Koutsikaloudis v Maple Leaf Academy, 2021 ABPC 136 (Sharek, J) is a new Provincial Court of Alberta case in which my Partner, Sarah Coderre, was successful counsel for the Plaintiff employee.
In Koutsikaloudis, the court found that a teacher who was employed for 18 consecutive years under contracts that individually looked quite a bit like fixed-term contracts, was actually an indefinite-term employee (i.e. no fixed-term contract) and entitled to 20 months of reasonable notice! The court also awarded aggravated damages for breach of the duty of good faith.
This case is significant in Alberta for many reasons. First, there are very few Alberta decisions on the subject of consecutive (apparent) fixed-terms, and this decision provides some protection to employees. Second, the case was decided by the Honourable Assistant Chief Judge of the Provincial Court G.W. Sharek, which should give it additional weight at all levels of court in Alberta.
Facts in Koutsikaloudis
The Plaintiff was employed for 18 consecutive years, ending in May, 2018. The Record of Employment created after the final end of her employment indicated that her “first day worked” was in 1999, and there was a mortgage application letter indicating that the Plaintiff had been there since 1999 and her income was “projected to be steady”.
The Plaintiff was provided a new contract each year and the Plaintiff would sign them. The contracts provided for 1 year of paid instruction. There was only a few weeks between the end of one contract in March and the start of the new one in April each year. Sometimes she started teaching prior to signing the new contract.
The employer was almost entirely dependent on government funding, and it wanted fixed-term contracts in case of a funding shortfall and the inability to pay severance.
In 2017, the 2017/2018 employment contract and employee handbook provided that upon termination of employment without cause, teachers would be provided payment in lieu of notice “in accordance with the Employment Standards Code”, and “Employees shall not be entitled to any notice of termination or termination pay in lieu of notice greater than that provided for in the Employment Standards Code.” Importantly, it went on to clarify that there was no “intention […] to violate any public policy, statutory or common law, and that if any sentence, paragraph, clause or combination of the same is in violation of the law […] [it] shall be void.”
In May of 2018, the employer tried to get the Plaintiff to sign a new employment contract which contained a probationary period – allowing termination without any notice – changes to the other clauses related to severance, and new clauses like “full time and attention” and a non-competition clause.
The Plaintiff declined to sign it. The employer was unhappy with this and did not want to discuss it but instead told the Plaintiff to ask her lawyer about it. Ultimately, she was not permitted to teach that year.
There was no evidence of a funding shortfall for the employer that year.
Court Analysis and Findings in Koutsikaloudis
The court found that the Plaintiff was employed under an indefinite-term contract because of the following:
- The 2017 employee handbook created a representation that the employer would continue to enter into new specific term contracts, subject to funding and there being a “positive, healthy, and respectful relationship between the teacher, the students and [the employer]”. There was no evidence of a funding constraint and the relationship was good
The court found that the Plaintiff was constructively dismissed solely because the defendant had tried to impose a probationary period on this 18-year employee. The court additionally found that other actions counted towards constructive dismissal in any event, such as the other new clauses and the fact that the employer refused to discuss the changes.
The court found that the termination provisions in the Plaintiff’s employment contract did not limit her termination notice (severance). This was because the court read the contract as providing that that the intention was not to violate any public policy or common law, and that the employer was to maintain the highest ethical standards, which would “surpass the letter of the law”. The court went on to note that even if that interpretation was wrong, there was enough ambiguity that the contract was not “clear and unequivocal” enough to extinguish the common law rights to reasonable notice.
The court found that the reasonable notice (severance) period was 20 months, because she was obviously entitled to substantial severance, and that period of time would take her to the end of two teaching terms beyond the termination date.
The court found that the plaintiff was entitled to $2,500 in aggravated damages due to the breach of the duty of good faith by the employer. The facts relevant to that finding were as follows:
[97] This constructive dismissal arose solely as a result of the conduct of Maple Leaf seeking to impose onerous conditions of employment upon Ms. Koutsikaloudis such as the probationary clause, the 2 week termination clause, the full time and attention clause, and the non-competition clause. Not only did Maple Leaf seek to unilaterally impose these conditions of employment upon Ms. Koutsikaloudis by insisting that she sign the revised contract prior to starting to teach, they declined to discuss her concerns about the contract with her. When the concerns were raised by Ms. Koutsikaloudis […] [the Employer] suggested Ms. Koutsikaloudis consult a lawyer. The next day, May 8, without offering any concessions, Ms. Ishikawa stated “you worked 19 years and still don’t trust and understand how we do the business here?”, and again suggested that “please tell your lawyer to contact our lawyer”.
[…]
[103] The crucial facts are that Ms. Koutsikaloudis arrived on Monday morning, May 7, ready to teach that day and commence a new term. Understandably, she did not expect that she would be required to sign the contract in the form presented by the employer. Rather, her expectation was that she would be permitted to commence teaching that day, and be able to discuss the provisions of the proposed contract in the days that followed. She was denied those opportunities.
[…]
[109] […], if the non-renewal of the annual contract or the termination of employment was not a function of funding or enrolment reductions, the reasonable expectation of the parties was that […] the employer would “adhere to the highest of ethical standards [and] these standards surpass the letter of the law and embrace open and honest dealings in all our relationships” and that it was “always MLA’s hope … that the teacher will enter into a new specific term contract for the succeeding term”.
[110] With those expectations in mind, since this was not a funding related course of action taken by Maple Leaf, the Plaintiff is entitled to damages for mental distress as a result of the manner in which termination was implemented.
Bow River Law LLP
The Author Joel Fairbrother is a Partner at Bow River Law LLP in Calgary, Alberta. Joel Fairbrother started this firm with his highly capable Partner Sarah Coderre, the one who actually fought and won the Koutsikaloudis case.
Bow River Law is a brand-new firm, but our lawyers are knowledgeable, skilled and experienced in employment law, human rights, and labour law in Alberta.
If you are an employee whose employment has been terminated, let us determine if you are being offered appropriate severance and help you with your legal options.
If you are an employer who is going to try to rely on a contract, or wishes to terminate the employment of any employee, let us determine your potential liabilities and help you approach the termination strategically.
The Koutsikaloudis case can be found at the following link on CanLii: https://www.canlii.org/en/ab/abpc/doc/2021/2021abpc136/2021abpc136.html?autocompleteStr=koutsikaloudis&autocompletePos=1
