Court awards $55,000 in extra damages on top of 22 months’ notice to show its ‘repugnance’
An Ontario employer must pay nearly two years’ salary plus $55,000 in extra damages to a long-term employee it fired after she reduced her hours and took medical leave for cancer treatment, the Ontario Superior Court of Justice has ruled.
Shelley Altman, 59, first became affiliated with Montreal-based musical instrument retailer Steve’s Music Store in 1978. At that time, her husband was the assistant manager of a Steve’s Toronto location and she helped out doing unpaid work. She soon began working at the front counter and advanced through various positions, becoming store manager in 1998.
Steve’s was a family-run business and over the years Altman became close to many of the family members. She often worked from home on her days off and was rarely out of contact with the store. She represented Steve’s on an advisory board for the Music Industries Association of Canada and became well-known in the industry.
Long-term employee diagnosed with cancer
In December 2007, Altman was diagnosed with lung cancer. She had part of her lung removed and had to take one month off work. She began chemotherapy in April 2008, followed by radiotherapy, which lasted until September. During this period, Altman worked reduced hours and occasionally had to take time off when the physical effects of the treatment were too much.
Steve’s agreed to pay her full salary while she worked reduced hours during her treatment. Altman wanted to continue working as much as she could because she felt it was her duty and it helped her have parts of a normal life.
On Oct. 15, 2008, Altman received a letter from a law firm representing Steve’s that accused her of being “remiss in your duties and obligations towards Steve’s Music in failing to work minimum number of hours required by your employer.” The letter outlined her tendency to arrive late and leave early or be absent for days at a time without providing prior notice. It concluded with a warning that a failure to work regular hours would result in termination of her employment.
The letter shocked Altman, not just because of the nature of her relationship with Steve’s and its owners, but also because nobody had told her the company considered her remiss in fulfilling her duties or that her job was in danger. Fearful for her job, she went to work the next day but began a medical leave the day after that. The leave was originally for three months but was extended by her doctor for another three months in January 2009.
Employee terminated for not fulfilling job duties
On April 1, 2009, Altman contacted Steve’s to tell the company she would be able to come back to work on April 8. A few days later, she revised her return date to April 20 because she had hurt her back.
Altman received a response from Steve’s lawyers shortly thereafter that referred to the previous letter. It stated her position had been abolished and “Steve’s Music has no obligation to reinstate you.” In addition, the letter said Steve’s was entitled to deduct amounts from her remaining pay to offset her absences, late arrivals and early departures from work. As a result, Altman received nothing upon termination.
Altman sued for wrongful dismissal, claiming pay in lieu of reasonable notice, statutory severance pay, damages for mental distress and punitive damages for bad faith. However, Steve’s argued the employment contract was frustrated because Altman couldn’t fulfill her job duties and wouldn’t be coming back to work. The company pointed to the fact Altman’s doctor indicated she was permanently disabled for disability payments after cancer was found in her bones and brain in fall 2009.
Altman initially won a summary judgment that ordered Steve’s to pay her the statutory minimum eight weeks termination pay and $46,551.06 for proceeds from a deferred profit sharing plan the company had made contributions to on her behalf.
At trial, the court found Steve’s was not entitled to withhold any of Altman’s pay to cover for any overpayments due to her reduced hours and absences. Steve’s originally decided to pay her full salary nor deduct her vacation entitlement while she underwent treatment, so any overpayment was a company decision, not an administrative error, said the court. As a result, it owed her any outstanding salary and bonus payments that were due in her final paycheque, as well as vacation pay.
The court found Steve’s didn’t have to pay any statutory severance pay, as this was only required of employers with a payroll of $2.5 million or more under Ontario’s Employment Standards Act, 2000. Though Steve’s total payroll was over that figure, its payroll in Ontario was $2.1 million, said the court.
The court also found there was no indication Altman was permanently disabled at the time of her termination. Her diagnosis of not being able to work and application for long-term disability came months later and Altman had indicated she would be able to return to work in April 2009. As a result, the court found there was no frustration of the employment contract and Altman was entitled to 22 months’ pay in lieu of notice.
Extra damages for poor treatment of employee
In addition to the pay in lieu of notice, the court supported Altman’s claim for additional damages. It found the October 2008 warning letter was inappropriate given her service record and the fact she had no previous warning. It exacerbated the stress she was feeling from her cancer treatment and played a role in the medical leave she went on two days later, said the court.
“Steve’s treatment of Ms. Altman was callous and insensitive. She deserved to be treated better than twice having a bailiff deliver a letter replete with mistruths from Steve’s lawyers — especially when Steve’s knew she was recovering from cancer treatment,” said the court. “These letters devastated Ms. Altman and caused her significant mental distress to the point of clinical depression.”
The court ordered Steve’s to pay Altman $35,000 for breaching its duty to deal with her in good faith and fairness in the manner of dismissal. The court also felt an additional $20,000 in punitive damages was necessary to “express the court’s repugnance at the conduct” and avoid a repeat of the circumstances.
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