The former executive-director of the Saskatoon Minor Basketball Association (SMBA) has been awarded 19 months’ salary in compensation for termination after a court concluded she was an employee — and not an independent contractor.
R.M., who started working for SMBA in late 2004 or early 2005, held various positions over her tenure, ultimately becoming the executive director. On March 9, 2021, she was informed that her position would be eliminated due to COVID-19-related restructuring.
Although offered a three-month short-term position or the opportunity to apply for a restructured role that required bookkeeping skills she did not possess, R.M. chose to accept the short-term position, which ended on May 31, 2021.
Following her termination, R.M. sought legal counsel and demanded reasonable notice for her termination. SMBA contended that she was an independent contractor, thus not entitled to such notice. This disagreement led to the legal proceedings.
Court’s analysis and decision
Justice Smith of the King’s Bench for Saskatchewan analyzed the nature of R.M.’s relationship with SMBA, examining the contracts and the practical aspects of her role. Despite SMBA’s arguments that she invoiced monthly and claimed GST like an independent contractor, the court found that the association exerted significant control over her work, and she was economically dependent on SMBA.
“I determine there is no reasonable conclusion other than for the entirety of the 16 or 17-year relationship, (she) was an employee of the SMBA,” said Justice Smith. Furthermore, the court acknowledged that even if she was not an employee, she was at least a dependent contractor entitled to reasonable notice.
Justice Smith awarded her 22 months of reasonable notice, deducting three months already served as working notice, resulting in 19 months’ compensation. The court also ruled that the termination clause in her contract, which limited her severance to six weeks, was invalid and unenforceable.
Rejection of additional damages
R.M.’s claim for $50,000 in moral and aggravated damages was dismissed. The court did not find evidence that SMBA acted in bad faith or intended to humiliate MacDonald during her termination process.
R.M. alleged that she was brought on a public call, including “many unknown participants,” and had to decide her own method of termination without warning. She felt blindsided and humiliated by it.
The court said there was “no question” that the termination of her contract could have handled with “more clerical exactitude.”
“Like many businesses, the SMBA suffered because of COVID-19. It is a not-for-profit organization that is always concerned about money. It has no Human Resources Department or any employee that would routinely deal with personnel issues. It is not used to dealing with employee problems,” it said. “I expect its Board of Directors is, for the most part, comprised of volunteers.”
But there was no evidence, or even a suggestion, that SMBA manifested any animus vis-a-vis R.M. the court said.
“The sad fact is that it had to bring a long-term relationship to an end,” it said.
Key takeaways
- Employment vs. Independent Contractor: This ruling reinforces the importance of correctly categorizing workers. Despite contractual language and invoicing practices, the court will examine the total relationship and control exerted by the employer.
- Reasonable Notice: Employers must provide reasonable notice or compensation in lieu when terminating employees, especially those with long tenures. Clauses that attempt to limit severance below statutory minimums are likely to be deemed unenforceable.
- Duty of Good Faith: While the court did not find SMBA liable for moral damages, this case underscores the importance of handling terminations with transparency and sensitivity to avoid potential claims of bad faith.
The full judgment, which also includes an award of $3,000 in costs to R.M., highlights critical considerations for employment agreements and the handling of terminations within organizations.
For more information, see MacDonald v Saskatoon Minor Basketball Association, 2024 SKKB 85 (CanLII).