By Howard Levitt

Here are some of the court cases that stood out in 2023

Every month, I review every single employment law case across Canada and summarize the most important ones for Thomson Reuters’ Dismissal and Employment Law Digest. The digest is meant for lawyers, employers and other voracious readers of employment law, but some cases are of wider interest, too. Here are some from the recent past that touch on common employment law issues:

Jardine v. Phoenix Petroleum

Subject to employment standards minimums, employees can only seek their actual lost income over whatever period of time the court assesses damages. In other words, if a court decides that an employee is entitled to 12 months severance, all they will be entitled to is what they lost during those 12 months. From the 12 months will be deducted what the employer already paid in severance and any income earned during those 12 months. But not only new income an employee earns will be deducted from damages for wrongful dismissal: any income they could have reasonably earned as a result of the employee’s duty to mitigate — by seeking and accepting comparable work — will be deducted, too.

That formula raises the question of what is required for an employer to show a failure of an employee to mitigate. An answer was provided in Jardine v. Phoenix Petroleum, a New Brunswick case in which the judge ruled that failure to look for other work, so as to reduce an employee’s severance claim, can only be established by proof that the employee failed to take advantage of one or more available appropriate opportunities for employment.

The fact that the employee did not look very hard for work is not sufficient to reduce their severance entitlement — there must be proof of an actual missed opportunity.

Donovan v. Quincaillerie Richelieu Hardware

This New Brunswick case dealt with a situation which was common during the pandemic. Donovan was laid off and then, months later, fired and sued for both the period of the layoff and for additional wrongful dismissal damages from the firing.

The court found this employee could have sued for dismissal as a result of the layoff or after the actual dismissal but could not recover both for the period of the unpaid layoff and also damages for the later dismissal. Many employees have sued for both and this is the first case that has seen its way into a courtroom and decision.

Incognito v. Skyservice Business Aviation

This Ontario case involved an employee suing their employer as a result of being allegedly sexually harassed by a coworker.

The court, however, found that one cannot sue in court for sexual harassment in Ontario but must proceed to the Human Rights Tribunal for redress instead. As well, in Ontario, an employer is not liable for the actions of its employees, agents or officers respecting harassment. This is despite the fact that the Code makes the employer responsible for other forms of discrimination by employees in section 46.3.

The court also concluded — and this is of importance to those who believe that being “harassed” provides them with legal recourse — that an employee cannot sue for generalized harassment as a lawsuit in and of itself.

Harassment could, however, form the basis of an action for negligence or for constructive dismissal. If the workplace is intolerable to the objective employee as a result of serious harassment, that can form a constructive dismissal case. If the employer knows of the harassment or should know of it and takes no action, that could result in an action for negligence against the employer.

Rahman v. Cannon Design Architecture

If various companies within a corporate organization are sufficiently intertwined so that different companies had roles respecting the same employee (i.e.: for supervision, bonus payments, initial hiring, the employment contract, etc.) they will all be held, pursuant to this decision, to be common employers and can all be sued for wrongful dismissal.

This is significant if the titular employer has no assets capable of paying a judgment. Prudent counsel will sue all potential “employers.”

The Ontario Court of Appeal case also confirmed that, in Ontario, if a termination provision provides a right to terminate without severance for cause, the entire termination provision will be invalid. This is because the Employment Standards Act states that not all “cause” entitles an employer to dismiss without severance but only wilful misconduct.

Employers should carefully review their contracts because even such terms as confidentiality provisions, conflict of interest provisions or non-competition provisions which permit dismissal without notice or severance but are not limited to only wilful violations, could also invalidate the entire termination clause.