B.C. Court of Appeal holds assessment of damages must take into account terms of contract

Munoz v. Sierra Systems Group Inc.
264 A.C.W.S. (3d) 127
British Columbia Court of Appeal

EMPLOYMENT — Wrongful dismissal — Damages

Employee was recruited by employer to work as IT consultant to provide support to particular client — Employer changed compensation model and gave employees choice as to how they were to be remunerated based on four different plans — Employee chose hourly plan, where he received fixed amount for each hour billed to client and assumed 100 per cent of risk of lack of billable hours for which he would receive no pay — Client stopped working with employee; employee was benched and received no income — Four months later, employer gave employee notice of termination — At time of dismissal employee was 43 years old and worked for employer for two-and-one-half years — Employee brought action for damages for wrongful dismissal — Trial judge concluded employee was entitled to 10 months' notice — Trial judge assessed damages based on earnings in 12 months immediately preceding first day on bench — Employer appealed — Appeal allowed in part — Trial judge erred in calculating damages based on employee's annual earnings in year immediately preceding last day of work because she failed to take into account terms of employment contract — Employee chose not to change to another compensation plan and it was contract in place at time of termination that governed calculation of damages — Assessment of employee's damages must take into account term of contract that provided he would not receive wages while benched — Employment contract did not expressly address how long parties reasonably anticipated bench period could last but three to four month bench period would not be unreasonable where employee had spent previous 12 months working and billing almost twice base salary — It was reasonable to use employee's average earnings based on 12 months immediately preceding notice of termination, which incorporated eight months of generous employment and four months on bench