'If you can't provide proper documents, then you're not going to be able to prove your claim'
“If you're going to allege cause, you better have your ducks in a row, have substantiation, and be consistent in your allegations,” says Melanie Samuels, chair of the Employment and Labour Group at Singleton Reynolds in Vancouver.
“You can allege cause without it being in bad faith because sometimes it's just that you don't meet the threshold, but it doesn't mean you're doing it improperly as an employer.”
Samuels’ words come after a British Columbia company was ordered to pay a worker the balance of a fixed-term contract plus aggravated damages for wrongfully dismissing the worker.
Monthly salary
In October 2019, the worker – who was a truck dispatcher – and a colleague purchased RRA Trucking in Surrey, B.C., in an even partnership.
The worker soon decided that he didn’t want to continue the partnership, but he didn’t have enough money to buy out his colleague.
In January 2020, the two of them agreed that the company would pay them each $8,000 per month starting in December 2019.
RRA provided the worker with cheques for December 2019 and January 2020 with no statutory or other deductions.
In February 2020, the worker said he no longer wanted to work in trucking, so they agreed that the colleague would buy him out. They entered into a share purchase agreement.
If there is no termination clause in a fixed-term contract, then there is no right to terminate the contract early, said an employment lawyer.
Supplemental agreement
The worker also drew up a supplemental agreement under which he would work for RRA as an employee. The worker started on Feb. 1, but the supplemental agreement wasn’t signed until Feb. 5 because the colleague wanted a non-solicitation clause, which the worker then included.
Under the supplemental agreement, the worker agreed to work for three months until April 30, with a salary of $8,000 per month to be paid the first week of the following month. The solicitation clause prohibited the worker from soliciting for employment anyone who was an employee or independent contractor of RRA until July 31, 2020.
The supplemental agreement did not mention mandatory deductions or training new dispatchers.
On Feb. 28, the worker signed a release agreement that purported to contain the entire agreement between the worker, the colleague, and RRA.
However, on March 5, the colleague overheard a telephone conversation the worker had on his cellphone in which the worker suggested that someone else could lure owner-operators from RRA while the non-solicitation clause was in effect. The colleague believed that the worker was soliciting owner-operators for his own business.
Termination without pay
RRA terminated the worker’s employment on March 6 without paying him for February or the days worked in March.
The termination letter stated that the worker was terminated for a “gross violation of company policy” in handling confidential information and threatening behaviour towards co-workers.
The worker sued for breach of a fixed-term employment contract and claimed entitlement to his salary for the contract term. He also claimed damages of $10,000 for wrongful dismissal, mental harassment, and reputation damage.
RRA claimed that the worker had agreed to pay the deductions that should have been taken from his December 2019 and January 2020 cheques from his February cheque, so it owed much less to him. It also filed a counterclaim for $35,000 for breach of contract and injury to its business and reputation, alleging that the worker failed in his job duties by not properly training new dispatchers, breached the non-solicitation agreement, and threatened other employees, among other grounds.
First, B.C. Provincial Court found that the worker was not obligated to repay any missed deductions because the release agreement discharged him from any obligation or cause of action that RRA or the colleague might have against him.
There is a three-part test to assessing whether there is just cause for dismissal, says an employment lawyer.
Three months’ pay
The court also found that the supplemental agreement required RRA to pay the worker $24,000 from February to April 2020. The worker was terminated in early March before he was paid for February, so RRA owed him the full three months’ salary, said the court.
As for the non-solicitation agreement, the court found that it was in effect even though the worker didn’t sign it until four days after he started. Since the worker drew up the agreement and agreed to amend it before he started work, it was likely that they had agreed to the non-solicitation clause before Feb. 1 and just finalized it on Feb. 5, said the court.
However, the evidence supported that the worker did not breach the non-solicitation agreement. The cellphone conversation that the colleague overheard was to someone unknown and the worker had no operational company at the time, said the court, adding that the worker had the right to plan his own future.
The worker ended up incorporating his own company in May 2020, but it didn’t become operational until May 2022.
The duty to mitigate after a breach of a fixed-term employment contract is treated differently among the provinces, according to an employment lawyer.
Planning for future
The worker contemplating how he was going to replace his employment wasn’t solicitation that breached the agreement, says Samuels.
“There was no new company established, he was just kind of panicked and looking for in the future how he was going to replace his employment,” she says. “But I think, at the end of the day, the judge was just really unhappy with the employer all around, so the court was going to almost bend over backwards to assist this [worker].”
In addition, the colleague claimed that four owner-operators told him they were leaving to join the worker’s new company, but he didn’t know the name of the company to which they went. This was all hearsay and speculation that could not be relied upon as proof that the worker breached the non-solicitation agreement, said the court.
The court noted that the worker was hired as a dispatcher for the three-month term. While instructing new dispatchers “may have naturally taken place” while working with them, the supplemental agreement did not indicate that training was part of his duties. In addition, the termination letter did not mention training, so it could not be used as a cause for dismissal, the court said.
The colleague said that the worker had an argument with one of the new dispatchers on Feb. 5 and RRA issued the worker a disciplinary note. The new dispatcher later apologized to the worker and the worker denied receiving any discipline or participating in any discussion about his conduct.
No proof, no credibility
Either way, RRA did not provide proof of the argument or the disciplinary note and, if it did occur, it was one month before the worker’s dismissal and had been dealt with, so this could not be used as a ground for termination, the court said, adding that there was also no evidence of any ongoing disputes.
“There were inconsistencies in some of the things [RRA] alleged, and so then that creates the problem with credibility,” says Samuels. “There was just not enough substantiation, it was vague, and it just seemed like there wasn't a substantive, consistent reason for the termination, and the court did not like that.”
The court noted that the colleague could have investigated his concerns about the worker’s phone call and the non-solicitation clause. It also could have terminated the worker’s contract and paid him for the full term. Since RRA didn’t consider other reasonable options, termination was not proportionate even if some of the allegations were true, said the court.
The court agreed that RRA’s conduct in the manner of dismissal warranted aggravated damages, as there was no evidence of a disciplinary notice before the termination and RRA didn’t pay the worker outstanding wages at the time of termination.
In addition, RRA’s counterclaim caused additional distress and had no prospect of success given the company’s lack of evidence for cause, said the court.
A worker’s attempt to solicit clients from a former employer indicated an intention to compete, which violated a non-solicitation clause, an Ontario court ruled.
Bad faith
The counterclaim set the stage for aggravated damages, particularly given RRA’s lack of evidence, says Samuels.
“If you can't provide proper documents, then you're not going to be able to prove your claim,” she says. “The judge was very upset with the employer on the failure to be able to produce anything relevant with respect to the counterclaim, because that's quite an extraordinary remedy, to get dinged for even making a counterclaim.”
RRA was ordered to pay the worker $24,000 for the three-month fixed-term contract, $8,000 in aggravated damages, and $3,500 – 10 per cent of the counterclaim’s amount – as a penalty for making a claim with no reasonable basis of success.
See Mutneja v. RRA Trucking Ltd., 2023 B.C.PC 2.
