By Barry W. Kwasniewski and Martin U. Wissmath

Employee Receives $81,100 in Damages for Early Termination of Fixed-Term Contract

Employment contracts for a fixed term should have carefully drafted early termination clauses, or else the employer may be liable to the employee for damages for the entire unexpired term of the contract. The British Columbia Supreme Court (the “Court”) in Lefebvre v Gisborne Holdings Ltd., published December 19, 2023, ruled against the defendant employer in favour of the employee plaintiff, and held Gisborne Holdings Ltd. (the “Employer”) liable for $81,100 in damages to Kavita Lefebvre (the “Plaintiff”).

The Employer hired the Plaintiff on a fixed-term employment contract for 18 months, as a replacement for an employee taking parental leave, commencing May 2022 and ending in October 2023, with an hourly rate of $25.95 and a completion bonus of $5,000 to be paid on the end date or “upon layoff”, according to the contract. “No payment (partial or otherwise)” would be paid if there was “a quit or termination for cause.” Six weeks into the term of the contract, the Employer terminated the Plaintiff’s employment after she sent an email to a human resources manager (the “Email”). The “tone and content” of that Email “caused an irreconcilable breakdown of the employment relationship” and constituted sufficient cause for dismissal, the Employer argued. Therefore, the Plaintiff was terminated for cause and not entitled to damages, according to the Employer. At the time of her termination, however, the Employer did not inform the Plaintiff that she had been terminated with cause. Alternatively, the Employer argued, the Plaintiff was terminated without cause and only entitled to the $5,000 payout “less the two weeks severance pay she received.” The Plaintiff argued that she was terminated without cause, and the fixed term contract did not provide for termination without cause.

On the issue of whether the Plaintiff was terminated with, or without cause, the Court found the Email did not constitute just cause for dismissal. Onus is on the Employer to prove just cause, which the Court cited, in accordance with B.C. law, as “employee behaviour that, viewed in all the circumstances, is seriously incompatible with the employee’s duties, conduct which goes to the root of the contract and fundamentally strikes at the employment relationship.” The Email, the Court stated, was “direct and strongly worded, but it was not rude or unprofessional.” It “did not rise to the level of insubordination.” Although the Employer’s human resources manager may have been offended by the Email, “progressive discipline, rather than summary termination, would have been a reasonable response.”

As for whether the employment contracted provided for early termination without cause, the Employer argued that the $5,000 completion bonus was sufficient. The Court, however, found that the completion bonus lacked necessary language and failed to state that the Employer was entitled to terminate the Plaintiff without cause prior to the October 27, 2023 end date. The completion bonus obligated the Employer to pay a bonus “in certain circumstances” but did not actually provide for early termination without cause, according to the Court.

Relying on precedent, the Plaintiff argued that she was owed damages based on the full term of the employment contract, as if she had earned the full amount and worked to the end of the term. The Employer argued that even if the Plaintiff was terminated without cause, she failed in her legal duty to mitigate her damages as a result of losing her employment. The Court held there is a “heavy onus” on the Employer to prove a failure to mitigate, and there is “uncertainty as to whether a duty to mitigate is owed by an employee with a fixed-term employment contract who is wrongfully dismissed.” According to the Court, the Employer must first establish that the Plaintiff should reasonably have done more in her attempt to find new employment, and second, that the Plaintiff would have been successful in obtaining employment. The Plaintiff “took reasonable steps to find alternate employment”, the Court ruled, and accepted the Plaintiff’s calculation of $81,100 in damages for the remaining full term of the 18-month employment contract. Although the Plaintiff had also sued for punitive damages, the Court found this unwarranted, because the Employer’s conduct was “not reprehensible and worthy of censure.”

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