When It Rains It (Really) Pours

In a recent article (Restoring ‘Working Notice’ As A Termination Strategy), I offered a different strategy for achieving the smooth, risk-free, and cost-efficient termination of employment relationships on a without-cause basis. Scintillating stuff, I know.

In that item, I stated…

Remember, when it comes to the law of employment and wrongful dismissal, reasonable working notice is the requirement. This is critical for understanding why HR’s default approach to termination of employment is broken – because it starts off by breaching the contractual terms of employment.

This is critical, because pretty much every civil claim for wrongful dismissal damages starts the same way, with the employer breaching the implied terms of employment by terminating the employment relationship without issuing reasonable working notice. Think about that for a moment… of the hundreds of wrongful dismissal claims commenced in court every year, virtually all of them start the same way… shouldn’t there be an approach to avoid that outcome?

A recent Supreme Court of B.C. decision exemplifies the risks associated with starting off on the wrong foot. I’ll jump to the end of the story, first… in Valle Torres v. Vancouver Native Health Society, Mr. Valle Torres was awarded a total of (approximately) $210,000 in damages as a result of the court’s finding that he was wrongfully dismissed and had been entitled to a 24 month notice period.

It’s worth noting that the Vancouver Native Health Society is a non-profit organization, so I doubt it can easily afford that sort of financial hit. The story gets worse for the Society, though, because it also has to pay Mr. Valle Torres’ legal costs and, of course, will absorb its own out-of-pocket legal costs. If the total price tag for the Society, at the end of the day, is under $300,000 it should consider itself lucky.

So, how did this catastrophic outcome happen?

How Not To Approach A Without-Cause Termination Scenario

Horacio Valle Torres was a 20 year employee, a mid-level manager supervising a few dozen employees and overseeing various projects, was 55 years old, and was earning almost $80,000 annually. He was not a signatory to an employment agreement containing a binding termination clause.

The Society decided to terminate Valle Torres’ employment on a without-cause basis, paying him 8 weeks’ pay-in-lieu (to which he was entitled pursuant to the B.C. Employment Standards Act), and offering 4 additional weeks’ pay in exchange for him signing a release of all claims. This was the Society’s first error, and the one which set the entire matter on a disastrous path.

Having terminated the employment plainly without providing the employee with reasonable working notice, the Society breached the employment agreement and made itself vulnerable to a civil claim for damages for wrongful dismissal. In doing so, it handed control of the outcome of the matter to Valle Torres (more on this below).

And, as these things tend to go, the Society only made things worse for itself from that point forward. It was “dishonest” with Valle Torres about why his employment was terminated, it later represented (in a separate proceeding) that he had been terminated for “proper cause”, it sent an email to the local social services community leaving the impression he had engaged in some wrongdoing or impropriety, it sent him an intimidating letter demanding he cease contact with the Society’s employees, etc. The court’s reasons read like a “how not to” formula for employment terminations.

In court, the Society’s evidence about the matter was “troubling”, was filled with “contradictions” and “glaring inconsistencies”, was “faulty and convenient”, and was “disingenuous and filled with animosity” towards Valle Torres. Yikes.

How Could That Outcome Have Been Avoided?

Aside from all the other ill-advised actions of the Society after the termination of Mr. Valle Torres’ employment, it could have approached the without-cause termination in a much better fashion. As I summarized in “Restoring ‘Working Notice’ As A Termination Strategy”, the strategy is quite simple.

Instead of laying the groundwork for wrongful dismissal litigation by breaching the implied term requiring provision of reasonable working notice of termination, employers have the following method available to them. The critical component is lays in dealing with the reasonable working notice entitlement.

The solution lays somewhere in between terminating abruptly and enduring a full period of working notice. Instead of abruptly terminating the relationship and sending the employee home with an offer letter and a release, as the Society did here, the employer may…

  • issue reasonable working notice (always erring on the high side) of termination,
  • combined with an alternative (and limited-time) offer of some amount of pay in lieu of notice,
  • make the alternative offer conditional upon the employee signing a release,
  • and give the employee a few days off, with pay, to consider the alternative offer.

By this method, all of the risk of litigation is eliminated because the employment has not been abruptly terminated. If the employee accepts the alternative offer and signs the release, the whole matter is resolved and the employee goes away without that risk ever arising at all. If (as was the case with Mr. Valle Torres) the employee doesn’t accept the offer then the employment continues for the reasonable working notice period.

Getting It Right

The keys to making an alternative offer which the employee will accept (and thus go away immediately) are generally that: the lengthier the working notice, the more interested the employee will be in settling; and the more money which is offered in lieu of notice, the more motivated the employee will be to settle. It is important to point out that, invariably, employees will accept less in order to be able to settle and go away immediately.

In this way, the employer achieves the without-cause termination and never places control of the outcome in the hands of the departing employee. The very worst that can happen is the employee rejects the time-limited offer, electing to work through the notice period – but as the Society learned (the hard way) this is a far better outcome than being sued for wrongful dismissal.

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This item is provided for general information purposes only and is not intended to be relied upon as legal advice. Informed legal advice should always be obtained about your specific circumstances.

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