Restaurant cut chef's pay after funding from hotel dried up
A Nova Scotia restaurant must pay a former executive chef pay in lieu of notice for constructive dismissal equal to his original salary after it unilaterally reduced his salary and changed his role, the Nova Scotia Small Claims Court has ruled.
Daniel Orovec, 48, was hired by Ryan Duffy’s, a steak and seafood restaurant in Halifax, on Jan. 5, 2015, to be the restaurant’s chief operating officer and executive chef. His annual salary upon starting with the restaurant was set at $75,000. Orovec left another position to join Ryan Duffy’s.
The restaurant had a relationship with a local hotel where the hotel gave it $40,000 per month that partly funded Orovec’s salary. However, in April 2015, it was decided to end this relationship. Restaurant management called Orovec into a meeting and told him that the chief operating officer position couldn’t be continued without funding from the hotel, as it was this funding that allowed Ryan Duffy’s to hire Orovec in the first place. They also told Orovec that he was welcome to stay on as executive chef at the restaurant at a salary of $50,000 per year.
This development was news to Orovec, as he had been unaware of the arrangement with the hotel and nothing about it had been mentioned in his offer letter and employment contract. Orovec expressed unhappiness with the proposed arrangement and on May 15 his employment was terminated. The restaurant gave him one week’s pay in lieu of notice, calculated on the basis of the $50,000 salary.
Orovec found another executive chef job six weeks later and filed a wrongful dismissal suit claiming damages for the six weeks he was unemployed.
The court found there was no express term in Orovec’s employment contract that supplanted Orovec’s right to reasonable notice of termination. The restaurant didn’t claim just cause for dismissal at the time of termination nor at the hearing, so Orovec was entitled to reasonable notice, said the court.
The court noted the prospects of re-employment for an executive chef were “fairly good,” as evidenced by the relatively short time it took Orovec to find another position. However, his level of employment with Ryan Duffy’s included managerial and supervisory functions and he was induced away from his previous job.
Though Orovec was only employed with the restaurant for four-and-one-half months, the court noted that previous Nova Scotia cases established that reasonable notice could be significant, even if the length of service was less than a year. It determined that Orovec was entitled to three months’ notice of termination. However, since Orovec found new employment six weeks after his dismissal — and only claimed damages for that period — the court only considered damages for the six-week period.
As for damages, the court found Orovec was entitled to have them determined based on his original $75,000 salary. The unilateral reduction of Orovec’s salary by one-third was a fundamental and significant change and a repudiation of the employment relationship. The restaurant was obligated to provide the same reasonable notice of this change as it would be for termination. It only provided one month of notice and Orovec made it clear he didn’t agree to the change. Though he initially stayed while things were still being discussed, his employment was terminated a couple of weeks later. As a result, Orovec was constructively dismissed and entitled to pay in lieu of notice based on the salary of his original employment contract, said the court.
