Corporate Restructuring and Wrongful Dismissal

What happens in wrongful dismissal cases involving companies that have been recently been sold? What rights do employees have under new ownership? This case-study involves a long-term employee whom, after questioning the terms of his new employment contract, found himself out of a job.


Wrongful Dismissal- New Company, New Terms


The 43-year-old plaintiff was employed for over 13 years in the telecommunications industry when the company he worked for was purchased by a different corporation. The purchase agreement for this transaction stated that the new company was obliged to offer employment to all designated employees, including the plaintiff, with equivalent terms and conditions as provided by its predecessor. Employees were then required to sign a revised employment contract with the new company. The plaintiff discovered that the terms in the new contract were questionable and he voiced his concerns. He was fired 4 months later and filed suit for wrongful dismissal.


Wrongful Dismissal - When the Employer Plays Hardball


Despite the company changing hands several times in his 13-year employment, the employee successfully continued in his management and supervisory roles. He had concerns over the termination clause with the new company’s employment contract. The new contract seemed to provide dismissed employees significantly less notice and/or compensation in comparison to the previous contract. He wrote a letter and had a conversation with the president of the company who suggested that the employee was mistaken as to the meaning of the clause. Unconvinced, the employee was encouraged to “agree to disagree” over the wording in the contract. He received no further clarification on the issue.


Shortly thereafter, a new president took over and the employee was suddenly dismissed for reasons of restructuring. He received bare minimum compensation in accordance with the new termination clause and British Columbia Employment Law. Unhappy with this outcome, the plaintiff initiated the wrongful dismissal claim. The company responded with charges of its own: they claimed that the plaintiff was actually fired because he failed to perform his duties adequately and was caught defrauding the company.


Wrongful Dismissal- Damages Awarded


It was determined that the wording in the termination clause was vague, ambiguous, and therefore unenforceable. Damages were determined by the plaintiff’s age, length of service, type of employment and availability of similar employment. The plaintiff was awarded a paid notice period that more than doubled his original notice and he was awarded further compensation for health coverage. Furthermore, the company breached its duty of good faith and fair conduct by making unfair accusations of fraud and dismissal with cause. These charges couldn’t be proved and were dropped before the wrongful dismissal case went to trial. Nevertheless, these rumours caused significant stress to the plaintiff and his family. For that, he was awarded an additional 4 months’ notice.


If this sounds familiar or you feel you are a victim of wrongful dismissal, please contact Wrongful Dismissal Lawyer, Bob Yeager.

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