'Don't use fixed-term contracts unless you absolutely need to,' lawyer warns
In a recent B.C. Supreme Court decision, an employer was ordered to pay a fixed-term employee terminated after six weeks’ employment the full amount owed for her 18-month contract, totalling $81,000, plus legal costs.
Gisborne Holdings terminated Kavita Lefebvre based on an email she sent to a human resources manager, the tone and content of which the company alleged was cause for dismissal.
Lefebvre sued the company for the entire amount of her fixed term, or alternatively the $5,000 completion bonus offered on her contract. She also sought punitive damages for the way the dismissal was conducted as well as the false allegation of cause.
Don’t use fixed-term contracts unless necessary: lawyer
HRD spoke with Nicole Skuggedal, Lawson Lundell partner in Vancouver, about how employers of fixed-term employees can avoid this circumstance.
“Don't use fixed-term contracts unless you absolutely need to,” said Skuggedal. “And in most cases, you don't need a fixed-term contract, you can have an indefinite-term contract with a strongly worded termination provision, limiting the employee’s entitlements to Employment Standards minimums.”
If a fixed-term contract is necessary, she continued, it’s important to include an early termination provision that clearly states early termination is allowed under provincial employment standard minimums.
“You should also have a clause that deals with what happens after the expiry, because sometimes agreements don't end on a fixed term, and now you'd be in a situation where you have common law entitlements after the fixed term has passed … you just need to be more careful when drafting a fixed term agreement.”
“Testy” behaviour does not amount to just cause for dismissal of fixed-term employee
Lefebvre was hired by Gisborne Holdings as a Departmental Administrator to cover another employee who was off on parental leave. She signed an 18-month fixed-term contract at an hourly rate of $25.95 inclusive of in lieu benefits. The contract included a $5,000 completion bonus to be paid on the last day of her employment “or upon layoff, whichever occurs first.
“No payment (partial or otherwise) is made if there is a quit or termination for cause,” the contract stipulated.
In its decision, the court noted that while Lefebvre was given some training for her role by the employee she was covering, she “was not adequately trained for all of the tasks assigned to her.”
The court also stated Lefebvre was given tasks additional to those her incumbent performed, and that she struggled to keep up with the workload.
Fixed-term employee not found to be insubordinate
Roughly six weeks into the contract, a telephone call between Lefebvre and the company’s largest client got “heated”, resulting in an apology from Lefebvre. With the Human Resources manager, Ian Gibson, a performance plan was created to build relationships with other staff who had allegedly complained of Lefebvre’s communication style, and all agreed to it.
Lefebvre had raised concerns to Gibson and her manager about her workload and additional tasks, and was on board with the performance plan. However, an email she sent to Gibson was deemed by the company to be insubordinate and cause for termination. She was terminated three days later, paid two weeks in lieu of notice.
The court found that the email was reasonable, stating that just cause for dismissal is “employee behaviour that, viewed in all the circumstances, is seriously incompatible with the employee’s duties, conduct which goes to the root of the contract and fundamentally strikes at the employment relationship.”
Performance plans must be followed for just cause dismissal
While the company did instate a performance plan for Lefebvre’s communication style, they did not follow it formally, Skuggedal said. While this wasn’t the main factor in the court’s decision since the employment contract was clear-cut, it didn’t help their case, either, with the court stating: “Gisborne did not follow its own progressive discipline policy, which is a factor that I find weighs in favour of finding no just cause.”
Performance plans are only effective if they are followed, Skuggedal said.
“It's hard to establish cause when you didn't do what you said you were going to do,” she said. “In some cases, it's not a good idea to have those kinds of policies because then you're stuck to them. So, if you're going to implement a performance management plan in your workplace, you need to ensure that you're able to follow it in all instances.”
Skuggedal also stressed that establishing insubordination as a reason for just cause termination is very difficult to do – another reason why performance plans must be followed exactly.
“Being a bit insubordinate to your boss, without progressive discipline … it's really difficult to establish cause, unless the behaviour is sufficiently abhorrent: they're swearing at their supervisor, they're engaging in fraud, sexual harassment, those kinds of more serious workplace behaviours,” she said. “Being insubordinate and somewhat rude – I would advise clients they need to be following a progressive path, or giving a warning, or letting the employee know this won't be tolerated.”
Fixed term with cause termination was not done in bad faith
The court did not award the punitive damages, however, because it decided Gisborne’s allegation was reasonable.
“The court looked at a cost analysis, they said there wasn't cause, but there wasn't anything wrong with the employer alleging cause,” said Skuggedal.
“That's a distinction. In some cases, we see the court say, ‘You have no basis for cause, the fact that you were alleging that can then create more aggravated and more punitive damages for that bad faith.’”
But in this case, the court decided there was no bad faith in the termination, however, there was also no cause.
