District manager demoted after affair with company owner ends

Owner claimed employee wasn’t doing her job well and requested a change, but evidence showed employee wanted to stay in her position

A British Columbia employer wrongfully dismissed an employee who rejected a demotion following personal issues between the employee and the owner, the B.C. Supreme Court has ruled.

Faranak Shirbigi, 40, was hired as an assistant manager by JM Food Services, a franchisor of FreshSlice pizza shops in B.C., in 2009. She quickly moved up to the position of manager and, in January 2010, she was awarded a corporate position of district manager with responsibility for 16 FreshSlice stores throughout the B.C. lower mainland region.

The district manager position required a three-year commitment, so Shirbigi signed a three-year contract that required her to oversee the 16 assigned store locations, along with set salaries and bonuses set out for each year of the contract. The contract had a provision stipulating Shirbigi must provide at least one month's notice before leaving, or else her salary would be calculated at minimum wage for one month before departure.

Personal relationship followed promotion

The owner and CEO of FreshSlice, Ray Russell, invited Shirbigi to a celebratory brunch. However, Shribigi claimed they stayed at her apartment and had sex, launching an affair that lasted several months. Russell was married and his wife was also a FreshSlice employee who was on maternity leave at the time.

In February 2010, Shirbigi moved into an apartment unit Russell owned and lived there rent-free. They also went on a trip to Niagara Falls together in May. When they returned, Russell’s wife became suspicious. Shirbigi sent her an email reassuring her that she wasn’t interested in her husband – which Shirbigi claimed she sent at Russell’s request.

On another occasion, Shirbigi stayed at an apartment with Russell when both were on a trip to Toronto.

Shirbigi had her first job performance evaluation in June and she received an overall grade of “C,” though no training to improve her performance was offered. Russell claimed at one point he told Shirbigi she needed to “step it up,” but no deadline was set and Shirbigi wasn’t told her job was in danger.

In July, Shirbigi moved out of Russell’s apartment, though their affair continued for a while longer.

After Shirbigi started her tenure as a district manager, the FreshSlice brand expanded rapidly, resulting in seven new stores assigned to her area. By fall 2010, the extra costs associated with travelling to the additional locations were starting to catch up with Shirbigi and she expressed her opinion to management that her income would be higher as a store manager because of the decreased travelling costs that would be involved. However, she maintained that she was proud to be a district manager and she understood Russell would try to address her concerns, including a request to issue her year-end bonus early to offset her travel costs.

Their sexual affair ended in September when Russell stopped visiting Shirbigi.

In February 2011, FreshSlice hired three new district managers and Shirbigi was told by the corporate office manager that she was being removed from her position once they were fully trained — a training Shirbigi was assigned to do. Shirbigi was shocked and upset and had some discussions on possibly becoming a franchisee trainer and overseer of opening new stores. However, she felt she would be embarrassed to take a job with less responsibility within the company.

Russell testified that he believed Shirbigi wasn’t handling the district manager position and, in a private meeting in February, she expressed a desire to move back to a store manager position. He agreed she wasn’t ready yet for the job.

Russell emailed Shirbigi in late February to tell her not to worry and he could give her another position with less responsibility. However, after Shirbigi trained the new district managers, she emailed Russell to convey her disappointment and sadness at the prospect of losing her district manager position. She said she wanted to “keep any personal issues out of it.”

Despite her efforts, Shirbigi was assigned to a FreshSlice store in Surry, B.C., owned by Russell’s brother. Shirbigi didn’t want to work at this store because it wasn’t successful and Russell’s brother was difficult to work with. She felt she was being set up to fail and Russell didn’t want her near the corporate office when his wife returned from maternity leave.

Shirbigi said she felt “horrible, worthless, used, humiliated, embarrassed and angry.” She filed a suit for wrongful dismissal.

Dispute over whether employee asked for demotion

Russell denied having a sexual affair with Shirbigi, claiming they were only friends and he was just being generous when he offered her the apartment rent-free. He also claimed Shirbigi asked to stay at his two-bedroom unit in Toronto while she visited family at the same time he happened to be there, and the Niagara Falls trip was similar to other trips he had taken with other employees. Russell also argued Shirbigi she had requested a move to a store manager position and later declined it.

The court found there was no direct evidence supporting Russell’s claim that Shirbigi requested a move to the position of store manager and out of the district manager position. Russell said she made the request in a private meeting and no-one else was aware of her intention. Conversely, the email exchanges between them didn’t seem to support this claim: Shirbigi emailed Russell to indicate her disappointment at losing her position and Russell didn’t show any surprise at this development. In addition, when the corporate office manager told Shirbigi of the company’s plans regarding the new district managers taking over, she recorded that Shirbigi was upset and relayed that to Russell, who still didn’t seem surprised, said the court.

Other email exchanges showed Shirbigi was upset and Russell felt she wasn’t ready to be a district manager.

The court also found Shirbigi was telling the truth about the affair with Russell. The fact they kept their relationship secret, the rent-free occupancy of an apartment Russell owned, the trips together, and Shirbigi’s contacting of Russell’s wife at his prompting to cover it up pointed to such a relationship.

“On balance, I am satisfied that Ms. Shirbigi and Mr. Russell were in a sexual relationshiop from approximately mid-January 2010 to early September 2010,” said the court. “I am similarly satisfied that this relationship is the ‘personal issue’ to which Ms. Shirbigi later refers to in her email.”

The court also found it wasn’t unreasonable for Shirbigi to reject the position at the store owned by Russell’s brother, as it was a “significant negative change in responsibilities and working conditions” while still having close association with FreshSlice and her troubles with Russell. Therefore, it couldn’t be argued Shirbigi failed to mitigate her damages by refusing employment offered to her at the Surrey store, said the court.

With regards to the contract, the court found it was for a fixed term of three years with a provision that permitted Shirbigi to terminate with one month’s notice. However, this provision didn’t automatically grant FreshSlice the same right without specific wording granting that right for the company, said the court.

“It is noteworthy that FreshSlice was solely responsible for the terms of this bargain,” said the court. "If FreshSlice intended to have the right to terminate Ms. Shirbigi on one month’s notice then it could have included such a provision in the contract it was solely responsible for drafting.”

The court ruled Shirbigi’s employment was terminated without cause. FreshSlice was ordered to pay Shirbigi for the balance of the contract, minus any employment income she earned, which came to a total of $49,098.66 plus interest and costs.

For more information see:

• Shirbigi v. JM Food Services Ltd., 2014 CarswellBC 2035 (B.C. S.C.).

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