Previously printed in the LexisNexis Labour Notes Newsletter.
Shahram Younesi knew something was not right when he walked into a meeting and his managers were standing up. They proceeded to terminate his employment after just two months of work. When he asked why, he was told that he was not a competent engineer or a good manager, and that he embarrassed the company. He was offered one month of pay in lieu of notice and asked to immediately sign a letter to confirm his acceptance of those terms. He refused and ultimately sued.
Mr. Younesi, who represented himself at trial, was awarded 6 months of pay in lieu of reasonable notice as well as aggravated damages. His total damages award was $128,833. The decision is reported as Younesi v. Kaz Minerals Projects B.V., 2021 BCSC 614 and teaches employers several important lessons.
1. Be careful with inducement
Employees who are "induced" to leave secure employment and take a new job can be awarded additional damages to compensate them if their reasonable expectation as to the duration and security of the new work is not met. In this case, Kaz Minerals recruited Mr. Younesi over LinkedIn and prepared a detailed compensation comparison to show him how much more he could earn with the new employer. The trial judge noted that the offer was set up to be "irresistible" and went "far beyond" the standard "wooing" of an employee. The judge also noted that the employment offer letter contained a one-month termination provision (found to be unenforceable) which "moderated" the effect of the inducement, but nevertheless the inducement was worth an additional two months of reasonable notice (an increase from 4 to 6 months).
We note that employers can displace the presumption of reasonable notice at common law (judge-made law) through clear contractual termination language, in which case inducement poses less risk.
2. Use a single, clear employment contract
Kaz Minerals is an international group of companies with a complicated structure. The trial judge noted that it had "a rather complicated and bureaucratic approach to employee recruitment and retention". That approach resulted in an "offer letter" signed before starting, and a "contract of employment" and "assignment letter" signed on his first day of work or shortly after. The "contract" was purportedly governed by the laws of England and Wales but the "assignment" was governed by the laws of Canada.
While ultimately none of these documents mattered much because the termination provisions within them were determined to be unenforceable (as described below), they highlight the confusion which can result from using multiple documents, signed at different times, to set out the terms of employment. In our view, the best practice is to use a single offer letter, signed in advance of any commencement of work, which clearly sets out the terms of employment, including enforceable terms with respect to termination of employment.
The termination provisions in Mr. Younesi's documents were found to be unenforceable because they provided for termination with one month's notice. At trial, Kaz admitted these provisions were unenforceable because they contravened the BC Employment Standards Act (which provides for up to 8 weeks after 8 years of employment). At the time he was dismissed, Mr. Younesi actually had no entitlement to notice or pay under the Employment Standards Act (because he had not yet completed three consecutive months of work) but the law across Canada is such that if a termination provision even potentially or theoretically contravenes the applicable employment standards legislation, it is unenforceable in all situations. Accordingly, Mr. Younesi was entitled to common law reasonable notice of termination.
The trial judge assessed the reasonable notice at 4 months (plus 2 more for inducement). In some cases, short-service employees in specialized positions tend to be awarded disproportionately long notice periods, in the range of 2 to 4 months, so this result is not especially surprising. Employers should keep in mind that short service does not necessarily mean a small amount of severance.
As an aside, we note that Mr. Younesi is identified in the trial judgment as being a "professional engineer". Pursuant to the BC Employment Standards Regulation, a professional engineer (as defined in the relevant legislation) is exempt from the Employment Standards Act entirely. In our view, if Mr. Younesi was a professional engineer (registered with Engineers and Geoscientists BC), Mr. Younesi's termination provision should not have been found to contravene the Employment Standards Act because that legislation does not apply to him. This issue was not addressed in the judgment, but it may come down to the fact that Mr. Younesi was not registered in BC, and thus may have been a "professional engineer" in other jurisdictions but not in British Columbia.
3. Keep notes at the termination meeting and watch what you say
The aggravated damages award came down to the conduct of Mr. Younesi's managers during the termination meeting. Mr. Younesi testified that when he asked why he was being dismissed, he was initially told "it does not matter", which the trial judge found was "somewhat callous". When Mr. Younesi persisted, he testified that he was told he was not respected, was not a competent engineer or manager, he embarrassed the company, and the company no longer wished to be associated with him.
Neither of Mr. Younesi's managers could recall much from the termination meeting, and the trial judge found that Mr. Younesi's recollection was more credible. If the managers had taken notes, or if a third party was present to observe, this issue may not have arisen. In any event, the judge found that Mr. Younesi was a "proud" person and was deeply insulted by these comments. Further, the company asked Mr. Younesi to "accept" one month of notice by immediately signing a letter at the termination meeting, which he refused to do.
Employers should always give employees the chance to take an offer home and review it with legal counsel. Further, they should avoid making disparaging or negative comments about the employee unless they are asserting just cause and, even then, only if the comments are true.
Mr. Younesi was described by the judge as having a "thin skull". This is a concept from tort law, which basically means that the wrongdoer takes his or her victim as he or she finds the victim, and a person who is more susceptible to harm may be entitled to more damages. The judge found that Mr. Younesi was more susceptible to harm from his managers' comments, and he sought counselling and medical treatment for depression after his dismissal. The trial judge found that he suffered prolonged emotional upset from the manner of dismissal, which was sufficient to award aggravated damages of $12,500. This is on the low end of the scale, but still significant and easily avoidable.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.