Awarded lost income

Employee has no duty to advise his employer of other employment opportunities being explored

Chris Savage worked for Transport Ease and Management Services (TEAMS), a trucking operation based in Winnipeg. He was responsible for soliciting new customers and making contact with existing customers so as to maintain the company’s business base.

On Oct. 11, 2000, Mr. Savage attended a lunch meeting with three individuals, one of whom was Kevin Smith, a former TEAMS employee. The other two individuals (Michael and Fred Schick) were truck owner-operators working with TEAMS. At that meeting the men told Mr. Savage of their business plan to start their own trucking company with five to six trucks initially. Mr. Savage was asked if he would be interested in a sales/dispatch position, but no offer was made. The meeting ended with both sides agreeing to consider the situation.

Mr. Savage did consider the new venture but ultimately decided that it would not be a good move for him. He did not have a good relationship with Fred Schick. After discussing the matter with his wife, he decided that he would not accept their offer if one was made.

On Oct. 13, 2000, Mr. Savage received a telephone call from Mr. Smith, who informed him that the new venture had been dissolved.

Approximately one week later another TEAMS employee, Dan Goulet, informed the owners of TEAMS that Mr. Savage was in discussions with Mr. Smith and intended to leave TEAMS, taking TEAMS’ employees and customers to a competing business.

At 9 a.m. on Sunday, Oct. 22, the owners called Mr. Savage at home. They said that it had come to their attention that he had met with someone regarding employment. Mr. Savage admitted that he had. The owners then stated that this action undermined the well being of the company and as a result they terminated him with no notice. Mr. Savage received no pay in lieu of notice and no severance pay. No further explanation was given for the termination.

Mr. Savage was not satisfied with the lack of explanation so he filed a complaint pursuant to section 240(1) of the Canada Labour Code. In his complaint he sought compensation for the “unjust” termination.

TEAMS responded to the complaint. While recognizing that an employee has the right to speak to prospective employers about potential opportunities, the company was of the view that this was an exception. Mr. Savage was meeting with a former employee and his associates about employment. This group had been aggressively recruiting TEAMS’ existing truck owner-operators, of which Mr. Savage was aware. They argued that Mr. Savage had a “moral and ethical obligation” to conduct himself in a manner that kept the best interests of his employer in the foreground. This involved informing TEAMS of his discussions with Mr. Smith.

At the hearing before the arbitrator Mr. Savage argued that he had no responsibility to inform TEAMS of his discussions since no offer of employment was made to him.

Although there are previous decisions that held that potential prejudice to an existing employer is enough to sustain dismissal in certain circumstances, there must be actual proof of a breach of duty or loyalty. Generally speaking employees have no obligation to advise their employer regarding alternative employment opportunities they are exploring.

Certain employees owe a fiduciary duty to their employers. This is generally restricted to employees who exercise a relatively broad and independent discretion in the handling of critical aspects of an employer’s business and the business interests of the employer are especially vulnerable to the actions of the fiduciary. In this case Mr. Savage was not subject to a fiduciary duty to TEAMS because of the nature of his employment.

The arbitrator held that Mr. Savage was not duty bound to inform TEAMS that Mr. Smith approached him. Mr. Savage was not aware of or involved in a plan to solicit TEAMS’ business base by using confidential customer information. The arbitrator did consider the issue of whether Mr. Savage did have an obligation to disclose to his employer that past and existing company personnel were organizing a rival organization but ultimately held that Mr. Savage had no such obligation. Mr. Savage was not offered and would not have even accepted an offer of employment by Mr. Smith. As such he did not violate any duty of fidelity that he owed to his employer.

Mr. Savage was awarded the sum claimed, namely six weeks of lost income amounting to $3,450.

For more information:

Savage v. Transport Ease & Management Services (T.E.A.M.S.), Canadian Arbitration Board, Docket No. YM2707-5360, Oct. 1/01.

To read the full story, login below.

Not a subscriber?

Start your subscription today!