In an article published on August 2, 2022, "A job for life: Not just for laughs!", Langlois commented on a decision of the Superior Court of Quebec written by the Honourable J.S.C. Marc Saint-Pierre according to which an employee should be reinstated in his job because he had a job "for life"1, despite consistent and unanimous case law that the Superior Court does not have the power to order the reinstatement of an employee in a strictly civil proceeding. However, the Quebec Court of Appeal, in a decision dated February 8, 20242, overturned the Superior Court's decision and added a few interesting twists.
The decision of the Superior Court in brief
Mr. André Gloutnay ("Mr. Gloutnay"), a former employee of Just for Laughs Group Inc. (the "Employer") was dismissed in 2019 after 25 years of service at the age of 53, with severance pay equivalent to 12 months' salary. Believing that he had received a promise of employment "for life" from the former president, Mr. Gilbert Rozon, the employee sued the Employer in order to be reinstated. The Court examined the validity of the "for life" employment guarantee and concluded that the parties' intention was to create a unilateral obligation for the employer which it was bound to maintain. Despite the argument whereby reinstatement is not usual when the position no longer exists, the Court ordered Mr. Gloutnay's reinstatement, given the Employer's unilateral undertaking to maintain his employment "for life".
Dramatic note — the Court of Appeal
The sui generis contract
The basic principles of individual employment contracts are well known: in accordance with the provisions of the Civil Code of Québec, the employment contract is for a fixed or indefinite term3. In the case of a contract of indefinite term, the parties are given the option to terminate the contract by giving the other a reasonable period of notice, taking into account the nature of the employment, the circumstances and the duration of the employment4. Conversely, for a fixed-term contract, the parties are legally obliged not to proceed with termination without a serious reason prior to the agreed expiration date.
Nevertheless, the Court of Appeal held that Mr. Gloutnay's contract did not fit into these usual classifications. According to the interpretation of the three judges hearing the appeal, the contract in question is sui generis, i.e. it represents a configuration that deviates from pre-established standard typologies. During the negotiation of this contract, the Employer explicitly waived its right of unilateral termination by undertaking to provide employment "for life" in exchange for the acquisition of rights to all of Mr. Gloutnay's archives, which according to the Court are valid stipulations that do not contravene the principles of public order.
The moral damages
The Court of Appeal's decision reiterates that an award of moral damages requires the employee to demonstrate unreasonable conduct on the part of the employer compared to that of a prudent and diligent employer in similar circumstances. The employee must show fault that results in harm beyond what would normally result from the termination of an employment contract. In the Court of Appeal's view, the reasons given by the Superior Court judge for concluding that moral damages were to be awarded were directly related to the termination of employment. In the absence of a fault distinct from the mere severance of the employment relationship, the trial judge could not accuse the Employer of having behaved casually or cavalierly.
The Court of Appeal therefore set aside the Superior Court's order awarding Mr. Gloutnay $20,000 in moral damages.
Reinstatement as reparation?
The Court of Appeal, while recognizing a guarantee of employment "for life", nevertheless reversed in part the judgment of the trial court regarding Mr. Gloutnay's reinstatement with the Employer, finding that this measure was inappropriate. In the reasons of the Honourable Justice Marcotte, with which the Honourable Justices Hogue and Moore concurred, the Court of Appeal noted that the intuitu personae nature of the employment contract linked to Mr. Gloutnay's unique skills and the obsolescence of his position did not make reinstatement desirable. Thus, the Court concluded that it was impossible to reinstate Mr. Gloutnay, but did not rule out the possibility of doing so in other circumstances. It will be very relevant to monitor the jurisprudential developments that follow this decision, because it has always been clear to all that superior courts do not have the power to order reinstatement in the context of proceedings under the Québec Civil Code, unlike administrative judges of the Administrative Labour Tribunal when they hear complaints under the Act respecting Labour Standards.
As Mr. Gloutnay was not reinstated, the Court assessed the compensation owed to him. The Court concluded that the Employer would be required to pay compensation equal to the income that Mr. Gloutnay would have received from the date of his dismissal until his presumed retirement age, i.e., age 65. This is a significant departure from the usual practice of calculating notice or severance pay applied in a more traditional context.
As a result, the Court of Appeal awarded Mr. Gloutnay, whose annual income was $60,000, a total of $660,500. This amount represents the equivalent of 10.75 years' salary, after deduction of amounts paid by the Employer.
It should be noted that interest at the legal rate and the additional statutory indemnity must be added to this amount and will, in this case, be calculated as of the expiry of the notice period offered to Mr. Gloutnay by the Employer upon his termination of employment, i.e., February 7, 2020. Between 2020 and 2024, the legal interest rate5 varied between 5% and 10%, which will certainly have a substantial impact on the amount to be paid by the Employer.
This ruling and the economic consequences that can result from it on a company6 should serve as a reminder for employers to be vigilant in drafting employment contracts. If you have any questions about the foregoing, please do not hesitate to contact a member of our labour and employment law team.
Footnote
1. Gloutnay c. Rozon, 2022 QCCS 2578
2. Gestion Juste pour rire inc. c. Gloutnay, 2024 QCCA 156
3. Article 2085 of the Civil Code of Québec
4. Article 2091 of the Civil Code of Québec
5. Tax Administration Act, CQLR c A-6.002
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