2. FACT SITUATION #1 – THE NIGHTLY NEWS
From 1991 to 2012 Dan Jeffries was the anchor of Wolf News, a
cable network owned by a media consortium.
He repeatedly took on a political party by ridiculing a number of their
candidates for their position on gay marriage and just about
everything else which earned him the anger of company President,
Jane Honda, and ultimately a “pink slip”.
The company gave Dan eight weeks’ working notice and agreed to
honour the termination provision in his contract provided that he
agreed to notify them if he became reemployed.
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3. THE NIGHTLY NEWS (cont’d…)
The Employment Agreement between the parties provided for 10
months’ notice or pay in lieu (base salary and bonus but no further
benefits).
Dan was earning a salary of $480,000.00 with a 25% bonus.
Fortunately he managed to find a new job with the same
compensation package by the expiration of the eight weeks.
The employer alleges that Dan has mitigated his damages and Dan
sues.
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4. THE NIGHTLY NEWS (cont’d…)
What are the issues?
If the parties settle, where does all the money go?
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5. THE NIGHTLY NEWS (cont’d…)
DISTRIBUTION OF FUNDS
Annual base salary: $480,000.00
Annual bonus of 25% = $120,000.00
Total annual compensation $600,000.00 ($50,000.00 per month)
Contractual entitlement to 10 months $500,000.00
Contribution to legal fees 10,000.00
Total money payable by Defendant $510,000.00
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6. THE NIGHTLY NEWS (cont’d…)
Dan Jeffries worked from 1991 to 2012 (21 years).
TD2 Roll-Over: The employee can roll-over $2,000.00 for every year or
part calendar year of employment up to and including 1995.
5 x $2,000.00 = $10,000.00
The employee can also transfer from a lump sum retiring allowance an
amount to use up any unused RRSP room as shown on the employee’s
most recent Notice of Assessment from CRA. Here assume that Dan
had $30,000.00 unused RRSP room.
Total roll-over: $40,000.00
Allocation from settlement to actual legal fees (obtain undertaking to bill
no less than amount allocated) $20,000.00.
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7. THE NIGHTLY NEWS (cont’d…)
Step 1: Total settlement + contribution to legal fees $510,000.00
Step 2: RRSP roll-overs - 40,000.00
Arrange for transfer of funds directly from employer to financial
Institution without withholdings
Step 3: Payment directly to Plaintiff’s counsel
(actual legal fees) - 20,000.00
Step 4: Remaining funds $450,000.00
Step 5: Arrange payment in 2012 requested by Plaintiff $15,000.00
Step 6: Calculate withholding at source ($0 - $5,000.00 = 10%,
$5,000.01 to $15,000.00 = 20%, above $15,000.00 is 30%)
Here 20% of $15,000.00 = $3,000.00 payable to CRA - 3,000.00
80% of $15,000.00 is $12,000.00 payable to Plaintiff - 12,000.00
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8. THE NIGHTLY NEWS (cont’d…)
Step 7: Payable in 2013 $435,000.00
30% of $435,000.00 = $130,500.00 to CRA - 130,500.00
70% of $435,000.00 = $304,500.00 to Plaintiff - 304,500.00
$ 0.00
TOTAL CHEQUES PAYABLE
Financial institution $ 40,000.00
Pelican O’Brady Pain 20,000.00
CRA 3,000.00
Plaintiff 12,000.00
CRA (2013) 130,500.00
Plaintiff (2013) 304,500.00
TOTAL… $510,000.00
NOTE: Any EI repayment obligations come out of net funds to employee.
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9. FACT SITUATION #2 – THE GOOD LIFE
Alicia is so possessed of a variety of talents that despite a hectic
schedule campaigning at political rallies for her husband and raising
two active teenagers, her firm has assigned her to some of its most
significant litigation notwithstanding her position as an associate
lawyer.
Now she has been asked to handle two pieces of employment
litigation.
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10. THE GOOD LIFE (cont’d…)
Matt Mauler is a young and aggressive associate working at Alicia’s
firm.
Matt is more focused these days on his music career and
auditioning for Canadian Rock Star than his law practice.
Unbeknownst to the firm, he has been relying heavily on online
precedents and he has not taken the time to make sure that they
are all “state of the art”. Recently an Employment Agreement which
he drafted has come under some scrutiny.
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11. THE GOOD LIFE (cont’d…)
The following provision in the Employment Agreement has drawn
negative attention:
The employer may terminate the employment of the employee by
providing notice (or pay of base salary in lieu thereof) of two weeks
for each completed year of employment.
Matt acknowledges that he was in a rush when he drafted this
provision but he believes that the intention of the parties was clear.
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12. THE GOOD LIFE (cont’d…)
Brian Rightheart had been employed by the firm for 25 years, most
recently as its HR Manager.
An otherwise exemplary employee, Brian had for the past several
years been engaged in an extra marital affair in contravention of the
firm’s non-fraternization policy with an Administrative Assistant who
is 15 years his junior.
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13. THE GOOD LIFE (cont’d…)
Instead of complying with the disclosure requirements of the company’s
policy, Brian:
a) Repeatedly denied the existence of a romantic relationship in
response to direct questioning.
b) Had the Administrative Assistant promoted to a position within his
department; and
c) Refused to stay out of the workplace as requested during an
investigation into the “affair”.
When Brian’s employer decided to terminate his employment he
stormed out asserting “just cause is a myth in this province... I will
see you in court”.
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14. THE GOOD LIFE (cont’d…)
What advice should Alicia give to the partnership?
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15. FACT SITUATION #3 – UPTOWN MANOR
Jonathan Valet was the butler for 30 years at Uptown Manor, a palatial
estate that employs numerous housekeepers, cooks, chauffeurs, maids
and groundskeepers to service the every need and whim of the family
that has lived there for generations.
For years it has been a not so well kept secret that Jonathan has a
“friend” and that many nights after the family are asleep Jonathan slips
out of the manor using one of the vehicles and returns before dawn.
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16. UPTOWN MANOR (cont’d…)
When it is subsequently discovered that Jonathan’s friend is a man, the
family decides that they no longer require a butler and provide
Jonathan with the eight weeks’ notice required by the Employment
Agreement signed by Jonathan mid morning on the day he started 30
years ago.
Jonathan looks for other work but at 60 finds few opportunities and 13
months post termination suffers a stroke that renders him
unemployable.
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17. UPTOWN MANOR (cont’d…)
At the date of termination Jonathan was paid $50,000.00 per annum
and enjoyed a comprehensive suite of benefits including health, dental,
drug, life and disability coverage.
In the ensuing litigation the family asserts that the after hour’s comings
and goings of Jonathan amounted to just cause (albeit after acquired
cause).
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