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Yahoo
04-07-2025
- Business
- Yahoo
Howard Levitt: Judge awards more than $300,000 in constructive dismissal case
A consequential decision by Ontario Superior Court Justice R. Lee Akazaki last month provides valuable lessons for employers on what not to do. Joanna McFarlane was both a victor and victim of the COVID-19 pandemic. She began working with her former employer, the Toronto advertising company King Ursa, in March 2019 as its director of analysis and insights. About a year later, COVID hit and the company faced financial challenges, reducing its workforce from more than 40 people down to 10 to ensure its survival. McFarlane was at first a beneficiary of this and was promoted to VP media and analytics. Shortly thereafter, she was promoted again to executive VP media and analytics, with a salary increase from $220,000 to $300,000 a year. McFarlane then went on maternity leave, during which time the company's cost-cutting efforts proved insufficient and it slid further into the red. Twice it deferred McFarlane's return from leave due to its worsening cash flow and discussed with her the prospect of severance. Ultimately, King Ursa provided McFarlane with a letter demoting her to her previous VP position and reducing her compensation to $210,000. She then resigned and claimed constructive dismissal. The company tried to sugar coat the situation by writing that, 'There is no executive here that is not needed, valued or wanted. Please do not feel that you are being dismissed.' It let her know that others were being dismissed, and that all executives were taking a pay reduction. Of course, not returning an employee to their previous position upon their return from maternity leave, let alone reducing their wages, is a violation of both the Employment Standards Act and human rights legislation. But this was a court case, not one before either of those tribunals. In concluding that there was a constructive dismissal, the court stated: 'The fact that the company's circumstances made the conduct of (the owners) more understandable in real-world context did not excuse them of their legal obligations as an employer. The business had legal obligations. If it cannot afford to keep an employee, it must provide notice or payment in lieu.' The court found that McFarlane overreached somewhat in the case by arguing that the owner had created a toxic environment, an allegation too readily made by plaintiffs' counsel these days and which can redound against their clients — particularly when not established, as it puts the reputation of the employer at risk if there is no basis for it. The court found that the allegation made in this case, which was obviously embarrassing to the owner although he admitted to it, had nothing to do with McFarlane. Justice Akazaki also noted that 'companies undergoing financial stress tend to allow anxiety to absorb the atmosphere' but found no grounds to hold that (the owner) made it hard for McFarlane to continue working at King Ursa. Despite her short length of service of just over three years, the judge awarded McFarlane 12 months' severance. In particular, he relied upon the lack of comparable employment available to her. I have always argued that availability of comparable employment should be the most important factor in determining notice/severance because wrongful dismissal arises from the law respecting breach of contract, and the degree of difficulty in replacing the contract is how damages are determined in the event of a breach. But few courts have as explicitly relied upon employment availability as the overriding factor to the extent that Justice Akazaki did here. The decision is another death-knell to those who attempt to emphasize length of service as a determining factor. That has never been the law. That confusion has lead to too many misleading severance formulas, as well as being a common misconception. The employer argued that McFarlane had not fulfilled her obligation to mitigate, i.e., look for other employment, in attempting to reduce the 12 months awarded. Although McFarlane's job search documentation was not permitted to be introduced as it was submitted too late to the court, the fact that McFarlane took a lower paid consulting assignment marketing wine after only a month convinced the court that she was serious about replacing her income. Of importance to all employers and lawyers acting for them are the court's words: 'The employer bears the burden of proving the employee failed to mitigate, including that they could have procured other employment of an approximately similar kind. The party in breach has a high onus, because they are demanding positive action from the sufferer of the breach. Any reduction of the severance requires cogent evidence proving not only the lack of effort but also the ability to secure comparable employment.' Turning to additional damages, Justice Akazaki noted that, whatever King Ursa's economic needs might have been, there was no economic basis for the demotion, adding that the demotion 'struck an employee's vulnerability as a person who had built her professional identity and status through thought and industry.' The court rejected the allegation of discrimination based on gender or because she took a maternity leave, although the fact that she was returning from one was a defining fact in its attempt to redefine her employment terms: 'The circumstances of her isolation from the company during her extended maternity leave contributed to a need for heightened sensitivity and professionalism in the renegotiation of her compensation or severance based on the company's undeniably poor financial performance. So, for the purpose of moral damages, the analysis was based on her handling not on discrimination.' Since the conduct was not malicious no punitive damages were awarded, but McFarlane was awarded $40,000 in moral damages, which the court defined as being in the mid-range of such awards because of the financially unnecessary demotion. It was clear that no moral damages would have been awarded if only her salary had been cut, although it still would have been a constructive dismissal. Sometimes 'I quit!' is no resignation at all Howard Levitt: CUPE should support its members, not a foreign authoritarian regime In the case of Doran v. OPG, in which I acted, every other employee but Doran accepted Ontario Power Generation's changes, just as the other senior executives at King Ursa accepted a compensation reduction. But, as in Doran, the employer is not entitled to materially reduce compensation, regardless of the rationale, good faith or its acceptance by others, without it being a constructive dismissal. Howard Levitt is senior partner of Levitt LLP, employment and labour lawyers with offices in Ontario, Alberta and British Columbia. He practices employment law in eight provinces and is the author of six books, including the Law of Dismissal in Canada. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
25-06-2025
- Business
- Yahoo
An ‘impossible' PIP revives age bias lawsuit against Caterpillar
This story was originally published on HR Dive. To receive daily news and insights, subscribe to our free daily HR Dive newsletter. A district court erred when it dismissed a former Caterpillar employee's age discrimination claim because he demonstrated that the performance improvement plan that preceded his firing was 'impossible' to complete successfully, the 7th U.S. Circuit Court of Appeals held June 18. Per the decision in Murphy v. Caterpillar, Inc., the plaintiff had already once won an age-discrimination jury verdict against Caterpillar after allegedly being passed over for a promotion. The two sides settled and Caterpillar reinstated the plaintiff and agreed not to retaliate against him. Years later, the company allegedly presented the plaintiff with a PIP in which one of the plan's deadlines had already passed, indicating that the plaintiff had already violated the plan. The employee claimed his supervisors denied his request to edit the plan and, instead, signed the portion of the PIP indicating that he failed to meet the deadline. He sued for age discrimination and retaliation. The district court granted summary judgment for Caterpillar, but the 7th Circuit reversed on the age discrimination claim only, holding that the PIP supported a reasonable inference of discriminatory pretext. The Age Discrimination in Employment Act prohibits age-based employment discrimination against applicants and employees who are 40 years of age or older. The plaintiff in Murphy was 58 when his employment at Caterpillar ended, and the three-judge panel of the 7th Circuit noted that he met or exceeded expectations in every evaluation category at the time that supervisors placed him on the PIP. That the plaintiff was technically in violation of the plan before even agreeing to sign it constituted an oddity that could not be explained away as an oversight, the court said. It added that a jury could infer that the supervisors' decision to sign the document confirming the plaintiff's failure to meet the plan before it took effect 'signaled to [the plaintiff] that his fate had been decided.' Quoting a prior decision, the court wrote that 'the handwriting may not have been on the wall, but it was certainly etched into the signature block of the action plan, and the axe was poised to fall because [the plaintiff] was already in breach of the plan's terms.' Caterpillar offered several justifications for the PIP as well as the termination decision. According to the 7th Circuit, the company told the U.S. Equal Employment Opportunity Commission that the plan was partially prompted by inappropriate comments the plaintiff made to two co-workers. But the court noted that the supervisors testified the PIP was initiated before they learned of the alleged comments. The company also supported its motion for summary judgment by pointing to a supervisor's set of personal 'desk notes' about the plaintiff which claimed to document his performance issues. The district court relied upon the notes as part of its rationale in ruling for Caterpillar, but the 7th Circuit deemed the notes to be inadmissible hearsay whose reliability was not supported by the record. EEOC has resolved tens of thousands of age-discrimination cases in recent years, and those cases have at times resulted in large settlements for plaintiffs. Examples include a manufacturer that agreed to pay $460,000 to settle claims that the company planned to replace older workers with younger candidates. Meanwhile, older workers continue to report ageism at work. One 2024 report found that 59% of job seekers ages 50 and older said they believed their age created obstacles in the hiring process, and more than one-quarter of respondents said that they had witnessed age-related microaggressions in the workplace. Recommended Reading Trump moves to shutter OFCCP after months of chopping away at it Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
South China Morning Post
19-06-2025
- Business
- South China Morning Post
Hong Kong employment bill ‘not foolproof', may still allow worker exploitation: lawmakers
A recent law amendment intended to protect part-time workers may still allow employers to sidestep providing benefits to their staff and create a more challenging business environment for several sectors, such as minibuses, some legislators have said. The concerns were raised on Thursday, a day after the Legislative Council approved the Employment (Amendment) Bill 2025 in an 84-3 vote. The amended law, which will take effect on January 18, 2026, stipulates that an employee who works 68 hours over four weeks will be entitled to a full range of statutory benefits, including paid annual leave and sickness allowance. It aims to plug the loophole, which has long been criticised by labour unions and manipulated by unscrupulous employers, particularly in the retail, catering and security industries. But Lam Chun-sing of the Federation of Hong Kong and Kowloon Labour Unions, who voted for the bill, warned that it might not be foolproof, raising concerns that the calculation method, which looks at the current week plus the three preceding weeks, could still be exploited. 'When someone tries to find a loophole in the future, should the clause specify that it's not just calculated based on the preceding three weeks, but should also consider the following three weeks? This ensures there is no escape for long-term work,' Lam said on a radio programme.
Daily Mail
10-06-2025
- Daily Mail
Calling a colleague a 'weirdo' is discrimination as it may 'violate their dignity', tribunal rules
Calling a colleague a 'weirdo' is discrimination and could allow them to claim thousands of pounds compensation, a tribunal has ruled. An autistic children's centre staff member who complained he couldn't work with background music was asked in jest why he couldn't be 'ordinary and perfect like the rest of us'. His boss, Malcolm King, also compared the worker's disorder to having a hangover after a 'good booze up' and said the requests he made to him at work were a 'pain in the arse'. Employee Nicholas James has now won more than £17,000 in compensation for disability discrimination and harassment. Employment Judge Stephen Jenkins said: 'We considered that the references to accommodating [Mr James]'s requests as being a "pain in the arse", to questioning why [Mr James] could not be "ordinary like the rest of us", and to [Mr James] being a "weirdo"...would clearly have been unwanted to [Mr James]. '[Mr James] himself clearly perceived the comments as violating his dignity, and we considered that, objectively, it was reasonable to conclude that the words had the effect of violating [Mr James]'s dignity. 'They were comments most senior person within the executive structure of the organisation, and were comments which Mr King himself has, on reflection, agreed were inappropriate. 'In the circumstances, we were satisfied that the comments did involve unwanted conduct which had the effect of violating [Mr James]'s dignity.' The hearing in Cardiff was told Mr James worked for The Venture - an organisation which provides community-based services mainly for young people - in Wrexham from July 2021. He was employed as a project worker on their inclusion project which provided play work for children with neurodevelopmental conditions, primarily autism. Mr James later began working at 'open access' sessions, which were open to the public with music played through a radio. However, the tribunal heard he could not work with the music playing in the background, because this impacted his 'ability to concentrate on other matters'. It was therefore not played while he worked at these sessions, but it continued to be played at public events Venture held a few times a year. Chief Officer Mr King told Mr James that to stop music being played at these events would be 'quite wrong' as they needed to be 'enjoyable' for guests. '[Mr James] noted that he felt that he was continually disregarded because of his condition, and that he felt accused of wanting to spoil children's fun and that he was not able to do his job,' the tribunal heard. In November, another meeting took place between Mr James and several more senior employees at the company. 'After some opening comments which were complimentary about [Mr James]'s qualities as a play worker, Mr King noted that for him, at the heart of it, they needed [Mr James]'s gifts and they needed to find ways of making that work, "even though it's a pain in the arse". 'He followed that with what [Mr James] described as an ill-timed joke saying, "Why can't you be ordinary and perfect like the rest of us? But no, jokes aside, having always been something of a weirdo myself, I have some sympathy".' Mr James was subsequently removed from his role at open access sessions. At a meeting in February 2024, Mr King raised the issue of safeguarding for Mr James and the children he worked with. The tribunal heard: 'He compared the need to be alert to the children's needs to staff attending work the morning after a night out saying, "So that if staff come to work on a Sunday and they've been out till late on a Saturday night, having a good booze up and they turn up on the playground on a Sunday to do a Sunday shift and they're not really in great shape to be able to pick up on those things".' Mr James was later suspended from his role because of 'an issue of concern regarding [his] work and an alleged failure to report an incident'. He then sued for discrimination. The tribunal found that The Venture's decision to to remove Mr James from the open access sessions was not 'appropriate'. The judge said the 'reference to the impact on [Mr James]'s ability to work due to potential mental health issues, and the comparison of that with someone being impacted by a "good booze up" was unwanted conduct'. EJ Jenkins said: 'The discussion involved [sic] around Mr King's own concerns that the Claimant's work and care for children would be impacted by his mental health situation, and we felt that that concern was trivialised by Mr King's comparison of that with someone attending work suffering with a hangover. 'We were again therefore satisfied that this comment did have the effect of violating [Mr James]'s dignity.' Mr James's claim for failure to make reasonable adjustments succeeded in part. His complaints of victimisation and unauthorised deductions from wages were successful. His other claims failed. Mr James' employers have been ordered to pay him him £17,154.86 in total including £15,000 for injury to feelings.
Zawya
05-06-2025
- Business
- Zawya
South Africa: Restraint of trade agreements, blanket ban backfires in Labour Court
It's not uncommon for businesses to want to stop former employees from joining a competitor. But just having a restraint-of-trade clause in a contract doesn't mean it will hold up in court. A recent Labour Court case shows how these clauses can backfire, especially when there's no clear evidence that the business is at risk. What happened? MSA Outsourcing Solutions, a company that supplies remote staff to international clients, tried to stop two former employees from working at a competitor, Exclusive Prep. The employees, who had been service agents, were now working in senior roles at the new company. MSA claimed they could hurt its business by taking clients or using confidential information. MSA asked the court to urgently stop them from working at Exclusive Prep or contacting MSA clients or staff. But the court wasn't convinced. What the court said The judge dismissed the case and ordered MSA to pay the legal costs. Here's why: - The employees weren't senior enough. They didn't have access to sensitive strategy or client data. They were service agents, not decision-makers. - There was no proof of wrongdoing. MSA didn't show that the employees had taken confidential information or poached clients. - The restraint was too broad. It tried to stop them from working in the whole of South Africa for a full year. That wasn't seen as reasonable. - Competition isn't always unfair. People are allowed to use the skills they've gained in a job. You can't stop someone from earning a living just because they're now working for someone else. Read the full judgment here What this means for HR and legal teams This case is a good reminder that restraint-of-trade clauses aren't a catch-all. If you want to protect your business, you need to: - Be specific. Restrict only what's truly sensitive, like client lists, pricing models, or strategic plans. And only for people who actually had access to that information. - Keep evidence. If you're going to rely on a restraint, make sure you can show what kind of information the employee had, and why it matters. - Act quickly. If you wait too long to raise a concern, it's harder to prove the issue is urgent. - Don't overreach. Blanket bans rarely work. Tailor your clauses to the role, the risk, and the region. Ensure your contracts stand up in court It's tempting to treat restraint clauses like a safety net. But they only work if they're fair, focused, and backed by evidence. If your business is serious about protecting itself, make sure your contracts and internal processes are doing the real work. If you're unsure whether your current contracts would stand up in court – or you're facing a potential risk, it's important to seek advice to review and update your contracts. All rights reserved. © 2022. Provided by SyndiGate Media Inc. (
