The recent Ontario Small Claims court decision of Donna Paquette v. Ian McConnachie, 1215396 Ontario Inc., o/a Woodroofe Pediatric Dentistry exemplifies what dentist employers should / should not be doing when it comes to terminating an employee.
Background
At the time of her termination, Paquette was a restorative hygienist, employed by 1215396 Ontario Inc. From 1984 to 1987, Paquette worked for Dr. McConnachie 4 days a week, then 2 days a week starting in 1987 and then 1 day a week starting in 2007. In 1997, Dr. McConnachie incorporated his practice as 1215396 Ontario Inc. (a dental hygiene service company) and continued to operate as Woodrooffe Pediatric Dentistry. Paquette worked for 1215396 Ontario Inc. since 1997.
Working Notice
By letter dated January 10, 2013, Paquette was given a written notice of termination of employment that indicated that her employment would be terminated on December 31, 2013 (i.e. 51 weeks of notice). The letter also informed her that she would receive $1,000 if she stayed on until that termination date. Paquette claimed that she was entitled to a longer notice period (or payment in lieu of notice) and sued Dr. McConnachie and 1215396 Ontario Inc. in Ontario’s small claims court.
Issue 1: Was Dr. McConnachie personally?
The Small Claims Court first had to determine whether Dr. McConnachie was personally on the hook – because Paquette claimed that he was in fact her employer, not 1215396 Ontario Inc. The Court found that he wasn’t. All the evidence pointed to Paquette being an employee of 1215396 Ontario Inc. (e.g. pay chques and T4s, etc.) and there was no reliable evidence provided which convinced the Court to pierce the corporate veil and find Dr. McConnachie personally liable. Even if he was personally liable, the Court noted that his conducted attracted no liability.
Issue 2: Was the 51 weeks working notice sufficient?
The Small Claims Court next had to determine whether 51 weeks of notice was enough for the employer to satisfy its common law reasonable notice obligations. It was. Although Paquette’s representative provided no caselaw dealing with similar fact situations, Dr. McConnachie (self-represented) provided the court with 12 cases (7 from Ontario and 5 from other jurisdictions) which the court considered. Coupled with the principles laid out in Bardal v. The Globe and Mail (the seminal case on what factors dictate common law notice for employees), the Court found that 51 weeks of working notice was reasonable.
Issue 3: Did Paquette mitigate her damages?
Employees who are being terminated have an obligation to mitigate their damages. The Small Claims Court thought that Paquette did so in this particular case, but her efforts were modest and not particularly thorough. For example, she asked for a reference letter on October 31, 2013 and received one dated November 7, 2014. She gave these to potential employers. But did she pursue reasonable avenues available to her to seek employment? Here, the Court sided with Dr. McConnachie, who stated that there were other job opportunities which Paquette did not pursue (e.g. a job posting within his office to work with another office as a hygienist, advertising in the Ottawa Dental Society Newsletter, inquiring at independent dental hygiene practices, or opening her own independent hygiene clinic, etc.). In any event, immediately following her termination, she did find work at Algonquin College as a clinic instructor each Thursday (from January to April 2014); thereafter, she worked periodically at another dental office on Thursdays.
Issue 4: Did the defendants (Dr. McConnachie and 1215396 Ontario Inc) act in bad faith?
The Small Claims Court did not find that the defendants acted in bad faith. Dr. McConnachie kept his staff apprised of his plans to cut back his practice and ultimately retire from full-time practice (the Court wrote that he was “candid in his sharing of what he knew of his future plans”). The $1,000 bonus offer made to encourage Paquette to stay until the end of her working notice was actually increased to $3,000 (this was declined by Paquette). Based on this, there was no bad faith and Paquette was not entitled to moral damages or punitive damages.
Bottom Line
Paquette’s claim was dismissed in its entirety and the defendants were entitled to costs of $500. One thing that we mustn’t overlook is the time that it took for this case to materialize (termination was given in January 2013), be heard in court (hearing took place on January 14, 2015) and be ultimately decided (the Small Claims Court’s decision was handed down on June 19, 2015). That’s a long time!
If you are a dentist looking to terminate someone, you should first consult with a lawyer. Although the defendants in this particular case were not found liable, there are many ways in which you can find yourself in hot water, including:
- Miscalculating the amount of common law notice that a staff is entitled to based on all of the factors (you should look at precedents that are analogous to your situation and all of the Bardal factors);
- Not providing proper written notice to your staff (either not in writing or with the wrong message / wording in the letter); and
- Acting in bad faith or making a misrepresentation.
If you are a staff and you are in the process of being let go, you should also know:
- The amount of reasonable notice you are entitled to depends on many factors (from the Bardal case) and you should look for precedents that are analogous to your situation;
- An employee being terminated has an obligation to mitigate their damages by looking for available/alternative employment and undertaking reasonable efforts to secure employment; and
- Trying to make a dentist personally liable when your employer is a corporation is not an easy task (the Court will only pierce the corporate veil in limited circumstances, such as where the corporation is the shareholder’s “alter ego” and is a sham or facade used to evade creditors or commit fraud).
