GENEROUS AWARD FOR WRONGFUL DISMISSAL
A man we will call Jimmy worked as the regional manager of a trucking company in British Columbia for almost 18 years.
He was in charge of 200-250 people, earned a base salary of $75,000 a year and many benefits.
In the summer of 1995, he was approached by one of three brothers who owned a chain of truck dealerships. They wanted him to become the manager of one of their branches. One of the brothers had met Jimmy before and had a good opinion of him.
Jimmy, however, did not have any sales experience. He was hired with the understanding that he would eventually become the branch manager after working as a sales representative for five or six months and learning the trade. He was told that his salary would be approximately $100,000 a year as a branch manager.
Based on these verbal promises Jimmy resigned from his l8 years of employment as the regional manager of the trucking company and started working as a sales representative at the dealership. He was initially paid under $60,000 a year but he accepted this as a prelude to becoming branch manager.
After six months of working as a sales rep Jimmy spoke to the owners about moving into the branch manager position. He was given a variety of reasons as to why this promotion could not happen yet. The initial need for a branch manager was contemplated as part of an expansion of the company and the opening of new dealerships. He was told that as that since they had not been successful in opening a new dealership yet, he could not be promoted.
After a year, Jimmy talked to the owners again and got the same response.
Jimmy became increasingly exasperated, frustrated and depressed. From time to time he would remind the owners that he did not give up his regional manager=s job to sell trucks. The relationship with the owners began to deteriorate.
Eventually, the owners told Jimmy that he had not impressed them as a salesman and without those skills he could not become a successful manager. Jimmy was trapped. He could not afford to resign and he had given up his old job. He suffered from agitation, loss of energy and insomnia. He also felt like an idiot for having given up his old job. This went on for four years until one day Jimmy was called into the office and told that somebody else was being made the branch manager. An hour later he was told that his salary would be reduced to $24,000 per year plus commission.
Jimmy chose to treat these events as a constructive dismissal and left his employment.
A constructive dismissal takes place when the employer so significantly changes the terms of the employment agreement that the employee has the right to treat the agreement as broken. A constructive dismissal is a termination without anyone saying, You are fired.
When Jimmy sued for wrongful dismissal the employer denied at trial that it had ever promised Jimmy the branch manager position. The judge did not believe them. It did not make sense that Jimmy would have given up such a good job simply to take a sales representative job with the possibility of promotion.
After Jimmy left the dealership's employ he became depressed and had to receive medical treatment. His wife became so depressed that she was hospitalized and stopped working as a real estate agent. They had to cash in their RRSPs and sell their house.
At trial, Jimmy claimed that he had the right to be paid $100,000 from six months after the date he was hired. Although the judge found that Jimmy had been promised that salary, by continuing to work for four years at a lower salary Jimmy had agreed to that lower salary. He had condoned the breach of contract by his silence. The judge further rejected the contention that Jimmy=s pay in lieu of reasonable notice should be calculated at the $100,000 rate. The court did find that the breach of promise to make Jimmy the branch manager could be taken into account in assessing how much notice of termination Jimmy should have received.
The judge found that the employers' insensitive conduct in telling Jimmy he would not be branch manager and that his income was being reduced all in one fell swoop warranted an increase in the notice period to which Jimmy was entitled. The employer was guilty of bad faith conduct.
The judge awarded Jimmy 24 months reasonable notice. After only four years of employment this is an incredible award.
Although this writer agrees that Jimmy was entitled to more than the usual 4 or 5 months reasonable notice to which he would normally have been entitled, the judge may have gone a bit far. It should be noted that this was a British Columbia case. Among employment lawyers, British Columbia courts are notorious for being generous in their award of reasonable notice to dismissed employees. I'm sure Jimmy is glad he lives in B.C..
As published in the Hamilton Spectator, August 19, 2002