Canada: Acceptance Of Severance Pay Does Not Mean An Employee Waives The Right To Claim Additional Amounts

In a Court of Québec decision in February 2012, an employee dismissed without cause was awarded a $21,994 indemnity for wages lost under her fixed-term employment contract,¹ even though she had accepted a severance payment.

Facts

On December 14, 2008, Accès Travail, an organization dedicated to promoting job entry and retention and workforce development in the Centre-du-Québec region, hired the plaintiff as an employability worker with a contract extending from December 2008 to July 2010.

In March 2009, the plaintiff erroneously sent confidential information to all partners of Accès Travail. The next month, she was dismissed for two reasons: first, she had sent out confidential information without authorization and, second, she apparently had experienced difficulty in completing various documents and holding training activities involving the organization's clients. When she was dismissed, she was offered four weeks' pay in lieu of notice, which she accepted.

Despite this, the plaintiff brought an action against the employer in the Court of Québec, claiming an amount of $37,602 as lost wages and damages. In particular, she claimed that she had benefited from a 21-month fixed-term employment contract and the employer was therefore required to pay her the wages she would have earned up to the end of the contract. The employer argued that the contract was for an indefinite term because the project's funders could pull their funding at any time. The employer also maintained that the pay in lieu of notice was sufficient.  

Analysis

The judge found that the contract was for a fixed term. The evidence showed that the employment contract binding the parties had a 21-month term and that the plaintiff had been dismissed before the term had expired.

The court then pointed to Article 2094 of the Quebec Civil Code, which allows an employer to unilaterally terminate a contract of employment without notice where there is a serious reason for doing so. In analyzing the employer's reasons for dismissing the employee, the court felt that the erroneous disclosure of confidential information had not caused tangible injury to the employer. Moreover, the fact that no disciplinary action had been taken supported the view that the event did not constitute gross misconduct warranting the plaintiff's dismissal. The court then analyzed the employer's argument regarding improperly completed documents and difficulties with a training activity involving clients. Again, in the absence of a disciplinary letter or other tangible evidence that the employer was dissatisfied with the employee's work or had suffered an injury of some kind, the court determined that these reasons did not warrant dismissal. The court concluded that the employer did not have sufficient grounds for terminating the plaintiff's employment contract.

The court also pointed out that Accès Travail had never informed the plaintiff of any reproach, except for giving her a warning when the confidential information was sent out. In addition, the employer had provided no assistance to the plaintiff to remedy the deficiencies cited in support of her dismissal.

Furthermore, the court felt that the four weeks' pay in lieu of notice given to the plaintiff was hard to reconcile with the attitude of an employer that terminates a person's employment for cause. In accepting pay in lieu of notice the plaintiff had not automatically waived her right to claim all amounts owed under her employment contract. The employer, if that had been the objective, would have had to have obtained the plaintiff's signature on an express waiver of her rights to institute legal proceedings to enforce the terms and conditions of her employment contract or otherwise obtained a clear, unequivocal waiver to the same effect.  

Since the plaintiff's dismissal was not warranted, the employer was required to compensate her by paying her the wages she would have earned up until the end of her contract. However, the amount of wages received by the plaintiff in her new job and an amount for the weeks that the plaintiff had been unemployable for personal reasons not related to work or the dismissal had to be deducted from that amount. The court set the plaintiff's damages at $21,994, plus interest.

As for the plaintiff's claim for moral damages, the court did not feel that the employer had acted in a way indicating an abuse of a right. It felt that it was clear that a dismissal was always a troubling and stressful event, but since it was the exercise of a legitimate right of the employer, it did not systematically open the door to damages, unless, of course, the employer abused its right.

Conclusion

This decision serves as a reminder of the potential consequences of terminating an employee with a fixed-term employment contract without cause. First, except where there is gross misconduct, a progression of disciplinary actions must be taken before the employee can be terminated for cause. Next, it is important that employers obtain a full release and discharge when offering the dismissed employee a severance payment. This release and discharge is essential because accepting pay in lieu of notice does not in of itself amount to a waiver of the employee's rights. In fact, without such a release and discharge, the dismissed employee can, as in the case discussed here, bring a claim before the courts for the additional amounts owing under the fixed-term employment contract.

Footnote

1. Lapointe c Accès Travail (February 14, 2012), Arthabaska 415-22-005145-101, 2012 QCCQ 1296 (CQ), Trudel J.

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