Good business move, bad legal strategy

Saskatchewan pilot fired in pre-emptive move after he expressed frustration over low wages

There is a big difference between what makes good business sense and what makes good legal sense. Justice R. Smith of the Saskatchewan Court of Queen’s Bench pointed this out recently in a decision involving Crystal Lodge, a hunting and fishing lodge in the northern part of the province.

Theodore Diachinsky was the chief pilot and operations manager at the lodge. He claimed he was wrongfully dismissed in May 2002. The company, however, took the position that he had resigned or, alternatively, that his conduct provided it with cause for dismissal.

The owners of the lodge had been operating the air taxi service since 1998. Each year between 1998 and 2001, they hired Diachinsky to be the chief pilot and operations manager.

The lodge is seasonal, operating from May 1 to the end of September. Diachinsky was hired on the clear understanding he would apply to the lodge again the following spring. During the season, he received a monthly wage and room and board. In 2001 the monthly salary was $3,000.

At the beginning of May 2002, Diachinsky showed up for another season of work and was told his salary would be raised to $3,200 per month. He was disappointed with what he regarded as a paltry increase and communicated that to his employer.

On May 8, 2002, Diachinsky called one of the lodge’s principals, Gary Lynchuk, who was in Toronto. Diachinsky expressed his displeasure at his salary and pointed out that a competitor was paying its pilots $4,000. Lynchuk said he would discuss it with him when he returned to Saskatchewan.

From the company’s point of view, Diachinsky’s actions presented it with a number of unsatisfactory options. It could not afford to pay him more than $3,200 per month. And if Diachinsky remained disgruntled and resigned during the season, the business would be placed in jeopardy.

The two sides met to discuss compensation. The company took the position Diachinsky resigned at that meeting. But at trial it became clear that, although the company was concerned about him resigning, he did not. Faced with the unsatisfactory options, the lodge acted pre-emptively and terminated Diachinsky’s employment.

The court said the lodge’s business logic was pretty sound.

“It could either address the problem at the front of the season or face the prospect of being held to ransom if (Diachinsky) insisted upon a salary increase once the season was well underway,” said Justice Smith.

The employer argued Diachinsky’s demonstrable distress and aggravation over his wage level was such that it reasonably concluded he was no longer a conscientious and loyal employee. Given that, and the company’s vulnerability to being held ransom, the employer argued Diachinsky should be taken to have resigned or, alternatively, that his attitude was cause for termination. But while that all makes good business sense, it fails a legal test.

“There is no authority that supports the proposition that an employee who evidences unhappiness about his or her wage level is, by the communication of same to the employer, providing grounds for dismissal for cause or evidencing the equivalence of resignation,” said Justice Smith. “The fact that an employer dismisses an unhappy employee, who may or may not be considering resignation, does not in any way relieve the employer of its obligation to provide reasonable notice or pay in lieu thereof.”

The company paid Diachinsky $1,000 for work he performed between the start of May and when his employment came to an end. Diachinsky sought damages for five months at $3,200 per month less the $1,000 he had already been paid. The company said he completely failed to mitigate his damages by looking for alternate work.

Diachinsky was a “very seasoned” pilot in the northern Saskatchewan market. But the evidence he introduced in regards to finding another job was “extremely thin,” in the court’s opinion. Workers are entitled to recover damages for losses incurred, but have a duty to take reasonable steps to mitigate their losses by looking for alternate employment.

“I conclude, without hesitation, that (Diachinsky) fell short in his duty to mitigate,” the court said. “The only inference to draw is that a pilot with his experience and flying credentials could have, with modest effort, obtained some employment during the northern Saskatchewan flying season of 2002.”

Justice Smith said there is no exact science in calculating the reduction because of the failure to mitigate. The court limited his damages to $6,400 — or two months’ salary — on top of the $1,000 he had already received.

For more information see:

Diachinsky v. Cree Lake Air Inc., 2005 CarswellSask 678 (Sask. Q.B.)

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