Re Lucas
IN THE MATTER OF an appeal pursuant to
Section 112 of the Employment Standards Act, R.S.B.C. 1996, c. 113 by
Dianna Lucas ("Lucas") of a Determination issued by the
Director of Employment Standards (the "Director")
[2000] B.C.E.S.T.D. No. 170
BCEST #D171/00; File No. 1999/620
British Columbia Employment Standards Tribunal
K.W. Thornicroft, Adjudicator
Heard: April 19, 2000.
Decision: May 4, 2000.
Appearances:
Helene Walford, Articled
Student for Dianna Lucas.
Nicole R. Howell, Barrister &
Solicitor for Regis Hairstylists Ltd.
No appearance for the Director of Employment
Standards.
DECISION
OVERVIEW
¶ 1
This is an appeal brought by Dianna Lucas
("Lucas") pursuant to section 112 of the Employment Standards
Act (the "Act") from a Determination issued by a delegate of
the Director of Employment Standards (the "Director") on
September 20th, 1999 under file number ER 029910 (the
"Determination").
¶ 2
The Director's delegate determined that Ms. Lucas' former
employer, Regis Hairstylists Ltd. ("Regis" or the
"employer"), had "just cause" for terminating her
employment and, accordingly, was not obliged to pay her compensation for
length of service [see section 63(3)(c) of the Act].
¶ 3
I heard this appeal in Victoria, B.C. on April 19th, 2000;
each party was represented by legal counsel--I would like to express my
appreciation to both counsel for their thorough presentations. Ms.
Lucas testified as the sole witness on her own behalf; Regis called one
witness, the current manager of the hair salon in question, Ms. Carol
Moerike.
ISSUES TO BE DECIDED
¶ 4
Ms. Lucas, in her appeal documents, advanced several grounds
of appeal including:
-
her termination was an act of racial
discrimination;
-
her conduct did not give Regis just cause for
termination; and
-
the delegate did not give proper weight to a
favourable Board of Referees' decision regarding her claim for
employment insurance.
¶ 5
In addition, at the appeal hearing Ms. Lucas' counsel, Ms.
Walford, raised two new issues, namely, that Regis failed to pay Lucas
wages in accordance with her written employment contract and that,
further, this failure amounted to a "constructive dismissal"
by Regis which, in turn, triggered its obligation to pay Ms. Lucas
compensation for length of service.
PRELIMINARY MATTERS
¶ 6
I am not able to conclude on the basis of the evidence
before me that Ms. Lucas' termination was an act of racial
discrimination. Ms. Walford, for Ms. Lucas, did not pursue
this issue at the appeal hearing and I understand that a separate
complaint has been filed with the B.C. Human Rights Commission. I
do not intend to address the merits of this latter complaint, however, I
do wish to reiterate that, based on the evidence before me, I cannot
conclude that Regis terminated Ms. Lucas due to any racial bias towards
her. Of course, that is not the same thing as concluding that
Regis had just cause to terminate Lucas' employment, a matter that I
shall more fully address shortly.
¶ 7
As for the Board of Referees' decision (which overturned the
Employment Insurance Commission's denial of employment insurance
benefits due to Lucas' "misconduct"), again, this was a matter
that was not pressed at the appeal hearing. In any event, I
note that the employer did not appear before the Board of Referees--not
surprisingly since it had no direct pecuniary interest in those
proceedings--and the issue before that tribunal (whether Ms. Lucas had
engaged in "misconduct") is not the same issue that I must
address (whether Regis had "just cause" for termination).
Accordingly, and given that the Board of Referees' decision does not
give rise to the application of the doctrine of issue estoppel, I am of
the view that the delegate quite properly ignored this latter decision
in rendering a decision with respect to Ms. Lucas' unjust dismissal
claim under the Act.
¶ 8
The last "preliminary matter" I wish to address is
the constructive dismissal allegation. An employee is said to
be "constructively" dismissed:
"Where an employer decides unilaterally
to make substantial changes to the essential terms of an
employee's contract of employment and the employee does not
agree to the changes...By unilaterally seeking to make
substantial changes to the essential terms of the employment
contract, the employer is ceasing to meet its obligations and is
therefore terminating the contract." (Farber v. Royal Trust
Co. [1997] 1 S.C.R. 846 at para. 24)
¶ 9
An employee is not constructively dismissed unless the
employer unilaterally effects substantial changes to the essential terms
and conditions of the employment contract. An employer's
unilateral change to a comparatively minor term of the employment
contract is a breach of contract; however, such minor breaches do not
constitute a constructive dismissal [see e.g., Poole v. Tomenson
Saunders Whitehead Ltd. (1987), 43 D.L.R. (4th) 56 (BCCA)].
¶ 10
The common law doctrine of constructive dismissal has been
codified in section 66 of the Act:
| 66. |
|
If a condition of employment is substantially
altered, the director may determine that the employment of an
employee has been terminated. (italics added)
|
|
¶ 11
A "condition" of a contract is to be contrasted
with a contractual "warranty"; the former is an essential or
fundamental term whereas the latter is of lesser importance. A breach of
a condition entitles the party not in breach to treat the contract as
having been terminated. A breach of warranty, on the other
hand, does not amount to a termination of the contract and the innocent
party's only remedy is an action for damages for breach of contract. Thus,
under section 66, an employee may be presumed to have been terminated
only if the employer unilaterally altered, in some substantial fashion,
a fundamental term of the employee's employment contract (see Stordoor
Investments Ltd., B.C.E.S.T. Decision No. D357/96).
¶ 12
In the instant case, Lucas was to be paid a 40% commission
on her sales; in the event that her commissions did not generate at
least the equivalent of $8 per hour, she was to be paid the latter
hourly rate. There is some evidence before me indicating that
Lucas, at least in a few pay periods, was paid at an hourly rate of $7
rather than $8 per hour (i.e., a $1 per hour shortfall). Ms.
Walford was not able to provide me with a precise calculation as to
Lucas' "underpayment" but conceded that the amount was a
comparatively small sum particularly given that, in most pay periods,
Lucas' earnings exceeded her guaranteed hourly wage.
¶ 13
Accepting, but only for the sake of argument, that Lucas was
underpaid by $1 per hour in a few pay periods, I do not consider that
underpayment to amount to a substantial alteration of a condition of her
employment contract. As our court of appeal noted in Poole,
supra., at page 64:
"The non-payment of a relatively minor
portion of the consideration to be paid for services which are
to be performed over a prolonged time period, would not by
itself, usually meet such criteria and hence would not qualify
as a fundamental breach. Damages could be expected to
afford a complete remedy."
¶ 14
I am further fortified in my conclusion that this minor
underpayment did not amount to a constructive dismissal by the fact that
Ms. Lucas, in her original complaint filed with Employment Standards
Branch, did not even mention the matter (the only claim particularized
in the complaint was for termination pay). Nor was this issue
raised during the delegate's investigation or even in the appeal
documents filed with this Tribunal. Obviously, this was not a
significant issue insofar as Ms. Lucas was concerned. Accordingly,
it hardly seems appropriate to characterize this underpayment as a
fundamental breach going to the very root of her employment contract. Finally,
given that this issue was not raised in the initial complaint, or during
the delegate's investigation, or even in the appeal documents filed with
the Tribunal, I do not think it appropriate for this issue to be
addressed by the Tribunal at this late date.
¶ 15
I now turn to the one remaining issue raised by this appeal,
namely, whether Regis had just cause to terminate Lucas' employment.
FACTS AND ANALYSIS: JUST CAUSE
¶ 16
Lucas was employed as a hair stylist in the Regis salon
situated in the Eaton Centre in Victoria from July 1996 to mid-January
1998 when her employment was terminated for an alleged failure to comply
with certain employer rules and directions. The Record of
Employment issued to Lucas by Regis indicated that Lucas was
"dismissed" for "violation of company policy".
¶ 17
It is conceded that certain written terms and conditions
governed Ms. Lucas' employment with Regis including:
|
Company Security Regulations
|
|
|
The following conduct is against the best
interests of the Company, its employees and its customers. Any
employee who engages in any of the conducts [sic] listed below
will be subject to discipline up to and including dismissal...
|
|
| 9. |
|
Failure to charge for products, supplies or
services rendered for ANY reason without the prior approval of
either the manager or a supervisor...
|
|
| 11. |
|
Charging customers for salon services at
prices other than those posted on the salon's price list or as
ticketed, unless such price is authorized by an appropriate
Company supervisor...
|
|
| 12. |
|
Rendering free or discounted services to
anyone other than a Company employee without the prior approval
of a supervisor or manager.
|
|
*****
|
Licensing
|
|
|
All salons and stylists must have
appropriate, current licenses...
|
|
|
Individual Stylist/Operator Cosmetology
License
|
|
|
All stylists must hold a current cosmetology
license...Each stylist is responsible for maintaining a current
license. No stylist will not be allowed to perform
any service without a valid license and will be subject to
termination... [sic]
|
|
|
Product and Service Use
|
|
|
...In addition to trying products and
services, Managers and stylists may perform one free service a
month in the salon for a relative. The employee must
perform this free service during their time off and with their
manager's permission.
|
|
|
(italics and underlining in original)
|
|
¶ 18
Mr. Jim Vance--who did not testify before me--was a
maintenance worker employed by the Eaton Centre Mall. He
apparently was on good terms with the salon manager and Ms. Lucas. According
to Ms. Lucas, there was an unwritten policy that Mr. Vance would receive
free haircuts as a form of "thank you" for his help and
assistance to the salon. Lucas says that these free haircuts
were authorized by the salon manager but that individual, no longer
employed by Regis, did not testify before me.
¶ 19
On October 2nd, 1997, the area supervisor, Jacqueline
Wright, met individually with each salon stylist and impressed upon them
the need to follow company rules and procedures. In Ms.
Lucas' case, Ms. Wright handed her a two-page handwritten letter
addressed to her. This letter begins: "Regis Corporation
is very concerned with cash handling procedures in our salon #5930 by
you". The letter continues: "Please follow
corporate instructions--no exceptions--as explained by area
supervisor..."; "All clients will be charged the correct Regis
price list for all services. There are no free services unless
authorized by area supervisor..."; "Failure to follow these
guidelines will result in your immediate dismissal with no further
notice...".
¶ 20
Lucas read and understood the contents of this letter; in my
view, the contents could not be clearer. In any event, on
January 10th, 1998, Lucas performed an "eyebrow waxing"
procedure on a young woman even though Lucas was not licensed by the
provincial government to perform this procedure. Lucas knew
that she could not lawfully perform the procedure given that she was not
licensed. The procedure resulted in the young lady suffering
burns which required medical treatment. The client's mother
complained to the salon, apparently threatened legal action, and certain
compensation was paid to the client by Regis.
¶ 21
On the morning of January 17th, 1998--and while
on-duty--Lucas gave Mr. Vance a free haircut and he, in turn, gave her a
$5 "tip" which she kept. In light of these two
events, Regis--after consulting the local employment standards branch
office--decided to terminate Lucas' employment for cause.
¶ 22
According to Lucas, "all of us in the salon did
waxing", but this assertion has not been corroborated by any viva
voce evidence and, of course, stands in stark contrast to the specific
company rules set out above (which were reinforced on October 2nd, 1997,
in writing, by Ms. Wright, the area supervisor).
¶ 23
When questioned by Regis' legal counsel about the free
haircut, Lucas acknowledged that she did not have the proper
authorization to cut Mr. Vance's hair for free and that her failure in
this regard was a simple "human error". She had
earlier testified that she could not obtain proper authorization because
Ms. Wright was not in the salon at the time. On the other
hand, Lucas also testified that she understood it was a salon
"policy" to offer Mr. Vance free haircuts and thus no
authorization was necessarily required. These two positions are not
consistent; indeed, Lucas' evidence on this particular matter has not
been consistent throughout these proceedings.
¶ 24
In March 1998, Lucas testified before the Board of Referees
that:
"With respect to the free haircut
[Lucas] stated that all staff were allowed to do free family
haircuts, she herself had no family here but that she had taken
the free haircut for her boyfriend. She also stated
that money had indeed changed hands but that was money from a
man to his girlfriend." (Board of Referees' March 17th,
1998 decision, at page 2).
¶ 25
In a letter dated June 18th, 1999 submitted to the delegate
during his investigation, Lucas stated that: "I only performed free
service to my boyfriend and following practice in the salon I thought it
was not inappropriate" (at page 2) and "I submit that the mall
maintenance employee was my boyfriend and on Saturday January 17, 1998,
I performed a free haircut for him. This was not
inappropriate as it is the practice and policy of Regis to allow
stylists to perform free haircuts for family, boyfriends included."
(at page 3)
¶ 26
In her appeal documents, Lucas no longer contended that she
had any romantic link to Mr. Vance but, rather, asserted that it was a
"salon policy" to offer Mr. Vance free haircuts:
"Jim Vance is a maintenance man in the
Eaton's mall. Hairdressers in the salon commonly provide hair
cuts to Jim free of charge because he provides staff with
assistance. This was common policy and I was acting
in a typical manner when I cut his hair. I had no
idea I needed permission to do this." (Letter, dated
October 15th, 1999, appended to Lucas' notice of appeal, at page
2)
¶ 27
It should be noted that Lucas' testimony before me was that
she knew she needed authorization to cut Mr. Vance's hair without charge
but neglected to obtain the requisite authority due to "human
error" and because Ms. Wright was not in the salon. I
think it reasonable to conclude that Lucas initially took the position
that the free haircut offered to Vance fell within the "free
haircuts for relatives" exception and has since changed her
position when that argument proved untenable.
¶ 28
In my view, Ms. Lucas is an unreliable witness. Given the
total absence of any independent viva voce corroboration for Lucas'
current position--namely, that all stylists did "waxing"
procedures even though none held a licence and that it was "salon
policy" to offer Mr. Vance free haircuts--I must conclude that
these actions on her part were carried out without authorization and,
indeed, in clear contravention of express employer rules. As
noted by our court of appeal in Stein v. British Columbia Housing
Management Commission (1992), 65 B.C.L.R. (2d) 181 at page 185 (per
Southin, J.A.):
"...an employer has a right to determine
how his business shall be conducted. He may lay down
any procedures he thinks advisable so long as they are neither
contrary to law nor dishonest nor dangerous to the health of the
employees and are within the ambit of the job for which any
particular employee was hired. It is not for the
employee nor for the court to consider the wisdom of the
procedures. The employer is the boss and it is an
essential implied term of every employment contract that,
subject to the limitations I have expressed, the employee must
obey the orders given to him.
It is not an answer for the employee to say:
`I know you have laid down a rule about this, that or the other,
but I did not think that it was important so I ignored
it'."
¶ 29
With the foregoing comments of Madam Justice Southin in
mind, it should be recalled that Regis established reasonable and lawful
work rules about employees providing free services or carrying out
procedures that they were not licensed to undertake. These
rules were set out, in writing, and provided to all employees. Lucas
was well aware of these particular rules and, indeed, she was forcefully
reminded about the importance of the rules (and the severe consequences
that would follow a contravention of these rules) in early October 1997. And
yet, only 3 1/2 months later, she breached both the "free
services" rule and the "unlicensed procedures" rule. In
my opinion, either breach standing alone might have justified
termination; certainly, the combined effect of those two contraventions
provided Regis with just cause for termination.
¶ 30
It follows from the foregoing discussion that I am of the
view the delegate correctly determined that Lucas was terminated for
cause. Accordingly, this appeal is dismissed.
ORDER
¶ 31
Pursuant to section 115 of the Act, I order that the
Determination be confirmed as issued.
