Alberta executive awarded full severance, employer can’t ‘change horses’ on cause

Ayalew v. The Council for the Advancement of African Canadians in Alberta

In this case, the Court of King’s Bench of Alberta (ABKB) ruled that The Council for the Advancement of African Canadians in Alberta (Africa Centre) couldn’t change its without-cause dismissal of Tesfaye Ayalew to a “for cause” termination.

As a result, the former executive director was awarded 14 months of severance pay.

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Facts of the case

• Ayalew served as the executive director of the Africa Centre for approximately 10 years.
• In 2017, the Africa Centre’s accountant resigns — alleging mistreatment by Ayalew.
• In January 2018, Ayalew is placed on administrative leave with full pay and benefits. An investigation into the allegations is launched.
• In March 2018, the Africa Centre reviewed the interim report of the investigation. It concluded that the allegations were unfounded.
• At a board meeting on March 15, 2018, the Africa Centre votes in favour of terminating Ayalew — citing “a need for a change in the leadership of the organization.”
• On March 16, 2018, Ayalew is informed in a letter that he is being fired without cause, effective immediately. At the time of his dismissal, the 62-year-old’s salary was $83,130.
• In addition to eight weeks of severance pay, the document offered another two weeks of compensation if Ayalew released the board from all claims relating to the termination.
• Instead of signing the release, Ayalew files a wrongful dismissal claim — arguing that he’s entitled to 24 months of severance pay. At this time, the Africa Centre had provided him with eight weeks of compensation.
• In response to legal action, the Africa Centre claims that it had just cause to fire Ayalew. The organization launches a counterclaim to recover the severance that was provided to him.

The Court’s Decision

The ABKB found that the Africa Centre didn’t successfully argue why it should be able to change Ayalew’s termination without cause into a “for cause” dismissal.

Consequently, the former executive director was granted 14 months of severance pay.

However, the court gave the Africa Centre credit for the eight weeks of severance that it already provided to Ayalew.

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Termination without cause wasn’t a “mistake”

One of the Africa Centre’s main arguments was that it mistakenly relied on the investigator’s interim report when it fired Ayalew without cause.

However, the evidence showed that the organization didn’t rely on the report or provide a reason for his dismissal.

Therefore, the judge wasn’t able to conclude that the Africa Centre’s decision to terminate Ayalew without cause was a “mistake.”

The ABKB also noted that the organization didn’t provide any court decisions where a mistake allowed an employer to “change horses” and assert just cause.

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No post-termination information to justify cause

In addition to making a mistake, the Africa Centre claimed that it discovered new information that justified firing Ayalew for cause.

However, the court found that all of the evidence was “known to the [Board of Directors] at the time of dismissal” — not after.

As a result, the ABKB concluded that the principles of “after-acquired cause” or “subsequently discovered cause” didn’t apply in this situation.

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No “freestanding right” to recharacterize dismissals

The Africa Centre finally argued that, regardless of a mistake or post-termination information, employers have a “freestanding right” to recharacterize dismissals as “for cause” at a later date.

However, the court concluded that no such right exists when an employer intentionally fires a non-unionized worker without cause and provides severance as per the province’s Employment Standards Code (ESC).

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Lesson for employees

• If your boss alleges cause after you are fired with severance, seek legal counsel immediately: In order to successfully retract a termination without cause, your employer must prove that it discovered evidence that would have warranted a “for cause” dismissal — had it been known at the time of termination. This is called “after-acquired cause” and it only applies to certain situations. An experienced Alberta employment lawyer at Samfiru Tumarkin LLP can determine if after-acquired cause is applicable in your situation and help you secure the compensation you deserve if it isn’t.

Lesson for employers

• Consult an employment lawyer before firing staff: If there is a chance that cause exists, employers in Alberta should thoroughly investigate and consider it before terminating non-unionized workers without cause. It’s very unlikely that courts are going to be sympathetic if you make a “mistake.” If you do have cause, but want to offer an employee severance in exchange for a release at the time of the dismissal, make sure the termination letter explicitly states your intention to do so. Since each situation is unique, a thorough review by our firm will ensure employment laws aren’t being broken and that the worker’s rights have been appropriately considered.

Lost your job? Speak with an employment lawyer

If you are fired or let go for any reason, contact the experienced employment law team at Samfiru Tumarkin LLP.

Our lawyers in Alberta, B.C., and Ontario have helped tens of thousands of non-unionized individuals resolve their workplace issues.

We can review your situation, enforce your rights, and ensure that you receive the compensation you are legally entitled to.