Does it make sense to sue for wrongful termination?

“At the end of the day, you never know what kind of position the court’s going to take on that and whether or not they will also work costs against you if you can't establish damages.”

So says John Hyde, founding partner of Hyde HR Law, in discussing two recent decisions out of B.C. involving claims of wrongful termination.

The cases before the Civil Resolution Tribunal concerned claims for damages after two employees left without providing the appropriate notice.

In the end, the tribunal disagreed with the employer, saying in both cases that it failed to prove damages.

“They couldn’t establish damages, and they went into it saying, ‘Well, hopefully the judge will find some damages here.’ But the judge won't — it's up to the plaintiff to establish the damages. And that goes with any litigation whatsoever,” says Hyde.

Two weeks’ notice, then termination

In 548981 B.C. Ltd. v. Reyes, the employee worked for the employer between June 2018 and February 2022 and then resigned.

The employer said she breached the employment contract by failing to give three week’s notice, and claimed $2,400 in damages, equivalent to three weeks of the employee’s wages.

But the employee said she gave two weeks’ notice, and the employer agreed in writing, but then terminated her employment.

In looking at the case, the Civil  Resolution Tribunal said the employee “undisputedly” did not provide three weeks’ notice and “technically, this is a breach of the employment contract.”

However, the employer “undisputedly” accepted the employee’s two weeks’ notice,  so it accepted the employee’s breach of contract, said the tribunal. “The employer also undisputedly terminated the employee’s employment later that day.”

Even if the employer did not accept the employee’s breach or terminate their employment, it is required to prove damages, said the tribunal.

“I find they have failed to do so. The employer says the employee was mainly responsible for [Insurance Corporation of British Columbia] customers and general ICBC tasks and was a ‘key employee.’ However, the employer provided no evidence of any losses they suffered because the employee failed to give 3 weeks’ notice. For these reasons, I dismiss the employer’s claim.”  

Broker gives no notice to employer

And in a second decision, apparently involving the same company, the tribunal again ruled against the employer, doing business as John Fleming Insurance Agency (JFIA).

This time, an insurance broker quit in October 2022 but gave no notice. The company said he owed three weeks’ notice, so it claimed $3,000 for lost income related to the resignation.

The broker said the employment contract limited the company’s “available remedies” and the company later accepted his resignation.

While the tribunal agreed that the broker breached the employment contract, it noted that “damages for breach of contract are generally meant to put the innocent party in the same position as if the contract had been performed as agreed.”

And while the company claimed $3,000 for lost income from reduced client revenue, JFIA “provided no evidence or submissions about how it determined it lost $3,000,” said the tribunal, “such as records of the revenue [he] brought in for JFIA or evidence from clients who chose not to do business with JFIA due to [his] sudden departure.”

The claim was dismissed.

Claim for damages ‘waste of time and money’

“Let's face it, the positions were not of significant importance, either objectively or subjectively, to the organization so that there was a difference between providing two weeks’ and three weeks’ notice,” says Hyde.

“They were trying to make a statement, but it was a waste of time and money.”

If an employer is looking to make a statement to employees that they will be sued if they give sufficient notice of resignation, maybe that's effective, he says, but it’s never guaranteed what position a court will take.

Jack Siegel, partner at Blaney McMurtry, has also encountered employers that are “particularly irritated” by a sudden resignation and want to do something about it, thinking, “I may not win, but we're going to put you through the wringer.”

But the question is “What was the harm? Were you annoyed? Were you inconvenienced? Or were you put to a significant expense that makes sense to actually pursue by paying a lawyer?” he says.

“The answer I've gotten back, in each and every case, particularly based on the final phrasing, is ‘Oh, yeah, I guess I'm just going to have to deal with it.’”

‘Where’s the cause and effect’ for damages?

If there’s a breach of contract, the employer has to decide if the damages are meaningful, says Siegel.

“Are they anywhere close to enough to warrant both the expense and aggravation of entering in litigation?

“It's not enough to say, ‘Oh, geez, that cost us a lot of money.’ OK, how much? Where's the cause and effect — keeping in mind that the cause isn't that the employee left, the cause would have to be that the employee left without providing reasonable notice.”

For example, if you have an employee who writes software for the past two years, at a decent salary, and they suddenly resign with no notice — after two years of your investment in developing this software, which is either up in smoke or seriously impaired — “now you've got a situation where there is economic damage as a result that’s directly attributable to the lack of notice,” says Siegel.

“Then they might have a case, and they might have a case for a significant amount of money even.”

On the other hand, saying you had to spend $20,000 on a recruiter to find someone new, that doesn’t add up, he says: “You’d have to do that anyhow if the person gave you a month's notice.”

‘It’s awfully hard to prove damages’

It’s advisable to think about reliance and how valuable the person, says Hyde.

“How much do does your organization rely upon the employee? And how hard will it be to replace that employee? If it's not significant reliance, if there's not significant difficulty in finding someone else, then why proceed?”

If, for example, they’re a receptionist who is relatively easy to replace, that’s one thing, he says; but if it’s a high-producing salesperson who “owes a significant duty to the company — whether duty of loyalty, fiduciary duties and the like — well then, yes, you would consider suing because then you could actually establish what the damages are; for example, loss of clients, ability to reach out to clients to keep them aboard, things like that.”

If it’s an executive who is of central importance to your organization, and abruptly departs, “by all means, consider suing. But first think about what the damages to your corporations are and how do you prove them?” says Hyde.

Updating employment contracts

In putting together employment contracts for employers, they often request that four weeks’ notice instead of two be included, says Siegel.

“The conversation almost uniformly goes, ‘OK, sure, you realize that your ability to actually force them to do it this way is pretty close to zero, right?’”

However, the employer will often say they are looking for a “bit more moral high ground in asking them to stay the duration,” he says.

In lot of these cases, people rely on old contracts, says Hyde.

“Yes, it may be a contract, which is still a viable contract and enforceable, but it might say two weeks when you really need more than that and it becomes a little more problematic.”

That’s why it's always important to update your contracts, he says, “when you are changing an employee’s position and they're increasing in their value to the organization.”

And you want to do that anyways because the law is always changing with regard to wrongful dismissals, says Hyde.

“As the law changes, old employment agreements are no longer valid, no longer enforceable because certain parts of it are no longer enforceable in accordance with the ESA. So it's important to update your employment agreements on a regular basis, taking that in consideration — not only the appropriate notice and termination clauses, but how much notice should the employee give.”