basis that "past history establishes that it has become an integral part of the plaintiff's wage structure." He must also show the basis for assessing the amount of any such bonus. See Sandelson v. International Vintners Ltd. 1987 CanLII 2978 (BC SC), (1987), 18 B.C.L.R. (2d) 86 at 90, 6 A.C.W.S. (3d) 882 (S.C.).
[73] In considering a wrongfully dismissed employee's entitlement to bonuses, the Court in Hansen v. Altus Energy Services Partnership,2010 ABQB 820 (CanLII), 2010 ABQB 820, 86 C.C.E.L. (3d) 297 concluded at para. 30:
[30] A bonus scheme that has historically become an integral part of an employee's wage or salary structure gives rise to a reasonable expectation of a bonus. Such a bonus is a benefit that has a value and should form part of the calculation of the employee's damages. In the case of quasi or non-formula bonuses, if they are routinely awarded in a certain amount or in a certain range, they should be included in the assessment of damages, just like any other fringe benefit. Hansen had received bonuses in all but 2-4 of his 23 years of employment and therefore the bonuses could be considered as routinely awarded.
This case also involved an issue as to whether a dismissed employee, who was not working at the time a bonus would have been payable, should receive compensation for a bonus in any event, both before the dismissal and for the notice period. The court rejected the defendant's argument on the basis that the bonus would have been payable if the employer had given proper working notice. This is consistent with the general course of authority in BC courts.
The court said on this point:
[65] Turning to the defendant's first argument, I find this position without merit for the simple reason that had CCS not wrongfully dismissed the plaintiff, Mr. Szczypiorkowski would have been employed and entitled to his bonus. Based on Mr. Szczypiorkowski regularly receiving a bonus in the past, it is reasonable to assume he would have continued to receive a bonus if he had continued his employment with the defendant. InFerguson v. Kodak Canada Inc., [1992] B.C.J. No. 2545 (S.C.), when considering a similar argument with regard to the award of dividends to a wrongfully dismissed employee, the court stated:
In my view the clause was not designed to meet the situation of a wrongfully dismissed employee who was deprived of the opportunity to work. He is entitled to be compensated by an award of damages
Another interesting issue was as to the amount of the bonus that should be awarded. The defendant's argument that larger bonuses in prior years should be excluded as they were extraordinary, but the court refused to accept this submission. The court assessed the bonus claim on the basis of a projection of historical averages, including higher and lower periods alike, writing:
[74] In my opinion, there is no reason to exclude the 2006 bonus or the $10,000 bonus from 2008 in this calculation. These facts differ fromReynolds v. First City Trust Co. reflex, (1989), 27 C.C.E.L. 194 at 200 (B.C.S.C.), where McKenzie J. concluded that one very large bonus of $70,000 "did not fit any pattern so far as amount was concerned," and did not include a bonus more than 11 times the average in his calculation of a bonus award within compensatory damages.
The defendant also argued that the amount of any bonus should have been reduced to reflect the fact that the employer might have placed the employee on a "performance improvement plan" if working notice had been given. The court rejected this argument, writing:
[66] With regard to the defendant's second argument, I find Mr. Berg's assertion that he would "probably" have put the plaintiff on a performance improvement plan if he had not been dismissed to be mere speculation. Mr. Berg's conjecture does not undermine the fact that the plaintiff received bonuses in the past on a continuous basis, and there was no evidence of prior misconduct or poor performance evaluations.
[67] Similarly, Ms. Fordy asserted that Mr. Szczypiorkowski would have been rated as "needs to do better" in "interpersonal-communications-related competencies." This is not certain enough, nor clear enough in its explanation of the rating categories and their relative values, for me to conclude that he would not have been considered to be doing a "good job" in four out of five core competencies—which is all that is required for an employee to be eligible for a bonus as far as job performance is concerned.
[68] Again, I am satisfied the reasonable probability is that, had the plaintiff not been wrongfully terminated in November 2010, he would have continued to receive a bonus.
Mitigation of Damages:
The court adopted a 2 part test, commonly followed in BC wrongful dismissal cases, requiring the employer seeking a deduction from notice period damages to discharge an onus that, firstly, efforts made by the plaintiff were not adequate and, secondly, that if extra effort had been made, earnings would have resulted. The court wrote in this regard:
[88] In Forshaw v. Aluminex Extrusions 1989 CanLII 234 (BC CA), (1989), 27 C.C.E.L. 208 at 212-213, 39 B.C.L.R. (2d) 140 at 144 (C.A.), our Court of Appeal addressed the issue of mitigation:
The duty to "act reasonably", in seeking and accepting alternate employment, cannot be a duty to take such steps as will reduce the claim against the defaulting former employer, but must be a duty to take such steps as a reasonable person in the dismissed employee's position would take in his own interests - to maintain his income and his position in his industry, trade or profession. The question whether or not the employee has acted reasonably must be judged in relation to his own position, and not in relation to that of the employer who has wrongfully dismissed him.
[89] On this point, I am mindful of Burnyeat J.'s description in Smith v. Aker Kvaerner Canada Inc. and Kvaerner Power Inc, 2005 BCSC 117 (CanLII), 2005 BCSC 117 ["Smith v. Aker"], of the dismissed employee's duty to search for new employment. At para. 31, he said:
[31] In seeking and accepting alternative employment, the plaintiff has a duty to act reasonably and to take such steps as a reasonable person in the plaintiff's position would take in his own interest to maintain his income and his position in his industry, trade or profession. The duty involves a constant and assiduous application for alternative employment, an exploration of what is available through all means....
[90] However, the defendant must prove that the terminated employee has failed to mitigate damages. This onus is "by no means a light one" (Red Deer College v. Michaels (1975), 1975 CanLII 15 (SCC), [1976] 2 S.C.R. 324 at 332, 57 D.L.R. (3d) 386 at 391). The defendant must establish, first, that it would have been reasonable for the plaintiff to do more in an attempt to find new employment and, second, that if the plaintiff had done more, he would have been successful in obtaining employment. See Jorgenson v. Jack Cewe Ltd., (1978), 93 D.L.R. (3d) 464, [1979] 1 A.C.W.S. 138 (B.C.C.A.), aff'd 1980 CanLII 177 (SCC), [1980] 1 S.C.R. 812, 111 D.L.R. (3d) 577; Sifton v. Wheaton Pontiac Buick GMC (Nanaimo) Ltd, 2010 BCSC 353 (CanLII), 2010 BCSC 353, aff'd 2010 BCCA 541 (CanLII), 2010 BCCA 541; and Smith v. Aker at para. 32.
[91] In my opinion, the plaintiff has attempted to find work in his field. He has monitored and applied for offers of similar employment. As well, even if the defendant was correct that Mr. Szczypiorkowski could have found the same job postings as did Mr. French, I am still not satisfied that there is sufficient evidence to conclude that these postings should be considered comparable job offers: again, there was no indication of the salary level offered for any of these positions (see Edge v. Kilborn Engineering (B.C.) Ltd. [1987] B.C.J. No. 992 aff'd [1998] B.C.J. No. 807).
[92] Moreover, turning to the second part of the mitigation test, given the plaintiff's present circumstances, it is highly unlikely that even if Mr. Szczypiorkowski had made substantially greater efforts, he would have succeeded in finding "comparable alternative employment" (see Carlysle-Smith v. Dennison Dodge Chrysler Ltd., 1997 CanLII 972 (BC SC), (1997) 33 C.C.E.L. (2d) 280 (B.C.S.C.) at para. 38). This is especially so when Mr. Szczypiorkowski's employer of the last 18 and a half years has exercised its right not to provide him with a letter of reference.
[93] I also bear in mind Burnyeat J.'s comments on similar circumstances in Systad v. Ray-Mont Logistics Canada Inc., 2011 BCSC 1202 (CanLII), 2011 BCSC 1202 at para. 31. I must regard Mr. Szczypiorkowski's "physical and mental condition": while he did not suffer an illness himself, he had just given care to two people with serious conditions for many months. I also take into account "the reasonable period of time" needed "to get over the shock of having his employment terminated." See also Smith v. Aker at para. 35.
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