Overview
Marc W. Kitay and Aaron Zaltzman of Whitten & Lublin employment law firm break new ground in employment law. Not only did Mr. Marc Kitay and Mr. Aaron Zaltzman successfully win a wrongful dismissal case on behalf of Mr. Ghazvini and Ms. Rose against the Canadian Imperial Bank of Commerce (CIBC), but their strategic approach also led to this landmark decision that enshrine a new set of protections to federally regulated employees, highlighting their expertise in employment law.
The Ontario Superior Court of Justice ruled in favour of Mr. Ghazvini and Ms. Rose, awarding them reasonable notice of 7 and 12 months respectively, which included damages for lost salary, variable incentive (commissions), and benefits during their respective notice periods along with their 2022 bonus.
This win was made possible because Marc and Aaron successfully argued that the 2020 Waksdale rule for invalidating terminations clauses should be applied to federally regulated employees under the Canada Labour Code (CLC). Not only was this the first case to apply this rule but this was the first case to consider the 2024 Dufault rule in the context of federally regulated employees, with the Court suggesting that this rule is even more applicable under the Canada Labour Code. By applying both these rules, that until this case had only been applied to provincially regulated employees, Marc and Aaron were able to invalidate the entire provision. This case underscores how strategic legal advocacy by Marc W. Kitay and Aaron Zaltzman ensured their clients received the compensation they were contractually entitled to, including bonuses and commissions.
Background
Mr. Ghazvini and Ms. Rose were employed as Mobile Investment Consultants (MICs) at CIBC. Their compensation included a base salary of $50,000, variable incentive (commissions), and annual bonuses based on performance and Eligible Sales Volume (ESV).
On October 7, 2022, they were terminated without cause. The Plaintiffs retained Marc W. Kitay and Aaron Zaltzman to pursue claims for full compensation.
Case Issues to be Resolved:
- Did the termination provision in the employment contract violate the CLC, thus invalidating the entire employment contract?
- Did a “saving” provision in the termination clause, save the termination clause from violating the Canada Labour Code?
- If the termination clauses were found to be invalid, what is the reasonable notice under common law?
- What are the Plaintiff’s damages for pay in lieu of notice?
- Did either Plaintiff fail to mitigate their damages by not pursuing other job opportunities?
Case Details
Plaintiffs’ Position
- Arguing that both Wasdale and Dufault rulings apply under the Canada Labour Code, Mr. Ghazvini and Ms. Rose’s employment contracts were invalid given their “for cause” and “without cause” termination clauses violated the Canada Labour Code. This would then make them eligible for a severance package under common law.
- Based on common law, they were entitled to 8 and 12 months respectively for reasonable notice with full annual bonuses, variable incentives, and benefits during the notice period.
- Mr. Ghazvini and Ms. Rose had consistently performed above expectations and were projected to earn significant bonuses and commissions for 2022 and beyond. Utilizing historical compensation averages in this case would undercompensate them, as both had incomes on an upward trajectory.
- They had reasonably mitigated their damages by exploring other employment opportunities.
Defendant’s Position (CIBC)
- CIBC argued that both “for cause” and the “without cause” termination clauses were valid and should be upheld.
- That the saving provision was valid and thus the termination clauses should be upheld.
- If the termination clauses were in violation of the CLC, and reasonable notice applied, CIBC argued that Mr Ghazvini was entitled to 4-6 months of reasonable notice while Ms. Rose was entitled to 6-8 months
- CIBC argued that the annual bonuses were not payable because the Plaintiffs were not actively employed at the end of the year.
- CIBC also argued that damages in lieu of notice should be calculated on a three-year average versus the upward forecasted trajectory submitted by the plaintiffs.
- CIBC claimed the Plaintiffs failed to mitigate their damages by not pursuing specific alternative employment opportunities.
Results
The court, considering submissions by Marc W. Kitay and Aaron Zaltzman, ruled in favour of the Plaintiffs:
- Unenforceable Termination Clause: The court found the termination provisions unenforceable based on Waksdale, reverting the plaintiffs’ entitlement to reasonable notice under common law.
- Reasonable Notice:
- Mr. Ghazvini: seven months
- Ms. Rose: 12 months
- Annual Bonus Awards for 2022 were paid out:
- Mr. Ghazvini: $62,376.16
- Ms. Rose: $99,663
- Damages In lieu of notice were calculated based on a trajectory-based forecast of income rather than a 3 year income average, ensuring the plaintiffs received a higher payout.
- Salary during notice period to include base salary, variable incentive and benefits
- Mitigation: The court found in favour of the plaintiffs and determined it was reasonable for Mr. Ghazvini and Ms. Rose not to pursue certain alternative employment opportunities due to inadequate pay, commission-only roles, or potential litigation concerns.
Why contact Whitten & Lublin Employment Lawyers
This is an excellent example of why all severance packages should be reviewed by an experienced employment lawyer. Even if it seems that your employment contract limits your severance payout, experienced employment lawyers like Marc Kitay and Aaron Zaltsman understand the nuances of employment law, and whether a termination clause is legal.
If you have been wrongfully dismissed, take control of the situation. Call Whitten & Lulin at (416) 640-2667 or contact us online to book a confidential consultation with one of our experienced employment lawyers.
