Workplace Dalliances Can Produce Legal Consequences

A 2014 decision by the BC Supreme Court demonstrates that workplace romance – though not unlawful – can produce legally consequential results. This is particularly so where the liaison involves management and an employee, and the workplace relationship subsequently breaks down.

In Shirbigi v JM Food Services Ltd, the Plaintiff was promoted to the position of district manager on a three-year, fixed-term contract with FreshSlice, a pizza franchisor. The position initially required the employee to oversee 16 franchises in the Lower Mainland.

However, her time as district manager was a period of rapid expansion for FreshSlice, and seven additional franchises were assigned to her without change to the terms of her contract. This resulted in the employee paying additional out-of-pocket expenses with no corresponding increase in remuneration. Complicating matters further was the fact that the Plaintiff and the owner/CEO of the company engaged in an extramarital affair. The Court heard evidence that after the Plaintiff was promoted, the CEO sent an email congratulating her and suggesting that they meet for coffee, brunch, or a hike. Although they agreed to a hike, they instead went to his apartment and engaged in sexual relations. The relationship progressed to the point where the employee moved into an apartment owned by the CEO, and the two went on romantic weekends together to Toronto and Niagara Falls. The extramarital relations ceased when the CEO became concerned that his wife would discover his infidelity. The Plaintiff testified that after the affair ended, the CEO became critical of her work performance and it became obvious that he did not want her around any longer.

The Plaintiff was later informed that three new district managers had been hired and, once they were trained, she would be moved to a position of lesser responsibility in the company. She was offered the position of store manager at a struggling FreshSlice franchise owned by the CEO’s brother. The Plaintiff did not take the position, and instead left her employment 15.5 months into her 3-year-term contract to pursue legal action against the company. At trial, the company took the position that the Plaintiff expressly requested to be relieved of her duties as district manager and assigned a store manager position. The Court did not find this position credible, and instead determined that when the employee launched justifiable complaints about the increasing number of stores under her supervision without any related increase in compensation, the company addressed the matter by terminating her.

The Court also found that the Plaintiff’s presence in the head office would be awkward for the CEO in light of their sexual history and his wife’s impending return to work from maternity leave. Although the CEO denied initiating the affair, and stated that his selfless nature motivated him to go on trips with the Plaintiff and arrange an apartment for her, the Court concluded that there had been a sexual relationship between the parties, commenting that “there has been no suggestion that [the Plaintiff ] was in desperate need of a coffee, a meal, or a hike with him, at the time.” The Court also found that the employee had not failed to mitigate her damages by refusing the store manager position with the company. The Court found the position to represent a significant negative change in responsibilities and working conditions that the Plaintiff was not required to accept.

By way of remedy, the Plaintiff was awarded the balance of the fixed-term contract and costs. While workplace affairs will not inevitably lead to the breakdown of an employment relationship, this case exemplifies how such liaisons – particularly those involving employers and individual employees – have the potential to lead to serious legal issues.

A reprint courtesy of: Mathews Dinsdale & Clark LLP. The information provided in this article is necessarily of a general nature and must not be regarded as legal advice. For more information about Mathews Dinsdale & Clark LLP, please visit mathewsdinsdale.com.