Company fired employee and then told clients she resigned
A British Columbia employer violated a termination clause in its employment contract with a worker it fired for cause after one year of service and must pay her $45,000 in termination pay and aggravated damages, the B.C. Supreme Court has ruled.
Sian Davies came to Canada from Wales in 1988 and worked as a nanny. In 2006, she started a home daycare business called Daisy Chain and over the next few years obtained an early childhood education (ECE) certificate and a diploma in kindergarten and preschool teaching.
In 2015 Davies met Derek Du, who owned a business call Shineray. Du wanted to establish a daycare facility as part of Shineray’s business and was looking for a qualified person who could manage it. Du offered Davies and her Daisy Chain business the position of manager of the daycare on March 16, and Davies signed it three days later.
The contract — set to run for five years and end on July 1, 2020 — called Davies an independent contractor, but referred to her “employment and duties,” which involved setting up the daycare program, curriculum and daily operation structures, recruiting staff, creating a marketing strategy, and setting up safety procedures and regulations. The contract also set targets for Davies to meet, such as achieving a certain amount of annual net profit by September 2016 and increasing that to a certain amount in subsequent months.
The contract stipulated that if Davies failed to meet targets "in any consecutive two years during the initial term, the agreement may be terminated by Shineray.” It also allowed Shineray to terminate the agreement “with or without cause by providing you with three months’ notice of cancellation. In such an event, the company shall have no further liability or obligation to you and you will have no action, claim or demand against the company at common law or under statute.”
Though the first stage of new the daycare business required setup before July 2015, the contract set out the start date of Davies’ employment as July 1. As a result, she did some preparation work before she started getting paid — including discussions with the local health authority, paperwork, and recruitment advertising. Davies brought a significant amount of educational materials, equipment, and furniture that were property of her Daisy Chain business.
The new daycare business, called Ladybird Montessori Learning Academy, was licensed and opened in September 2015.
In January 2016, Davies received two emails from a representative of Du that expressed concern about expenses, enrolment, and how much time Davies spent doing banking. Du’s wife — who had been teaching ballet at the Shineray-owned daycare facility, was asked to take over Ladybird's banking.
On March 30, 2016, Shineray terminated Davies’ employment. Her letter of termination explained that she had failed to provide organized reports and failed to achieve more than one-half of the promised revenue. As a result, Ladybird had lost more the $130,000 since it had opened. Davies was ordered to return all relevant documents, materials, inventory, and assets by April 5.
Davies was shocked and met with Du that day, but the termination proceeded. Afraid that Shineray was already removing her access to email and the facility, she brought some friends and a U-Haul truck to Ladybird that evening and took all the materials and equipment that were property of her business, Daisy Chain.
Finding itself short of materials, Ladybird sent a letter signed by Du to parents of the daycare’s children saying the situation was “due to the sudden resignation of Sian Davies and the disappearance of our school equipment.”
Davies sued for breach of a fixed-term contract and aggravated and punitive damages.
The court found that, while the contract called Davies an independent contractor, the offer was for “employment” and Shineray controlled most aspects of her job. The reality was that “Davies was hired as an employee and the contract, which is between her and Shineray, is a contract of employment,” said the court.
The court also found that the termination clause clearly stated that Davies was entitled to three months’ notice regardless of whether the termination was for cause or not. As a result, it didn’t matter whether Shineray had established just cause — but the court noted that although Shineray referred to $130,000 in losses in the termination letter, it provided no evidence supporting that figure. The court also determined that the January 2016 emails to Davies expressing concerns were vague and didn’t constitute a warning that her employment was in jeopardy. Even if it was, Davies wasn’t given enough time to improve before her termination, the court said.
The court ordered Shineray to pay Davies three months’ pay in lieu of notice — as stipulated in the termination clause, which allowed the company to terminate the contract before its five-year fixed-term elapsed. Since Davies was paid $5,000 per month under the contract, she was owed $15,000 in termination pay.
The court also found that Shineray misrepresented the reason for Davies’ departure and essentially accused her of stealing equipment that didn’t belong to her in the letter to parents. This was “untruthful, misleading and unduly insensitive, constituting conduct made unfairly and in bad faith” that shocked Davies and cause her mental distress. In addition, Davies actions in quickly clearing out equipment that belonged to her was fuelled by the company itself when it abruptly and wrongfully terminated her, the court said in ordering Shineray to pay another $30,000 in aggravated damages, for a total award of $45,000. See Davies v. Canada Shineray Suppliers Group Inc., 2017 CarswellBC 520 (B.C. S.C.).
