The factors for assessing wrongful dismissal damages in Canada are well established, and will generally include the person’s age, tenure, the character of employment (or the degree of expertise or specialization) and other economic factors that may impact a person’s ability to find comparable work, such as education, the health of the local economy and the demand for her services.
To the chagrin of many, there is no universal formula for assessing wrongful dismissal damages. However, people in low-skill or semi-skilled jobs often do not receive extended notice periods due to the perceived availability of comparable work – a food service worker can arguably work as a cashier, a convenience store clerk or even a construction labourer.
Recognizing this, one recent Ontario decision (Brake v PJ-M2R Restaurant Inc., 2016 ONSC 1795) is receiving some attention after the Court awarded a former McDonald’s manager over $100,000 in damages (or 20 months wages) for her constructive dismissal.
Esther Brake began working for McDonald’s restaurants in 1986 in Corner Brook, Newfoundland. In 1999, she moved to Ottawa and began working for a local franchise, PJ-M2R. In recognition of her experience and the associated value that she was bringing with her to PJ-M2R, she was hired as if already having 7 years of full-time service to that business. Interestingly, as of August 3, 2012 (the date of termination), the judge concluded that Ms. Brake had the equivalent of 20 years employment history with the Defendant, although she had only worked there for 13 years by that point. She was 62 years old at the time of termination.
By 2008, Ms. Brake was managing two stores – a stand alone restaurant and a kiosk restaurant in a nearby Walmart. For years Ms. Brake received consistently positive reviews and feedback from ownership and coworkers.
By 2011, the Walmart store was underperforming and struggling with high-turnover. In that year Ms. Brake received her first negative review and was assigned to work in the Walmart location full time. She was given strict instructions to turn the restaurant around and was given exceptionally difficult performance targets.
Ms. Brake worked extremely hard to turn around the Walmart store, often working 12 hour days, 7 days a week. Despite her efforts, at her 3 month performance review in the Walmart restaurant, Ms. Brake was graded as “needs improvement” and was placed on a performance improvement plan.
At the conclusion of her 3 month performance improvement plan, Ms. Brake had met all of her targets and the Walmart restaurant was performing substantially better. Despite this, ownership approached Ms. Brake and informed her that she was being demoted. Ms. Brake protested, but was told to “take the demotion or go”. Ms. Brake did go, never to return.
Between her termination and trial, Ms. Brake worked as a cashier in a Sobey’s and a Home Depot. She never again worked as a manager.
Ms. Brake sued her former employer for constructive dismissal. Not surprisingly, the court agreed, finding that the demotion was a fundamental breach of contract that would have resulted in humiliation and meaningfully inferior benefits.
In assessing Ms. Brake’s damages, the court effectively summarized the relevant facts as follows:
At the time she was constructively dismissed, Esther Brake was 62 years old (she is now 65). She had worked for McDonald’s in some capacity for the majority of her working life. She had effectively worked for the Defendant for 20 of those years. She has little in the way of formal education. She rose to a management position through perseverance and hard work. Her knowledge and skills are mostly applicable to only the McDonald’s environment, a work place that very much has its own unique culture, language and ways of doing things. Since her dismissal, despite her reasonable best efforts, she has not managed to secure a reasonably comparable managerial position. I find that her subsequent employment represents a reasonable effort on her part to mitigate her losses. However, I also find that her ability to find employment does not take away from the loss she suffered from being dismissed without cause. The cashier position she occupies now at Home Depot is so substantially inferior to the managerial position she held with the Defendant that the former does not diminish the loss of the latter.
Given the Plaintiff’s age, the length and nature of the employment, the manner in which she was dismissed by the employer, the low likelihood that she will ever again attain a similar managerial position and the impact on her of being unjustly dismissed in the context of her character, reputation and circumstances, the court concluded that a fair compensatory notice period would be 20 months. When benefits and salary were factored, this amounted to $104,499.33.
This case is intriguing for a number of reasons. First, although there is no direct mention, the outcome of this case appears to support the idea that today, the character of employment is a factor of declining relative importance (see for example Di Tomaso v. Crown Metal Packaging Canada LP, 2011 ONCA 469 and Medis Health and Pharmaceutical Services Inc. v. Bramble (1999), 1999 CanLII 13124 (NB CA)). Ultimately it begs the question – if you have two employees, one in low skill position and one in an executive position, what’s to say that the executive will have a harder time finding comparable work?
Second, it is interesting how the court came to consider Ms. Brake a 20 year employee, when in actual fact she had worked there for 13 years. The court does not go into much detail as to how they came to this conclusion, except to say that Ms. Brake was “accepted into the organization as if already having 7 years of full-time service.” This appears to have had a significant impact on damages, given that the court awarded 1 month for every year of service.
Third, while the court clearly acknowledges that Ms. Brake has been working 35-40 hours a week since shortly after her termination, it found that “her ability to find employment does not take away from the loss she suffered from being dismissed without cause”. In reading the decision, it appears that Ms. Brake was awarded 20 months of wages and benefits, and that no deductions were made for any mitigating income she received over this same period of time from her new employer.
This last point is significant. Reasonable notice is designed to provide a terminated employee with sufficient time and resources to find comparable, alternate employment. If she is awarded 20 months wages and benefits from McDonald’s in addition to the income she received from Home Depot, an argument could be made that she is now in a better position than she would have been in had she not been terminated at all. She essentially received two sources of income for the same period of time.