New Brunswick, Canada: Appellate Court Finds In Favor Of Employee In Wrongful Dismissal Action

• Published date: 03 December 2020
• Subject Matter: Employment and HR, Contract of Employment, Unfair/ Wrongful Dismissal
• Law Firm: Littler - Canada
• Author: Ms Rhonda B. Levy and George Vassos

In Abrams v. RTO Asset Management, 2020 NBCA 57 (Abrams), the New Brunswick Court of Appeal considered an employee's appeal of a decision dismissing his action for damages in lieu of reasonable notice upon his job termination without cause. After considering the employee's age, length of service, the availability of alternative employment, and a restrictive non-competition clause, the court awarded him 24 months' damages.

A key issue in the decision was whether, after terminating the plaintiff's employment without cause, the employer could then claim the dismissal was for cause and therefore the employer had no obligation to provide common law reasonable notice. The court decided the employer could not do so.

Background

At the time of dismissal, the employee, a high school graduate in the deemed or actual employment of the employer for 29.5 years, was 55 years old earning an annual compensation exceeding $150,000. In 2002, the employee took a two-month leave of absence due to job-related stress and anxiety. The employee signed a 2002 contract of employment when he accepted the employer's invitation to return to work in an "accommodated position." Upon his promotion in 2008, the employee executed a second contract of employment. In 2012, the employee took a three-month medical leave because he found his position too stressful. When he returned to work with significantly reduced duties, the employee signed a third contract, which superseded all previous contracts. The 2012 contract was in effect at the time of the 2017 job termination and it included a restrictive non-competition clause. It also included a termination clause that limited notice or pay in lieu of notice on dismissal to the minimum statutory entitlement under employment standards legislation (i.e., four weeks) as follows:

10. Termination of Employment

10.1 Either you or the Company may terminate your employment at any time and for any reason, with or without cause, in accordance with the following:

(a) The Company may terminate your employment for cause without notice, pay in lieu of notice or severance pay.

(b) The Company may terminate your employment at any time without cause by providing you with written notice or pay in lieu of notice equivalent to your statutory entitlement under the province of New Brunswick employment standards legislation. If the Company terminates your employment pursuant to this paragraph, the Company shall not be obliged to make any further payments to you and you will not be entitled to any additional payments under the common law as a result of the termination. In addition, the payments and notice provided for in this paragraph are inclusive of your entitlements to notice, pay in lieu of notice or other severance pay pursuant to the province of New Brunswick employment standards legislation.

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