A B.C. Court recently held that an employer did not have just cause to dismiss an employee even though the employee breached the employment contract. The Court stated that not all breaches of employment agreements allow an employer to dismiss an employee without providing notice. This is especially true where the breach is in relation to performance issues.
In the case of Avelin v. Aya Lasers Inc., 2018 BCSC 2313, the Plaintiff was employed by the Defendant as a sales representative for approximately seven months. The Plaintiff’s employment was pursuant to an employment agreement which had a term requiring her per quarter sales to be a minimum of $250,000. During her seven months, the Plaintiff only made about $75,000. Given her low performance, the Defendant terminated the Plaintiff’s employment and the Plaintiff was paid only one week’s pay.
The Plaintiff then brought a wrongful dismissal action. The Defendant alleged that it was allowed to terminate the Plaintiff for cause given the fact that the Plaintiff had not achieved her contractual sales performance requirements. The Court determined that the Plaintiff was in breach of contract but held that breach of the performance standard did not justify summary dismissal as the breach did not go to the “heart of the employment relationship.” The Court noted that misconduct that does not go to the heart of the employment relationship can amount to just cause where the employer establishes that the employee was warned and given time to improve, but still persisted with bad behaviour. Despite this conclusion, the Court held that there was no evidence that the Plaintiff had been warned about potential termination if she did not improve sales.
The Plaintiff was awarded moral damages for the Defendants bad faith conduct in the manner of termination. In coming to its decision, the Court looked to the Defendants motive when it brought a separate action in Ontario, the Plaintiff’s economic vulnerability and the way it terminated her. The Court concluded that the defendant failed to deal with the Plaintiff “fairly and in good faith” and that it was foreseeable that the Plaintiff would suffer harm.
Ultimately, not every contract breach will justify termination. Each case is fact specific and a contextual approach must be taken. This case illustrates the importance of a breach going to the heart of the employment relationship to justify summary dismissal, and, if the breach does not go to the heart of the contract, then prior warning and a failure to rectify the misconduct should be given.
If you are in breach of a term of your employment contract and are at risk of being terminated for such breach, contact top Toronto employment lawyer, Stacey Ball to help you challenge potential terminations. If you are an employer seeking to terminate an employee for breach of a fundamental term, call us at 416-921-7997 extension 227 to ensure that a procedure of warnings has been established and your employees are aware that termination may result if they do not reach their contractual sales performances.