Improper Termination and Contract Disputes – Moffatt v Prospera Credit Union

Moffatt v Prospera Credit Union Overview

Facts

• The plaintiff, Ms. Moffatt, was employed by the defendant, Prospera, as a financial services associate.
• The total length of her employment, between casual, part-time, and full-time contracts, was 22 months.
• In the course of her employment, her responsibilities included greeting clients at the branch, assisting with daily banking transactions, providing information regarding digital banking options, and informing members of promotions.
• She began as a casual employee in July 2018, and was offered a part-time position in early April 2019. She worked under this contract for about four weeks, at about 38 hours per week.
• Later in April 2019, she was offered a fixed-term full-time contract, estimated to be about 15 months long, to fill in for a parental leave absence. She worked under this contract until May 2020, when she was terminated.
• Both the part-time and full-time contract contained an express provision that they replaced any previous employment agreement between the parties. Both also contained a termination provision.

Ms. Moffatt was presented with a termination letter on the morning of May 20, 2020. The letter was summarized to her, but not reviewed in detail. The letter listed a reduced notice period, as well as a doubled non-solicitation period of Prospera’s clients, both of which were of significant detriment to Ms. Moffatt if she agreed to them.

She was told she had one week to sign the letter and the general release attached to it.

Following being presented with the letter, Ms. Moffatt was not given any opportunity to calm herself, and was immediately escorted back across the branch, in direct view of the public and her colleagues, and immediately told to collect her things and leave.

Ms. Moffatt argued that her full-time contract was invalid for want of consideration (ie: she didn’t get anything in return for signing the new contract), due to the more harsh terms imposed by it, and specifically those that favoured Prospera. She said the full-time contract was an offer to continue employment under a reduced notice period and a non-competition clause, both of which were not in her favour.

She also argued that the manner of her termination was so egregious that she should be awarded damages.

Law

The law states that an amendment to an employment contract must provide a benefit to both parties, and that continued employment alone is not enough to constitute consideration for a termination clause.¹

Where there is no promotion, new job opportunity, or other advantage offered to the employee other than continued employment, there is no fresh consideration, and a modified employment contract will be unenforceable.²

Aggravated damages result from the manner of a dismissal, while punitive damages seek to punish an employer for their conduct.³

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Consideration could be something like a raise in wage or in hours, but in this instance, Ms. Moffatt said that her average number of hours and salary were effectively the same under both the part-time and full-time contracts.

Even worse, the part-time contract required Prospera to provide Ms. Moffatt notice based on her age, tenure, position, and employment market opportunities, while the full-time contract permitted termination without cause with one months’ notice per year of service. When Ms. Moffatt entered the full-time contract, she would have had no notice eligibility, as she had started work less than a year previously.

In this instance, the full-time contract was always intended to be temporary, and Ms. Moffatt was to return to her part-time contract upon its ending. The court said this meant the part-time contract continued, especially given the language in the full-time contract that “at the end of this term position, you will return to your own or a comparable position.”

Ms. Moffatt’s unique vulnerabilities were important to the court. She was in her late 50s and working a job with no management responsibilities. The only benefit to her under the full-time contract was security of hours, as they could not be cut back. Given that this occurred during the Covid-19 pandemic, the court agreed with Ms. Moffatt that her prospects of finding employment were grim.

Outcome

Prospera’s manner of dismissal was not egregious enough to warrant aggravated damages. They did not breach their duty of good faith and fair dealing through the manner of dismissal. Ms. Moffatt’s termination was due to a restructuring by the bank, and she was not criticized or chastised in any way during the termination meeting.

The termination letter itself, though, contained errors that would have limited Ms. Moffatt’s entitlements and increased her obligations, and Prospera would have benefitted from her agreeing to the misleading errors in the letter. Prospera claimed that the errors were an oversight made in the course of preparing over 100 termination letters.

Ms. Moffatt was awarded 2 1/2 months’ salary in punitive damages for the errors in the termination letter. This matched the amount she would have lost, had she signed the letter as presented and not hired a lawyer.

Key Takeaways

• Aggravated damages arise from dismissal done in a manner that is unduly insensitive, untruthful, or misleading. An employee bears the onus of proving they suffered damages as a result of the employer’s conduct. This must be something beyond normal hurt feelings and distress.
• Punitive damages are intended to compensate an employee for wrongful acts that are so malicious or outrageous that they deserve singular punishment. They may also promote deterrence and denunciation, thus encouraging future employers to act more responsibly.
• A run-of-the-mill termination, though resulting in feelings like embarrassment or sadness, will probably not be enough to receive aggravated damages. However, an employer is responsible for making sure the termination notice complies with provisions set out in an employment contract and that the notice is fair to the employee.
• Employees should not take a termination letter at face value, and should refer to their employment contract and the Employment Standards Act, as well as involve an experienced employment lawyer.

References

Moffatt v Prospera Credit Union, 2021 BCSC 2463 (CanLII)
https://canlii.ca/t/jld9k

1. Watson v Moore Corporation Ltd, 1996 CanLII 1142 (BC CA) ↩︎
2. Singh v Empire Life Insurance Co, 2002 BCCA 452 ↩︎
3. Cottrill v Utopia Day Spas and Salons Ltd, 2018 BCCA 383 ↩︎

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