Wrongful Dismissal claims occur when an employee believes they have been fired without just cause or without proper notice or pay in lieu of notice. To pursue these claims employees have to pay for a lawyer to bring the case in Court, and employers have to pay lawyers to defend against them, whether the claims are meritorious or not. Regardless of which side of the equation you find yourself, as employee or employer, often parties only consider the circumstances that existed at the time of termination as being relevant to a claim for wrongful dismissal. The reality is that the post-termination conduct of both employee and employer can have a significant impact on claims for wrongful dismissal.
Post-Termination Conduct Repudiating Employment Contract
The governing legislation for employment relationships in British Columbia includes the Employment Standards Act and common law principles. The Employment Standards Act sets out minimum standards for notice periods and severance and employers are not allowed to contract out of these minimum standards. That being said, employers can contract out of paying the maximum in severance under common law principles, and in order to do so many employers include termination clauses in their contracts that exceed the Employment Standards Act minimum amounts, in order to ensure that the clauses which limit the maximum severance payable to an employee are enforceable in Court.
Many employers realize their potential liability can be limited by a well-crafted employment contract, with enforceable termination clauses. These termination clauses are designed to outline the conditions under which employment may be terminated by the employer, often including laying out the notice period or severance pay required. However, most employers do not realize that the enforceability of termination clauses in employment contracts can be significantly impacted by the conduct of employers, whether by action or inaction, particularly in the context of wrongful dismissal claims.
In the case of Kyln v. Pentax Canada Inc., 2024 BCSC 372 the employee’s contract stipulated their entitlements on termination and what would happen if their employment was terminated without cause, in particular, how the employee’s compensation would be calculated in light of the fact that their employment compensation was based entirely on commission. In this case, the employer failed to provide compensation to the employee post-termination in the manner laid out in the contract. Due to this, the Court found that the employers’ post-termination actions had repudiated the employment contract, and the employee was entitled to common law compensation, which was significantly more than they would have been entitled to under the employment contract.
Failure To Mitigate Damages
In wrongful dismissal claims, the employee has a duty to mitigate their losses by seeking alternative employment during their notice period. An employee who fails to attempt to mitigate their losses can find that what otherwise would have been a strong wrongful dismissal claim ends up being worth little at the end of the day. This is because the Courts will take into account a failure to mitigate losses into account when determining the reasonableness of the employee’s efforts to mitigate damages, and if the Court finds it was not reasonable then the damages awarded at the end of the day will be significantly less than what otherwise might have been ordered.
Damage to Reputation
Another way post-termination conduct can impact a wrongful dismissal claim is when a former employer’s statements negatively and wrongly impact a former employee’s reputation when it comes to the workplace environment and future potential job opportunities. This can occur through poor references, public statements on social media and other mediums, amongst other ways. If an employer makes disparaging remarks about a former employee to third parties, it may not only harm the employee’s reputation but also strengthen their wrongful dismissal claim. Courts may view such conduct as evidence of bad faith, which can influence the amount and types of damages awarded. Such conduct could also be defamatory and a cause of action in and of itself.
After-Acquired Cause
After-acquired cause is a cause for the termination of an employee’s employment which is acquired by the employer post-termination. While it might be surprising to discover that an employer can defend against a claim of wrongful dismissal for facts that they discover only after they have already terminated the employee, the current state of the law is that they can. So long as the conduct discovered post-termination occurred during their employment and was not condoned by the employer, either expressly or impliedly, then it can be used as after-acquired cause to support a termination that had already occurred. There are cases where the employer did not learn of the conduct they alleged to be after-acquired cause a year or more after termination of the employee, yet the Courts still consider the same as a defence to wrongful dismissal claims.
Practical Implications for Employers & Employees
Given the potential for employer conduct to impact the enforceability of termination clauses, employers must exercise caution in their management practices. Employers should ensure that their termination clauses are not only legally sound but also reflective of their commitment to fair treatment and good faith. This includes providing clear communication, maintaining transparency in performance evaluations, and allowing employees the opportunity to address any performance issues before termination.
Additionally, employers should regularly review their employment contracts and termination clauses to ensure they comply with current legal standards and best practices. Engaging legal counsel to draft and review these clauses can help mitigate the risk of unenforceability due to employer conduct.
Experienced Employment Lawyers
The conduct of both employers and employees can play a crucial role in determining the enforceability of termination clauses in British Columbia and the rights and remedies available to parties when the workplace relationship comes to an end.
If you have a legal matter arising out of the termination of an employment relationship, contact the experienced employment lawyers at Taylor & Blair LLP today to schedule a consultation.