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Employees cannot sue before being fired |
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| Premature action could repudiate employment contract |
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Written by George Waggott
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Friday, 28 November 2008 |
As Jennifer Lewis learned to her detriment, Canadian employment laws do
not allow an employee to sue their employer for wrongful dismissal if
the employer has not yet taken definitive steps to terminate the employee.
 Employed for about three years by the Terrace Tourism Society, Lewis worked as executive director promoting tourism in the northern B.C. municipality. Looking to change how tourism was being promoted locally, a group of interested business people and politicians reviewed relevant organizations. In the context of this review, all seven directors of the society resigned. At the same time, a committee was struck to determine the future of the society. One of the key issues was the deterioration in the relationship between the society and the City of Terrace, which was the society’s major source of funding.
Following additional discussions, the membership of the society voted in favour of winding up. For this purpose, a dissolution committee was established and was asked to provide a final report containing financial statements.
The members of the committee were always aware of their obligation to formally sever Lewis’ employment relationship with the society. Prior to doing so, however, they sought to confirm that various financial matters were in order, including the amount of various salary expense payments that had been made to Lewis. In the course of their review, the committee discovered some apparent discrepancies between the salary paid and the initial letter of employment signed by Lewis. Through a series of conversations and e-mails, some which
were copied to Lewis, the committee eventually became satisfied that all payments to Lewis were in order. It became clear, however, that Lewis did not agree with the manner which her conduct and payments received had been questioned. Indeed, the lawsuit that she eventually filed included allegations of defamation.
Before the society offered a severance payment to Lewis, she commenced a lawsuit claiming damages for wrongful dismissal. The society subsequently received correspondence from a lawyer acting for Lewis containing a number of accusations, including an allegation that the society was using up remaining funds
so as to deprive her of a package. The society subsequently advised Lewis that it was terminating its employment relationship with her.
In dismissing her wrongful dismissal claim, the B.C. Supreme Court found that the society had not expressly dismissed Lewis. Accordingly, she had no basis to claim that she was entitled to reasonable notice, or pay in lieu of notice. Further, the commencement of an action by her against the employer amounted to a repudiation by Lewis of the contract of employment she had with the society. The society was entitled to accept Lewis’ repudiation and formally terminate her employment contract.
The society membership meeting where the decision was made to wind up the affairs was not, in and of itself, a termination. While the society and the members of the committee knew that it would have to terminate their employment contract with Lewis at some point, the mere decision to wind up the affairs of the society and to terminate Lewis in the future did not amount to wrongful dismissal. This approach is similar to a case where the employer might be in a position to consider offering a package to an employee and have that “in the works” only to then have the employee resign. In each case, there is no obligation to provide notice to the employee.
Before the society had an opportunity to present its severance offer to Lewis, she took the pre-emptive strike and sued. In the court’s view, Lewis acted prematurely since the society had not yet terminated its contractual relationship. Instead, the society had simply determined that it would at some point in the near future terminate the contract. Put simply, expressing its future intention to exercise its ights to terminate Lewis was not grounds for her sue for notice.
The court focused particularly on Lewis’ statement made to the committee after the membership meeting where she asked about the amount of severance she would be paid once her contract was terminated. This was obviously evidence, held the court, of a recognition that there would be a right to notice, but only once the termination had occurred.
This case demonstrate the dangers of prematurely initiating a lawsuit. Dismissed employees must actually be provided with an express notice of termination in order to be able to claim damages against their employer. Even in circumstances where the employee is advised that, “You are about to be fired,” the right to
sue does not arise until they receive express written notice of their termination.
George Waggott is a partner in the Employment and Labour Law Group at Lang Michener LLP in Toronto. His practice includes advising employers on employment and labour law. You can reach him at 416-307-4221 or
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