On November 8, 2021, the BC Supreme Court released its decision in Yates v. Langley Motor Sport Center Ltd, 2021 BCSC 2175. This is another “COVID” dismissal decision that touches on several important points for employees and employers.
The plaintiff Ms. Yates was hired by Langley Hyundai as a Marketing Manager, earning $60,000 per year. After only 8.5 months of employment, she was temporarily laid off in March 2020 at the beginning of the COVID pandemic. While there were discussions of a possible recall, this did not materialize, and the layoff became permanent in August 2020, resulting in a termination without cause.
Ms. Yates sued the employer in Supreme Court, asking for 8 months pay in lieu of notice, plus aggravated and punitive damages for what she said was a breach of the employer’s duty of good faith. Specifically, she accused the employer of being untruthful about the prospects of returning to work during the layoff and failing to support her with a reference letter after the dismissal.
Since Ms. Yates did not have a written contract, the first issue before the court was the common law reasonable notice period. The employer submitted the notice period should be two to three months, while Ms. Yates said it should be 8 months. The Court settled in the middle at five months, which is still an extremely high notice period for such a short service employee. In coming to this assessment, the following points are noteworthy regarding each of the four “Bardal Factors”:
- The Court still considered the employee’s “manager” title despite the fact she did not actually supervisor or manage employees; it was still relevant because she worked closely with the Vice President in a professional role;
- The Court did not accept that the employee’s age (30 years old) was so young as to increase her notice period on the basis that her relative inexperience would make it harder to find a job; specifically, the judge noted “I do not consider Ms. Yates, at 30 years old, to have been a very youthful employee at the time of her termination” (para 23)
- In considering the length of service, the Court examined the principles for short service employees set out in Saalfeld v. Absolute Software Corporation, 2009 BCCA 18. In this instance, Ms. Yates length of service did not justify a longer notice period than the typical two to three months that would normally be awarded (subject to below);
- At paragraph 31, the Court noted that while the plaintiff had made a valiant effort to find comparable employment (37 unsuccessful job applications) she was unable to find work for 7 months. The Court inferred “a depressed job market arising from the COVID-19 pandemic” and concluded that alternative employment was not readily available. For this reason, the notice period was increased to five months for total damages of $25,000.
Deduction of CERB
The Court then considered whether the $10,000 in CERB benefits the plaintiff had received should be deducted from the award. After considering the law, including the recent case of Hogan, the judge concluded that CERB benefits were deductible, as the evidence did not establish that the employee would have to pay them back to the government as a consequence of the severance award (which is the case for regular Employment Insurance benefits, making them non-deductible). This makes the score 2 to 1 in the BC Supreme Court in favour of the deductibility of CERB. Interestingly, the Court invited the parties to return to court for a variation of the order if things turned out different (i.e. the employee had to repay CERB) in which case presumably the $10,000 would be ordered.
Aggravated & Punitive Damages
Finally, in declining to award aggravated or punitive damages, the Court said that while the employer could have been more proactive in communicating with the employee during leave, this did not rise to the level of a breach of the duty of good faith, or conduct deserving of the Court’s rebuke. While the employee gave testimony of suffering depression and even being suicidal after the termination, the Court found that this harm was not caused by the employer or the manner of the termination. To the contrary, the employer had indicated that it wished to recall Ms. Yates when it became able.
Even though it dismissed the claim for punitive damages, at paragraph 67, the Court gave a helpful summary of past cases where such awards were given in other wrongful dismissal cases:
- fabricating allegations of serious misconduct or incompetence;
- using bullying or intimidation tactics such as:
- intimidating an employee into withdrawing or settling a wrongful dismissal suit,
- threatening to bankrupt a plaintiff;
- threatening a baseless counter suit; or
- refusing to return a plaintiff’s belongings;
- lying about other employees “signing off” without severance;
- denying, on specious grounds, that a plaintiff is entitled to statutory pay;
- pressuring a plaintiff to agree to settle a wrongful dismissal claim immediately; and
- failing to pay statutory severance while knowing that this amount is payable – especially when the employer knows that the terminated employee is financially vulnerable.
My employer takeaways from this case are as follows:
• Ensure you have written employment contracts for all employees with a properly drafted termination clause; this could have avoided the entire lawsuit here.
• If you have employees on a temporary layoff, be sure to keep in regular communication with them and ensure all communications regarding a possible return to work are transparent and truthful to avoid allegations of bad faith
• If possible, support a terminated employee with a truthful and accurate reference letter if requested
• Notice periods for short service employees continue to trend upwards; be mindful that even your least senior employees can make a wrongful dismissal claim that results in significant liability
• Judges will take notice of the depressed job market during COVID and this may increase notice periods substantially (it was doubled in this case)
• It appears that CERB benefits continue to be deductible from wrongful dismissal damages, so long as the government does not require that they be repaid when severance is received for the same time period.
Our Employment & Labour Group has been working with businesses to educate, develop and draft the right policies and contracts for their workplace and are here to help! Get in touch today.
Chris Drinovz is an experienced employment and labour lawyer in Abbotsford, Langley, Surrey & South Surrey, a Partner at KSW and Head of the Employment & Labour Group at KSW Lawyers (Kane Shannon Weiler LLP). Chris has been assisting local businesses with workplace issues since 2010. His expertise covers all facets of the workplace including wrongful dismissal, employment contracts, workplace policies, and WorkSafeBC matters, including occupational health & safety. Chris is on the Executive of the Employment Law Section of the Canadian Bar Association BC, the Vice President of Greater Langley Chamber of Commerce and a Director for Surrey Cares. Chris can be reached at firstname.lastname@example.org.
Mike Weiler is senior counsel with the Employment & Labour Group at KSW Lawyers (Kane Shannon Weiler LLP). Mike works closely with Chris and specializes in labour law and helping unionized employers with Labour Relations and Union Advice. Mike has more than 44 years of experience practicing employment, labour and human rights law, and related areas, including governance and shareholders rights (and corporate defences to same). He represents employers, management, executives and other senior employees.
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