Employee’s Damages Owed to Former Employer Significantly Reduced

Previously printed in the LexisNexis Labour Notes Newsletter.

In Consbec Inc. v. Walker, 2016 BCCA 114, the B.C. Court of Appeal significantly reduced the amount of damages owed by Peter Walker to his former employer, Consbec Inc., and provided valuable insight into the steps which must be taken by employers in order to justify damages claims against former employees.

Background

This dispute began in 2002 after Walker resigned from employment without notice. At trial, Consbec advanced several claims against Walker, including a claim to the effect that he was competing unfairly and had misappropriated confidential information. While most of the claims were dismissed, the trial judge upheld Consbec’s claim for damages arising out of Walker’s failure to provide notice of resignation and ordered Walker to pay Consbec more than $56,000 in damages.[1]

The damages were comprised of the costs incurred by Consbec in transferring two existing employees from Ontario, which included reimbursement for mileage, per diems and moving expenses.

B.C. Court of Appeal Decision

Before the B.C. Court of Appeal, Walker asserted that the trial decision was flawed because Consbec had failed to prove that it had suffered any damages.

The Court of Appeal agreed, noting that the trial judge had failed to assess the amount of notice that Walker was obligated to provide Consbec and finding that many of the expenses claimed by Consbec had not been proved or established as necessary.

In particular, the Court described Consbec’s decision to have an employee drive between Ontario and British Columbia and incur mileage and per diems in the process as “unnecessary”, given that the employee could have flown between locations. The Court also found that Consbec had failed to establish why it needed to relocate two employees to B.C. as opposed to just one.

Accordingly, the Court of Appeal reduced the damages award to $5,875, approximately 10 percent of what had been awarded at trial.

Key Lessons

There are several key lessons to be learned from this case:

1. The main purpose of the requirement on an employee to provide notice of departure is to give the employer a reasonable period to adjust to the departure. In determining the appropriate period of notice in the absence of a written agreement, consideration will be given to the employee’s duties, responsibilities and length of service and the time it would reasonably take to reallocate the work or hire a replacement.
2. In determining damages, the measure of damages is the cost incurred as a result of the employee’s failure to provide notice.
3. To justify an award of damages, an employer needs to establish that the costs incurred were reasonable and necessary in the circumstances.This case should also get employers thinking about what steps they can take to eliminate or reduce the risk of their employees leaving them in the lurch and quitting without notice. After over a decade of legal wrangling, the legal fees incurred by Consbec almost certainly exceeded the amount awarded through the court process. Employers would be well served to implement employment agreements with provisions clearly dictating the amount of notice an employee has to provide on resignation from employment. Had there been such agreement between Consbec and Walker, their dispute might have been avoided in its entirety.
4. The last of these three points is perhaps the most significant lesson to be taken from the Court’s decision. It is a strong indication that, going forward, employer claims for damages will be subject to strict judicial analysis and scrutiny.

[1] 2014 BCSC 2070.