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Employer’s Conduct Constitutes A Repudiation Of The Employment Contract Thereby Disentitling It From Relying On The Without Cause Termination Provision

Employer’s Conduct Constitutes a Repudiation of the Employment Contract thereby Disentitling it from Relying on the Without Cause Termination Provision

In a recent decision of the Ontario Superior Court of Justice (May 2021), Humphrey v. Mene, a 32 year old employee with  over 2 ½ years of service earning $90,000.00 per annum plus stock options, recently promoted to Chief Operating Officer prior to the Company terminating her employment alleging just cause, was awarded $50,000.00 for aggravated damages and $25,000.00 for punitive damages, in addition to wrongful dismissal damages based on a 12 month common law reasonable notice period (reduced to 11 months on account of mitigation issues raised by the Company).  This case is very significant for a number of reasons including:

  1. At first blush, the common law reasonable notice period seems high in this case.  Although the employee was only 32 years of age and she had less than three years of service and only earned $90,000.00 per annum with stock options,  she held the position of Chief Executive Officer of a publicly traded company. The Employer’s position was that she should be looking for positions paying $90,000.00  not on finding a COO position or something comparable to a COO. The employee’s position was that she held a senior executive position as a COO and as such, she was entitled to look for that type of position  and therefore, the availability of comparable employment for that position would be  limited. Furthermore, the Court accepted her argument that it would be far more difficult for women to obtain senior executive positions, particularly someone as young as her.  The Court also took into account that her resume would reflect that she was let go six months after being promoted to COO which would create problems for her seeking new employment as she would have to explain why she was terminated so soon after being promoted;
  2. Even if there was consideration for the new employment contract (the Court in fact found there was no consideration), the Employer’s conduct  (ie. subjecting her to a toxic work environment, embarrassing and humiliating her with her co-workers and clients after her suspension, alleging cause when it knew or should have known it did not have it) repudiated the employment agreement thereby preventing it from relying upon the without cause termination clause. As such, the employee’s wrongful dismissal damages were to be assessed based on the common law reasonable notice period; and 
  3. If an Employer alleges just cause and fails to prove it, that alone will not suffice to justify an award for aggravated damages if the allegation is made in good faith. The Employer has a duty to act in good faith towards the employee  which encompasses treating the employee fairly and honestly and to ensure that the workplace is free from harassment, bullying and intimidation. In this case, the Court found the Employer’s actions in terminating her employment alleging cause went “well beyond mere mistaken good faith for cause allegations.” The Court took this into account as well as inter alia, the manner in which she was treated during her employment, to conclude that she was entitled to aggravated damages.
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