Contract didn't allow for early termination; strongly worded email not just cause
An employer must pay a worker for the remainder of her fixed-term contract after firing her three months into the 18-month contract without proper cause, the British Columbia Supreme Court has ruled.
“My thesis is that there is never a good reason to have a fixed-term employment agreement, as you can do the same thing with an indefinite term of employment by being prepared to give working notice,” says Mike Hamata, a partner at Roper Greyell in Vancouver. “It's still a good idea to tell the employee during the hiring process that you expect the employment to last for a year or for 18 months, as long as you're also clear that you're not creating a fixed-term contract of employment.”
Gisborne Holdings is an industrial general construction company in Burnaby, BC. In April 2022, Gisborne hired the worker as a Departmental Administrator, filling in for an employee who was taking parental leave.
Gisborne hired the worker on an 18-month fixed-term employment agreement slated to end on Oct. 27, 2023. The agreement included a “completion bonus,” which it defined at “$5,000 to be paid on Oct. 27, 2023, or upon layoff, whichever occurs first.”
Gisborne had a written progressive discipline policy that outlined a verbal warning, a written warning, and suspension as steps before resorting to dismissal.
Once the worker was established in the job, Gisborne assigned her additional tasks, which caused the worker to struggle with her workload.
Incident with client
On June 24, the worker was on a telephone call with a representative of Gisborne’s biggest client. The representative became upset when she learned that the worker had not scheduled a service appointment, so the worker said she would speak with her manager to find a solution. The conversation became heated.
Immediately after the call, the worker called her manager to report what had happened. However, the manager was offsite and the call was dropped before they finished the conversation. Afterwards, the manager emailed the client to work through the scheduling issue and copied the worker. The worker replied, apologizing to the client for how their conversation went.
On June 30, the worker was called into a meeting with her manager and the company’s human resources manager. The worker disagreed that a client meeting had been scheduled because she knew the manager had scheduled a meeting herself. The worker said that she would reach out to the client to “smooth things over.”
The manager mentioned that some Gisborne technicians had reported concerns with the worker’s communication style, so the worker said that she would work harder at positive communication. They all agreed that the worker would attend service meetings with the technicians to help build relationships with them.
The worker raised concerns about her training and workload, her manager agreed to meet weekly to develop their communication and work relationship. They also asked to change her hours of work.
Worker questioned manager’s version of events
After the meeting, the HR manager emailed the worker and her manager with a summary of their discussion. On July 4, the worker replied directly to the HR manager, clarifying that her manager had not spoken to her after the dropped phone call and the manager had chosen to accept the client’s version of events “without doing due diligence” to get the worker’s side.
The worker added that there was a “complete lack of timeliness” with the manager in discussing it with her and the manager’s claim that the client had complained about her was “at best, a deliberate misdirection.” The worker also said that it was “patently unfair and borderline untrue” to imply that problems with the client were because of her. She reiterated that she was willing to comply with the manager’s direction to attend service meetings.
The worker had been aware of a meeting between the manager and the client to discuss challenges, but she didn’t know that the client had asked for another meeting to discuss the worker’s communication.
The worker concluded the email by saying that her expectation was that everyone “will be held to the same standard, and that the courtesy, honesty, and accountability that I extend will be reciprocated.”
The HR manager shared the email with the worker’s manager, who was upset and offended. The manager considered the email “borderline insubordinate.”
The next day, July 5, the worker apologized to the client’s representative emailed her manager and the HR manager to say that they had “resolved our differences and are both committed to working together cordially.”
Termination without cause
However, on July 7, Gisborne terminated the worker’s employment and paid her two weeks’ pay in lieu of notice. The HR manager offered her an additional week’s pay instead of terminating her for cause because the worker’s husband was a senior manager with the company.
The worker sued for wrongful dismissal, seeking damages for the balance of the fixed-term employment agreement. She also claimed punitive damages for the manner of dismissal and a baseless allegation of cause.
The court noted that Gisborne didn’t give any warning, reprimand, or discipline before the dismissal, even though the company had its own progressive discipline policy. This suggested that the company’s response to the worker’s email was not proportionate, the court said.
The court found that the email was strongly worded, but it had a professional tone and was only sent to the HR manager. It didn’t undermine the authority of the worker’s manager and the worker expressed a willingness to follow her manager’s directions, said the court in finding that the email did not constitute egregious or insubordinate misconduct.
The court also found that the fixed-term employment contract did not authorize Gisborne to terminate the worker’s employment without cause. The company could have included a clause allowing early termination, but it didn’t – the completion bonus clause recognized that the worker’s employment could end on a date other than the end date of the fixed term, but the contract itself didn’t say that the company could terminate employment early without cause, the court said.
“Courts require extremely clear, valid, and enforceable language in order to allow the employer the benefit of terminating without cause, including before the conclusion of a fixed term,” says Hamata.
Progressive discipline
In addition, Gisborne was bound to follow progressive discipline without a way to terminate without cause, according to Hamata.
“The employer could have undertaken a more gradual process of performance management, but it really requires a lot of management by the employer,” he says. “There has to be feedback to the employee that their performance is not meeting the standard and an opportunity for the employee to improve, and then there can be a gradual ramping up of the intensity of that performance management over time that can eventually lead to a for-cause termination.”
“But a single incident - sending a strongly worded letter to the employer, but not insubordinate, those are facts that are going to be difficult to establish cause,” adds Hamata. “This single incident on its own wasn't sufficient to lead to what the court considered a breakdown of the employment relationship or make the employment relationship irreconcilable.”
The court said that there was uncertainty in the jurisprudence over whether an employee terminated from a fixed-term contract has a duty to mitigate, but in this case it didn’t matter, as Gisborne did not establish that the worker failed to mitigate. The worker was able to show that she applied for jobs and attended interviews, while Gisborne did not show that her efforts were insufficient and she would have found comparable employment had she tried harder, said the court, calling the employer’s onus to prove a failure to mitigate “a heavy one.”
The court determined that the worker was wrongfully dismissed. Gisborne was ordered to pay the worker damages for the balance of the fixed term contract - $81,100. The court declined to award punitive damages, finding that Gisborne’s conduct was not vindictive or reprehensible.
“The employer didn’t have cause in this case, but it had to allege that it had cause because it was stuck, because it had no way to end the employment before the end of the term,” says Hamata. “So it's not surprising to me that [Gisborne] maintained the allegations of cause, as they didn't really have another option because the contract was so limiting from the beginning – it painted them into a corner.”
The way Gisborne was stuck for the balance of the contract term is one reason why Hamata isn’t a fan of fixed-term employment agreements from the employer perspective.
“I just think it's so much simpler to have an indefinite-term employment agreement with employment standards minimums and just be prepared to give working notice, as the employer gets more certainty about the end date of the employment,” he says. “You can do all of the things that you want to do with a fixed-term employment agreement without the kind of risks that you see in this case.”
