Employment and Labour

Law SEMINARS | 2013

FACT SITUATION #1 – THE NIGHTLY NEWS

From 1991 to 2012 Dan Jeffries was the anchor of Wolf News, a

cable network owned by a media consortium.

He repeatedly took on a political party by ridiculing a number of their

candidates for their position on gay marriage and just about

everything else which earned him the anger of company President,

Jane Honda, and ultimately a “pink slip”.

The company gave Dan eight weeks’ working notice and agreed to

honour the termination provision in his contract provided that he

agreed to notify them if he became reemployed.

2

THE NIGHTLY NEWS (cont’d…)

The Employment Agreement between the parties provided for 10

months’ notice or pay in lieu (base salary and bonus but no further

benefits).

Dan was earning a salary of $480,000.00 with a 25% bonus.

Fortunately he managed to find a new job with the same

compensation package by the expiration of the eight weeks.

The employer alleges that Dan has mitigated his damages and Dan

sues.

3

THE NIGHTLY NEWS (cont’d…)

What are the issues?

If the parties settle, where does all the money go?

4

THE NIGHTLY NEWS (cont’d…)

DISTRIBUTION OF FUNDS

Annual base salary: $480,000.00

Annual bonus of 25% = $120,000.00

Total annual compensation $600,000.00 ($50,000.00 per month)

Contractual entitlement to 10 months $500,000.00

Contribution to legal fees 10,000.00

Total money payable by Defendant $510,000.00

5

THE NIGHTLY NEWS (cont’d…)

Dan Jeffries worked from 1991 to 2012 (21 years).

TD2 Roll-Over: The employee can roll-over $2,000.00 for every year or

part calendar year of employment up to and including 1995.

5 x $2,000.00 = $10,000.00

The employee can also transfer from a lump sum retiring allowance an

amount to use up any unused RRSP room as shown on the employee’s

most recent Notice of Assessment from CRA. Here assume that Dan

had $30,000.00 unused RRSP room.

Total roll-over: $40,000.00

Allocation from settlement to actual legal fees (obtain undertaking to bill

no less than amount allocated) $20,000.00.

6

THE NIGHTLY NEWS (cont’d…)

Step 1: Total settlement + contribution to legal fees $510,000.00

Step 2: RRSP roll-overs - 40,000.00

Arrange for transfer of funds directly from employer to financial

Institution without withholdings

Step 3: Payment directly to Plaintiff’s counsel

(actual legal fees) - 20,000.00

Step 4: Remaining funds $450,000.00

Step 5: Arrange payment in 2012 requested by Plaintiff $15,000.00

Step 6: Calculate withholding at source ($0 - $5,000.00 = 10%,

$5,000.01 to $15,000.00 = 20%, above $15,000.00 is 30%)

Here 20% of $15,000.00 = $3,000.00 payable to CRA - 3,000.00

80% of $15,000.00 is $12,000.00 payable to Plaintiff - 12,000.00

7

THE NIGHTLY NEWS (cont’d…)

Step 7: Payable in 2013 $435,000.00

30% of $435,000.00 = $130,500.00 to CRA - 130,500.00

70% of $435,000.00 = $304,500.00 to Plaintiff - 304,500.00

$ 0.00

TOTAL CHEQUES PAYABLE

Financial institution $ 40,000.00

Pelican O’Brady Pain 20,000.00

CRA 3,000.00

Plaintiff 12,000.00

CRA (2013) 130,500.00

Plaintiff (2013) 304,500.00

TOTAL… $510,000.00

NOTE: Any EI repayment obligations come out of net funds to employee.

8

FACT SITUATION #2 – THE GOOD LIFE

Alicia is so possessed of a variety of talents that despite a hectic

schedule campaigning at political rallies for her husband and raising

two active teenagers, her firm has assigned her to some of its most

significant litigation notwithstanding her position as an associate

lawyer.

Now she has been asked to handle two pieces of employment

litigation.

9

THE GOOD LIFE (cont’d…)

Matt Mauler is a young and aggressive associate working at Alicia’s

firm.

Matt is more focused these days on his music career and

auditioning for Canadian Rock Star than his law practice.

Unbeknownst to the firm, he has been relying heavily on online

precedents and he has not taken the time to make sure that they

are all “state of the art”. Recently an Employment Agreement which

he drafted has come under some scrutiny.

10

THE GOOD LIFE (cont’d…)

The following provision in the Employment Agreement has drawn

negative attention:

The employer may terminate the employment of the employee by

providing notice (or pay of base salary in lieu thereof) of two weeks

for each completed year of employment.

Matt acknowledges that he was in a rush when he drafted this

provision but he believes that the intention of the parties was clear.

11

THE GOOD LIFE (cont’d…)

Brian Rightheart had been employed by the firm for 25 years, most

recently as its HR Manager.

An otherwise exemplary employee, Brian had for the past several

years been engaged in an extra marital affair in contravention of the

firm’s non-fraternization policy with an Administrative Assistant who

is 15 years his junior.

12

THE GOOD LIFE (cont’d…)

Instead of complying with the disclosure requirements of the company’s

policy, Brian:

a) Repeatedly denied the existence of a romantic relationship in

response to direct questioning.

b) Had the Administrative Assistant promoted to a position within his

department; and

c) Refused to stay out of the workplace as requested during an

investigation into the “affair”.

When Brian’s employer decided to terminate his employment he

stormed out asserting “just cause is a myth in this province... I will

see you in court”.

13

THE GOOD LIFE (cont’d…)

What advice should Alicia give to the partnership?

14

FACT SITUATION #3 – UPTOWN MANOR

Jonathan Valet was the butler for 30 years at Uptown Manor, a palatial

estate that employs numerous housekeepers, cooks, chauffeurs, maids

and groundskeepers to service the every need and whim of the family

that has lived there for generations.

For years it has been a not so well kept secret that Jonathan has a

“friend” and that many nights after the family are asleep Jonathan slips

out of the manor using one of the vehicles and returns before dawn.

15

UPTOWN MANOR (cont’d…)

When it is subsequently discovered that Jonathan’s friend is a man, the

family decides that they no longer require a butler and provide

Jonathan with the eight weeks’ notice required by the Employment

Agreement signed by Jonathan mid morning on the day he started 30

years ago.

Jonathan looks for other work but at 60 finds few opportunities and 13

months post termination suffers a stroke that renders him

unemployable.

16

UPTOWN MANOR (cont’d…)

At the date of termination Jonathan was paid $50,000.00 per annum

and enjoyed a comprehensive suite of benefits including health, dental,

drug, life and disability coverage.

In the ensuing litigation the family asserts that the after hour’s comings

and goings of Jonathan amounted to just cause (albeit after acquired

cause).

17

UPTOWN MANOR (cont’d…)

What are the legal issues?

18

Thank You

montréal ottawa toronto hamilton waterloo region calgary vancouver beijing moscow london