MANDATORY ASSIGNMENT #2 (ONLINE) S1 2020 – Q&A

1. An employer wants to remove a term in the contract of two employees that requires payment of
an annual bonus to the employees. Employee A, concerned that refusing the employer’s request
will have negative ramifications for his job security, agrees to the change. Employee B refuses
the modification, saying that he likes the bonus and does not want to give it up. The contract of
both employees permits the employer to terminate the contract by giving three months’ notice.
Explain how the employer can modify the contract in both scenarios so that the modification is
legally enforceable.

Employee A must receive some form of new consideration in order for the new contract
(term) to be enforceable, even though A agreed to this change. A signing bonus, extended
vacation, or other benefits could constitute such new consideration. It need not be equal to
what was given up but should be seen as sufficient to cause someone to agree. Francis v.
CIBC, Globex v. Kelcher.

Employee B can be dealt with in either of two ways. The first is to exercise the right to
terminate with notice and then offer the employee the new contract, which can be agreed to
—i.e. “I am firing you and providing you (working or pay in lieu) notice. Upon the
conclusion of that contract, I am offering you a new contract with the new terms, which you
are free to accept or not.” The second is to offer employee B the new contract and make it
clear that unless B signs the new contract the employer will exercise its right to terminate
with notice. The employee can agree or not at that point. In either case, should employee B
accept the new contract there must be new consideration. In the first case that would simply
be the exchange of work for pay. In the second the employee would need to receive
something else.

2. If an employment contract term specifies that the contract operates from January 1, 2015 to
December 31, 2015, must the employer provide notice of termination to terminate the contract?

No. This is a fixed term contract. The employee has effectively already received notice of
when the contract ends. There is no implied term of CLRN. That said, if the employer
wants to terminate the contract before the set termination time, the ER would owe the EE
the value of the balance of the contract.

3. What four questions do the courts consider when dealing with constructive dismissal lawsuits?
1. What are the express and implied terms of the contract?
2. Has the employer breached one of them?
3. Is the breach fundamental or “repudiatory”?
4. Did the employee “accept” the repudiation and treat the breach as having terminated the
contract?
4. Describe the three options available to an employee confronted with an employer who commits a
fundamental breach of the employment contract.

1. Condone the employer’s breach of contract

5. What is the purpose of requiring employers to provide employees with reasonable notice?

To allow the employee a “cushion” time to find new work.

6. What is the difference between compensatory and aggravated damages?

Kind of a trick question and unfortunately the text is unnecessarily confusing on this issue
and goes on far too long about past case law which no longer applies since Honda v Keays.
Actually, the best way to describe this is to say that aggravated damages are a type of
compensatory damages - that is they are actual damages incurred by the employee as a
result of the employer’s actions in firing them.

This is in contrast to punitive damages, which are assessed not by actual harm to the
employee but to punish and denounce the employer’s behaviour.

That said, the difference as set out in this chapter is that Compensatory damages are
described as the damages resulting from the dismissal itself (loss of salary, benefits and
pension contributions for the notice period). Aggravated damages here refer to the damages
that flow from the manner of the dismissal, i.e. dismissal is done in such an egregious or
bad-faith manner as to cause a separate harm to the employee, which can be given a
determinable financial value.

This is also discussed in a slightly different way in the chapter dealing with Torts and tort
damages.

7. What are the conditions in which an employee will be expected to accept a job with the employer
that has just dismissed him or her as part of an employee’s duty to mitigate?

1. The salary is the same; working conditions are not substantially different or the work
demeaning, and the personal relationships are not acrimonious; and
2. Returning to the old workplace would not place the employee in an “atmosphere of
hostility, embarrassment, or humiliation.”
8. Explain the various types of remedies available to the victim of a tort.

a) Compensatory Damages - for losses/harm actually caused to the victim which include:
i) Special Damages – reimbursement for actual expenses, which can be quantified
ii) General Damages – future financial losses and expenses, which are harder to
quantify
iii) Aggravated Damages – damages resulting from high-handed and insensitive
behaviour which worsened the effects of the tort, such as hurt feelings
b) Punitive Damages – awarded to the victim but not for losses/harm actually cause to the
victim but rather to denounce, punish and deter outrageous behaviour by the tortfeasor.

9. How do the courts in the common law regime deal with an employment contract term that
permits termination of the contract by provision of less notice than required by employment
standards legislation?

The illegal clause is void and is replaced by the Implied Term of Common Law Reasonable
Notice of Termination.

10. Explain the test for frustration of contract, and provide some examples of how it might arise in
the employment setting.

Whenever, without default of either party, a contractual obligation has become incapable of
being performed because of circumstances in which performance is called for would render
a thing radically different from that which was undertaken by the contract. E.g.,
Destruction of workplace by unexpected act—i.e. “act of god;” death of employee; illness of
employee; a change in law.

11. Bridget suffered a back injury that medical evidence confirms will forever prevent her from
performing her job as a shelf stocker. However, she could return to work as a cashier, provided
she could sit on a chair while she works. The employer refuses to take her back as a cashier and
instead informs her that her contract has been frustrated by her disability. Do you think Bridget’s
contract has been frustrated?

Assuming she is not unionized, under Common Law, yes her contract has been frustrated.
Under regulatory law and particularly under human rights statutes no and the employer
would be required to accommodate her.
12. Describe the two-step proportionality test developed by the Supreme Court of Canada in the case
of McKinley v. BC Tel.

1. Did the employer establish on balance of probabilities that the employee breached the
contract?
2. Is the employee’s misconduct sufficiently serious that it undermines the foundation of
the employment contract? Considers all the circumstances, aggravating and mitigating.

Also, though not explicitly part of the test, is whether it is a single act (one act is unlikely to
meet test unless criminal, or serious, wilful breach) or cumulative just cause/culminating
incident (this situation more likely to meet test).

13. Explain the concepts of “cumulative just cause” and “culminating incident.” What must an
employer establish in order to justify summary dismissal of an employee based on cumulative
just cause?

A series of less serious breaches is described as “cumulative just cause.” The final breach
that precipitates the termination is the “culminating incident”. The employer must establish
whether or not:
1. Employee was given clear/express warnings about performance
2. Employee was given a reasonable opportunity to improve
3. Employee still failed to improve after being given that opportunity
4. The employee’s cumulative failings prejudiced the employer’s business

14. In what circumstances can an employee’s behaviour outside of the workplace and during non-
working hours be grounds for summary dismissal?

When employee’s off-duty conduct threatens the economic interests or the ability of the
employee to perform job, this can be affected by the requirements of the particular job in
question — e.g., a teacher might be held to higher moral standard than a forklift driver.
This behaviour potentially includes social media commentary.

15. Explain the legal test the courts apply when considering whether an employee has terminated the
employment contract.

It is an objective test. The intention must be clear and unequivocal and determine whether a
“reasonable person” of normal intelligence looking at what happened would conclude the
employee has unequivocally resigned from his/her job.