November 20, 2022

By Brian Babcock

If you are an employer and are faced with a wrongful dismissal or constructive dismissal claim from a former employee you may need to defend yourself. You may even be successful or largely successful in your defence.

THE ISSUE

In Canada, unlike the United States, a successful party is usually entitled to a portion of their legal expenses reimbursed as “costs” after the judgment in an action. This presumption is, however, always subject to a discretionary decision by the judge hearing the case.

THE CASE

Nader v. University Health Network, is a bit of an unusual dismissal case, dealing as it does with a secondment agreement and a fixed notice period upon completion of the secondment, plus arguable issues surrounding the calculations of damages. However, in our view the most interesting part of the case is the brief discussion of the end of the case about costs.

In Nader the employer conducted a very aggressive defence. It initially purported to refuse payment of the 12 months’ salary and related benefits provided for termination without cause under the UHN Employment Agreement unless and until Nader executed a full and final release. Nothing in Nader’s employment contract required him to sign a release.

As the judge noted, this is not an uncommon position for an employer to take.

However, the practice of asking for a release before paying amounts which are clearly due and owing is now frowned upon as a tactic. It is essentially coercion to deny someone, particularly a departing employee who may be vulnerable, monies they are entitled to in the hopes they will abandon any further claims.

The judge in Nader described the employer’s tactics as “heavy-handed” and as something which ought to be discouraged.

How is it discouraged?

By denying costs to the employer even though Nader had limited success on his claim. The judge could easily have called it a “split decision” and not awarded costs, but they went out of their way to emphasize that the employer might have recovered some costs if they had behaved better.

This decision illustrates that courts view terminated employees as a special group of parties to lawsuits. The same presumption of vulnerability which leads to strict interpretation of termination clauses stretches into how courts view the overall conduct of the termination itself. In some cases it  leads to moral damages or even punitive damages. Each of those damages have well-defined tests, and at least in theory are not discretionary. Extending this paternal attitude into costs should be a strong wake up alarm to any employers still tempted to pursue aggressive defences.

WHAT WEILERS LAW CAN DO FOR YOU

Whether you are an employer or a dismissed employee, the growing complexity of the rules surrounding dismissal requires that you obtain timely advice. The employment law team at Weilers Law might be the right lawyers for you.