Sometimes the employer does just about everything correctly, and still ends up facing a lawsuit
Sometimes the employer does just about everything correctly, and still ends up facing a lawsuit. Such is the nature of employment law. John Finlan was hired by Ritchie Bros. Auctioneers (RBA) in British Columbia, a major industrial equipment auctioneer, as chief information officer to lead its IT department on June 15, 1999. A term of his contract provided that upon termination he would receive five weeks’ notice or pay in lieu, for five years of employment. This defined notice provision was the minimum required by B.C.’s Employment Standards Act.
On June 2, 2004, RBA terminated Finlan’s employment and gave him a payment equivalent to six months’ salary. Finlan sued, seeking to set aside the contract as unconscionable and to recover common law damages for reasonable notice, including a discretionary bonus, RRSP employer contributions and stock options he would have earned during the notice period. He was also seeking Wallace damages for the way his termination was handled.
The B.C. Supreme Court ruled the contract was enforceable. The fact it contained the bare minimum notice period under provincial legislation doesn’t automatically mean the contract is unconscionable, it said. Finlan fully understood what he was signing and he chose to sign the contract after weighing the risks of giving up a secure position with his former employer to the potential offered by RBA.
Even though the contract contained a defined notice provision of five weeks for five years of work, RBA chose to pay Finlan the equivalent of six months’ salary. Even if the court had ruled the contract was unenforceable, Finlan still would not have gotten what he was seeking. Six months’ salary was within the range of damages he would have been entitled to, the court said. It also rejected his claim for Wallace damages. There simply was no evidence to support a finding of bad faith against RBA.
The employer was considerate of the fact that Finlan was upset and embarrassed by his termination. He was left alone in the CEO’s office to collect his thoughts and was allowed to gather his personal belongings without supervision. And he was given a lump-sum payment of almost five months more salary than provided for in the contract of employment. RBA also offered to assist him in minimizing his tax liability on that payment. See Finlan v. Ritchie Bros. Auctioneers (Canada) Ltd., 2006 CarswellBC 442 (B.C. S.C.).
On June 2, 2004, RBA terminated Finlan’s employment and gave him a payment equivalent to six months’ salary. Finlan sued, seeking to set aside the contract as unconscionable and to recover common law damages for reasonable notice, including a discretionary bonus, RRSP employer contributions and stock options he would have earned during the notice period. He was also seeking Wallace damages for the way his termination was handled.
The B.C. Supreme Court ruled the contract was enforceable. The fact it contained the bare minimum notice period under provincial legislation doesn’t automatically mean the contract is unconscionable, it said. Finlan fully understood what he was signing and he chose to sign the contract after weighing the risks of giving up a secure position with his former employer to the potential offered by RBA.
Even though the contract contained a defined notice provision of five weeks for five years of work, RBA chose to pay Finlan the equivalent of six months’ salary. Even if the court had ruled the contract was unenforceable, Finlan still would not have gotten what he was seeking. Six months’ salary was within the range of damages he would have been entitled to, the court said. It also rejected his claim for Wallace damages. There simply was no evidence to support a finding of bad faith against RBA.
The employer was considerate of the fact that Finlan was upset and embarrassed by his termination. He was left alone in the CEO’s office to collect his thoughts and was allowed to gather his personal belongings without supervision. And he was given a lump-sum payment of almost five months more salary than provided for in the contract of employment. RBA also offered to assist him in minimizing his tax liability on that payment. See Finlan v. Ritchie Bros. Auctioneers (Canada) Ltd., 2006 CarswellBC 442 (B.C. S.C.).
