Employer was late paying employees for three consecutive pay periods, the last more than 3 weeks late
A British Columbia employer constructively dismissed an employee when it was late paying him for four months in a row, the B.C. Provincial Court has ruled.
Serguei Sokolov, 46, was an assistant chartering manager with Orient Steamship, a Vancouver-based shipping company. After working several different jobs since coming to Canada from Russia in 1998, the father of two joined Orient in September 2007. His employment agreement stipulated he would be paid $5,000 per month paid semimonthly, which increased to $5,300 per month after one year.
In September 2008, his first paycheque of the month was three days late. The next two were on time but the following three were all significantly late — with due dates of Oct. 31, Nov. 15 and Nov. 30, Sokolov didn’t receive them until Nov. 20, Nov. 27 and Dec. 24, respectively. Because of the delays, Sokolov faced pressure from his landlord to pay the rent and had difficulty making mortgage payments on an apartment he had purchased for his daughters. He also wasn’t able to buy gifts for his family, as the company was closed on Dec. 25 and he didn’t get the money until after Christmas.
Sokolov and other employees brought the situation to the chief accountant and later the vice-president of Orient, but they were given a vague explanation that an offshore account was closed and that caused the delay. They were told the funds would be brought in with cash in December, but the employees were still paid more than three weeks late. There were also rumours Orient was trying to get rid of unwanted employees by purposely being late with their pay.
Sokolov was frustrated with the delays and the lack of a satisfactory excuse, so he resigned from his position on Jan. 19, 2009, and claimed constructive dismissal. His last two paycheques for the periods ending Dec. 15 and Dec. 31, 2008, didn’t come in until Jan. 19, 2009.
The court found the employment agreement clearly stated Sokolov was to be paid a monthly salary in semimonthly instalments and getting paid on a timely basis was a fundamental consideration to the employment contract. The delays in pay were significant, said the court, not just from the number of pay periods it happened in a short period of time but also in the length of the delays — three weeks or more in a couple of cases.
The court disagreed with Orient’s claim Sokolov waited too long to accept a repudiation of the employment contract. It found he began inquiring about the delays after the first one in September and continued to do so for the next two months. Considering he had a family and similar employment wasn’t readily available, the court found the amount of time Sokolov waited before leaving was reasonable.
The court also dismissed Orient’s claims there was just cause for dismissal because of poor performance, since Sokolov had never been told there was a problem with his performance.
