Friday, 1 December 2017

Mooch Ado About Nothing: Being Fired Before You Begin

Can you be fired from your job before you even begin it? As preposterous as that question may sound, that was the very question with which the Supreme Court of British Columbia found itself faced in the case of Buchanan v Introjunction Ltd., 2017 BCSC 1002 (CanLII).

Facts

As the Honourable Mr. Justice Skolrood noted in his reasons for decision, this case is somewhat unusual in that the plaintiff’s employment was terminated shortly after his contract of employment with the defendant was signed but before he actually commenced work.

The parties proceeded by way of an agreement statement of facts. The material facts of the case were said to be as follows:

  • In or around mid-July, 2016, while employed by another company, the Plaintiff applied for employment with the Defendant.
  • The Defendant did not recruit the Plaintiff or solicit his application for employment.
  • Following receipt of the Plaintiff’s application for employment, the Plaintiff was invited to meet with representatives of the Defendant beginning in or about September, 2016.
  • After a series of meetings, the Defendant provided the Plaintiff with [a] letter dated September 29, 2016…
  • Thereafter, the Plaintiff exchanged correspondence with the Defendant wherein he sought and obtained clarification of the terms of employment.
  • In mid-October, 2016, the Plaintiff received and signed a formal employment contract with the Defendant.
  • The Plaintiff returned the signed employment contract to the Defendant on October 16, 2016.
  • On October 29, 2016, the Defendant’s Chief Executive Officer, Mike Nabavi, met with the Plaintiff and advised him that the Defendant was “retracting” its offer of employment.
  • The “retraction” was confirmed in a letter from Mr. Nabavi to the Plaintiff that same day.
  • Mr. Nabavi’s letter of October 29, 2016 was followed by an exchange of emails.
  • The Plaintiff did not seek to avail himself of any assistance from the Defendant or from Mr. Nabavi and in particular, did not pursue any short-term work with the Defendant.
  • The Plaintiff did not perform any work for the Defendant.
  • The Plaintiff obtained employment with a third company, commencing on or about December 19, 2016.
  • The Plaintiff earned $16,052.36 (gross) for the period beginning December 19, 2016, and ending April 13, 2017.

The employment contract executed between the parties (the “Contract”) provided that the plaintiff would commence his employment with the defendant effective November 1, 2016, in the position of senior software engineer at an annual salary of $125,000. He was also eligible to participate in a stock option plan and to receive a company-wide bonus.

The Contract contained the following clause titled “Probation”:

Employee’s employment shall be subject to a probation period of three months beginning on the Effective Date during which time the Employer may terminate the employment without notice or cause.

Following the defendant’s “retraction” of the Contract, Mr. Nabavi, on behalf of the defendant, suggested that the defendant may be able to assist the plaintiff financially or with some short-term employment:

  1. In his October 29, 2016 letter to the plaintiff confirming the retraction of the Contract, Mr. Nabavi said: “As promised, I will take a look to see to what extent we may be able to help you financially as you transition to your new role”.
  2. In an email to the plaintiff dated November 2, 2016, Mr. Nabavi said: “I can find some short-term paying work at Otherly to keep you busy. It will also be a BIG help for us. You don’t even have to work with the team, if you don’t want to. You can work out of home, our office, or one of the several Regus temporary offices nearby…If interested, please let me know what would be a reasonable hourly wage. Perhaps something close to what you were getting paid before.”
  3. In an email dated November 4, 2016 to the plaintiff, Mr. Nabavi said: “If you are still looking and need to fill in the gap on the short-term, my offer still stands and I can get you to help us on two smaller projects. It will be a big help for us as well. I’ll be happy to pay at least the same amount as your last employer.”

In his affidavit, the plaintiff said the following about Mr. Nabavi’s November 2 email:

I did not respond to this email. At that time, I found it difficult to trust Mr. Nabavi as I was led to understand the company was in a much different position in terms of growth potential and financial capability that I was advised during the interview process. Furthermore, the offer by Mr. Nabavi was undetailed in nature as to the duties, responsibilities and duration of the temporary position.

With respect to Mr. Nabavi’s November 4 email, the plaintiff said:

I did not respond to this email. I found it difficult to trust Mr. Nabavi given what had recently transpired. Moreover, my focus was to find a long term position that was in line with my career goals as a website designer and software engineer.

For his part, Mr. Nabavi describes his offers of short-term work in these terms:

In terms of my willingness to provide the Plaintiff with short-term work as set out in my emails to him of November 2 and November 4, 2016, the Defendant had genuine needs to be addressed. When it was clear to me that the Plaintiff was unwilling to consider short-term engagement, I arranged to contract with other individuals whose combined engagement lasted for several months doing the same type of work that I had envisioned for the Plaintiff.

And that was it. That was the totality of the facts.

Decision

The court found that, based on the facts, three issues arose:

  1. Did the defendant’s “retraction” of the Contract constitute a wrongful dismissal entitling the plaintiff to seek damages in lieu of reasonable notice? Included in this issue is the question of whether the defendant could rely on the probation clause of the Contract to terminate the plaintiff’s employment without obligation.
  2. If the plaintiff was entitled to reasonable notice, what is the appropriate period? and
  3. Did the plaintiff fail to mitigate his losses?

In answering the question of whether the plaintiff had been wrongfully dismissed, Justice Skolrood reasoned as follows:

[13] It is well established that, absent an express contractual provision to the contrary, an employee who is terminated without cause is entitled to reasonable notice or damages in lieu of notice. That proposition holds true even where the termination occurs before the employee has started work: DeGagne v. City of Williams Lake, 2015 BCSC 816 [“DeGagne”]; and Horvath v. Joytec Ltd. (1989), 77 Sask. R. 272 (Q.B.).

[14] The real issue in this case is whether the defendant can rely on the probation clause of the Contract to terminate the plaintiff’s employment without any obligation to pay damages in lieu of notice.

[15] The plaintiff submits that the probation clause has no application because i) on its face it only applied as of the effective date of November 1, 2016 and ii) the concept of probation requires a good faith assessment of an employee’s suitability which did not occur here.

[16] The defendant submits that the probation clause should be found to apply because it would be illogical for the plaintiff to have better rights before he commenced employment than once he started work, given that as of November 1, 2016, the defendant had an unfettered right to terminate the plaintiff without notice or cause.

[17] I find that the defendant cannot rely on the probation clause to support its termination of the plaintiff without notice. I reach this conclusion for the following reasons.

[18] First, on its face, the probation clause provides that the three month probation period commences as of the effective date of November 1, 2016. Thus, it was not in force on October 29, 2016 when the defendant retracted the Contract. Had the defendant intended to maintain a right to terminate the Contract without notice at any time after execution, it could have included a term to that effect. In DeGagne, Madam Justice Dardi similarly found that a probation clause had no application prior to the employee actually starting work (at para. 45).

[19] Second, I reject the defendant’s argument that had the probation clause applied, it gave the defendant an unfettered right to terminate the plaintiff without notice or cause. The purpose of a probationary period is to permit the employer to engage in a good faith assessment of the employee’s suitability for the position in issue.

[20] This point was recently confirmed by Madam Justice Morellato in Ly v. British Columbia (Interior Health Authority), 2017 BCSC 42 …

[21] Here, there was no good faith assessment by the defendant of the plaintiff’s suitability for the job for which he was hired. Suitability was not a factor at all; rather, the defendant changed its mind about its business and staffing needs. This is apparent from Mr. Nabavi’s October 29, 2016 letter to the plaintiff where he said:

This decision is due to further evaluation of our business priorities and resource needs. It, needless to say, has absolutely no reflection on you. We simply made a mistake of hiring too many front-end people.

[22] While it was open to the defendant to do so, it cannot rely on the probation clause to escape its obligation to pay damages in lieu of notice.

[23] Counsel for the defendant sought to distinguish the cases relied on by the plaintiff by suggesting that they involved circumstances in which the employee was recruited away from existing employment by the defendant and that the contracts in issue provided for performance reviews after a period of time.

[24] In my respectful review, the cases are not so distinguishable. Again, I do not accept the defendant’s contention that the probation clause, if applicable, granted the defendant unfettered discretion to terminate without notice or cause. I note as well that the Contract here did provide, in clause 1.7, for quarterly performance evaluations.

[25] In addition to the above, there is a further reason why, in my view, it is not open to the defendant to rely on the probation clause. The defendant’s “retraction” of the Contract amounted to a repudiation which, based on the parties’ communications, was accepted by the plaintiff.

[26] A very helpful and concise summary of the principles governing repudiation is provided by Mr. Justice Cromwell in his concurring Reasons in Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 10 at para. 144 …

[27] Where the repudiation occurs in advance of performance, it may amount to an anticipatory breach, which was described by Justice Cromwell at para. 149 …

[28] Here, the defendant stated a clear intention not to be bound by the Contract and it was therefore open to the plaintiff to treat the Contract as at an end and to sue for damages. In those circumstances, it is not then open to the defendant to rely on a provision of the Contract to avoid or limit its damages.

Given such reasons, Justice Skolrood found that the plaintiff had been wrongfully terminated.

In assessing the reasonable notice period at six weeks, Justice Skolrood found that, in the circumstances of this case, the factors weighing in favour of a longer notice period include the nature of the position, the relatively high salary and the fact that the plaintiff left secure employment to join the defendant, although he was not recruited. The factors weighing in favour of a shorter notice period include the minimal length of service, the precariousness of the position and the availability of alternate employment.

With respect to the issue of whether the plaintiff had failed to mitigate his damages by refusing to accept Mr. Nabavi’s offers of short-term employment, Justice Skolrood wrote the following:

[41] In my view, the plaintiff did not unreasonably fail to mitigate his damages by not following up on Mr. Nabavi’s offers of short-term employment. The offers, as set out in Mr. Nabavi’s emails of November 2 and 4, 2016, were vague and lacked any particulars about start date, number of available hours and scope of work, as well as specifics about what the plaintiff would be paid. In the November 2 email, Mr. Nabavi referred to a “reasonable hourly wage” that would be “perhaps something close to what you were getting paid before”. In the November 4 email he said he would be “happy to pay at least the same amount as your last employer”. While that suggests the defendant would pay a similar rate to what the plaintiff earned previously, absent any details about the amount of work available, the plaintiff could not properly assess how much money he could expect to earn.

[42] Further, even accepting that the defendant would pay a similar rate, his salary from his previous employer was substantially less than what he was offered by the defendant. In the circumstances, it was not unreasonable for the plaintiff to decline to pursue an ill-defined job for unknown hours at a reduced salary from the employer who had recently advised him that there was no need for his services.

[43] I would add that throughout his dealings with the plaintiff, Mr. Nabavi acted honorably. It is clear that he felt bad about how events transpired and he had a genuine interest in helping the plaintiff. However, his offers of assistance were not ones that a reasonable person would have accepted given all of the prevailing circumstances.

In the result, the court found that the plaintiff was wrongfully terminated from his employment and that he was entitled damages equivalent to six weeks’ notice. As he did not start his new job until after the expiry of six weeks, there was no need to deduct actual earnings from this amount.

The plaintiff was scheduled to earn $125,000 per year, or $2,404.00 per week with the defendant. Six weeks’ salary equals $14,424.00 and the plaintiff was found to be entitled to judgment in that amount.

Commentary

Two initial comments. First, I did not dive into this case expecting it to be as interested and well-reasoned as it is. Second, I fully intended to use this case as a jumping off point to finally talk about the situation involving Anthony “The Mooch” Scaramucci, who was, for a very brief period, appointed White House Communications Director.

With respect to The Mooch, as some may recall, on July 21, 2017, Scaramucci was appointed White House Communications Director. He began work on July 25, although he had not yet been sworn in. Days into the job, Scaramucci provoked controversy after an expletive-laden interview with The New Yorker's Ryan Lizza, in which he made obscene and strongly derogatory statements about several members of the Trump administration. Ten days after the announcement of his appointment, he was fired by President Donald Trump.

Whether Scaramucci was technically fired before he began is a matter of some debate, given that he was on the job, but not yet sworn in, but it's certainly a high-profile example of someone being terminated before they technically start. Plus, I could hardly pass up the opportunity to use the title “Mooch Ado About Nothing.”

With respect to the decision itself, what a great set of reasons. Justice Skolrood’s reasons are approachable, easy to understand and follow and, to me at least, make sense.

I have already written much, perhaps too much, about the issue of probationary employees; see for example my post Employers Can Terminate Probationary Employees Without Cause, which is really an amalgam of a number of posts I have written on this issue. What I found interesting in this case is Justice Skolrood’s findings that, (a) the probationary clause did not apply as the probationary period had not yet commenced; and (b) the probationary clause could not be invoked as the employer had failed to conduct any assessment of the plaintiff’s suitability for the job.

Takeaways for Employees with Labour Pains

The takeaway from this case for employees is that, as incredible as it may sound, you can sue your ‘employer’ if your employment is terminated before you even begin. What workers need to be mindful of, however, is that once employment does begin, circumstances can change. Employees terminated during the probationary period would be prudent to review my post about the ability of employers to terminate probationary employees before relying too heavily on this decision.

If you are an individual looking for assistance with respect to the interpretation or enforceability of the terms of your employment contract, the professional, experienced and cost-effective employment lawyers for employees at Ottawa's Kelly Santini LLP would be happy to be of service to you.

Takeaways for Employers with Labour Pains

This case is a cautionary tale for employers and employment lawyers that draft employment contracts. In addition to drafting probationary clauses, it would appear that offers of employment need to make plain that such offers can be and may be withdrawn prior to the employee commencing employment.

If you are an employer and you need to make changes to the terms of your employee’s employment, or if you want to introduce written employment agreements with your staff, the professional, experienced and cost-effective employment lawyers for employers at Ottawa's Kelly Santini LLP would be happy to be of service to your business or organization.

Contact Me

To reach the author of this blog, Sean Bawden, email sbawden@kellysantini.com or call 613.238.6321.

Sean P. Bawden is a partner with Kelly Santini LLP, located in Ottawa, Ontario, Canada. He practices in the areas of employment law and civil litigation. He has also taught Trial Advocacy for Paralegals and Small Claims Court Practice at Algonquin College in Ottawa.

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As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation. It is always prudent to seek professional legal advice before making any decisions with respect to your own case.

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