Big Severance and Breach of Good Faith Re Non-Payment of Invoice

Rosenberg v Northern Nursing Solutions Inc., 2024 ABCJ 220 (CanLII), is a recent Alberta Court of Justice decision where employee Tara Rosenberg commenced an action against her employer, the Northern Nursing Solutions Inc., for wrongful dismissal, breach of contract (outstanding wages) and additional damages.

Please note that the employee used an employment lawyer, but the employer did not defend the action.

Facts

The following are the pertinent facts of the case:

• The Employee was working and residing in another province when she was contacted by the Employer in or about October 2021.
• The Employee left her secure employment and moved with her husband to Westlock, Alberta to commence work for the Employer. The move was made in a short period of time and resulted in the Employee being separated from her daughters.
• The parties entered into a Master Employment Agreement, which contained the following material terms:
  
  

1. The Plaintiff would hold the position of an LPN.

2. She was to be regarded as an employee of the Defendant.

3. She was entitled to group health and dental benefits.

4. She was entitled to reimbursement for her accommodations and utilities of approximately $2000 per month.

5. She was to be compensated at an hourly rate of $60 per hour and $90 per hour of overtime with her hours to be submitted through weekly invoices and payment to be issued on a biweekly basis amounting to an approximate annual salary of $128,945.

6. She would be reimbursed regarding fuel expenses based on a fee of $0.40 per kilometre up to a maximum of $500 per assignment.
   
   

• In accordance with the Employment Agreement, the Employee provided the Employer with invoices for services provided.
• Starting in August 2023, the Employer failed to pay the Employee’s invoices in a timely manner. The Employee unsuccessfully attempted to bring the unpaid invoices to the Employer’s attention.
• On December 1, 2023, the Employee received written notice of termination effective December 31, 2023. The termination letter stated the Employer would pay the unpaid invoices.
• As of the date of termination, the Employee was a 49-year-old Licensed Practical Nurse (“LPN”) for the Employer for just over two years.
• Following the Employee’s termination, the Employer failed to pay all unpaid invoices.
• The Employee commenced an action against the Employer, whereby she sought damages for the following:
  
  
  • Notice of termination;
    
    
  • Breach of contract/ outstanding wages; and
    
    
  • Other damages (bad faith/aggravated/ punitive damages).

• As noted above, the Employer did not defend the claim. The Employer was Noted in Default on May 15, 2024. The decision summarized here the damages hearing.

Analysis / Conclusion

The Employee argued that she was entitled to a longer notice period as she was induced by the Employer to leave secure employment in British Columbia to move to Alberta to work for the Employer. The Court was referred to Toole v Northern Blizzard Resources Inc. (2017) ABQB 760 at para 21:

The concept of inducement of an employee to leave secure employment involves a spectrum of facts. At one end is an employee on working notice when he or she is contacted by a recruiter. That employee would be very motivated to pursue the opportunity, because his or her job is not secure. At the other end of the spectrum is an employee who is securely employed and not interested in meeting for a new job until the recruiter offers a specific inducement, such as a signing bonus, more valuable benefits, or better salary. Most cases are somewhere along the spectrum.

The Employee was awarded 6 months of severance pay (common law notice), after taking into account inducement, her age (49 years old), impact of Covid-19 and issues associated with future employability.

The Employee also sought additional damages from the Employer. The Court applied Bhasin v Hrynew, 2014 SCC 71 (Bhasin), in determining whether the Employee was entitled to additional damages:

[39] In Bhasin, the Supreme Court recognized that a duty to act honestly in the performance of contracts exists. It explained that this duty “…should not be thought of that implied term but a general doctrine of contract law that imposes as a contractual duty a minimum standard of honest contractual performance” (para 74). At paras 65 and 66, the Court had this to say:

“The organizing principle of good faith exemplifies the notion that, in carrying out his or her own performance of the contract, a contracting party should have appropriate regard to the legitimate contractual interests of the contracting partner. While “appropriate regard” for the other party’s interest will vary depending on the context of the contractual relationship, it does not require acting to serve those interest in all cases. It merely requires that a party not seek to undermine those interests in bad faith…

This organizing principle of good faith manifests itself through the existing doctrines about the types of situations and relationships in which the law requires, in certain respects, honest candid forthright or reasonable contractual performance. Generally, claims of good faith will not succeed if they do not fall within these existing doctrines. But we should also recognize that this list is not closed…”

The Court recognized that the most important or essential element of an employment contract was for the Employer to pay the Employee on time.

The Court also considered the duty of good faith principles discussed in C.M. Callow Inc. v Zollinger, 2020 SCC 45. In particular the duty a contacting party has to correct a known misapprehension caused by its own conduct.

The Court held that the Employer failed it’s duty to act in good faith towards the Employee when it:

• Failed to acknowledge the Employee’s communications surrounding the unpaid invoices;
• Continued to employ the Employee under the misapprehension that submitting her invoice would result in payment; and
• Noted in the termination letter that the Employer would pay the outstanding invoices, which perpetuated the misapprehension.

The Employee was awarded $30,000.00 in aggravated damages as the Employer failed to meet its contractual obligations (payment of invoices) in good faith.

My Take

This decision is quite interesting for multiple reasons, including that the Court found a breach of the duty of good faith related to the employer’s actions around non-payment of invoices, and awarded aggravated damages against the Employer.  The body of case law on the breach of the duty good faith in Alberta employment law is small but growing.   The Employee was able to obtain a longer notice period as a result of inducement and due to the impact of Covid-19 on employability.

One cannot help but wonder how the outcome may have been different had the Employer defended the action. In particular, the impact it would have had on the aggravated damages award.

Bow River Law provides these regular legal blog articles for the purposes of legal news, education and research for the public and the legal profession.  These articles should be considered general information and not legal advice.  If you have a legal problem, you should speak to a lawyer directly.

Amanda Jacinto is an employment and labour lawyer at Bow River Law in Calgary.