Okay, throwing this out there for debate in the escalating frenzy. A senior lawyer with experience in labour law wrote me the following. You’ll have to take my word for it that this is a senior lawyer and not, say, Mike Magee. But I swear on my book of UBCM resolutions that it is. Based on what he has written, looks like Penny Ballem could actually have tried to argue to get $700,000, not $550,000.
There are a couple of points that need to be made (and aren’t being made) in the public discussion about Penny Ballem’s severance.
First, Ballem’s contract is available on the internet (just search for Penny Ballem employment contract). No guarantee of authenticity, of course, but it sure looks like the real thing. It’s dated 2009. It contains clauses providing for dismissal with and without cause. The contract very clearly provides that if she is terminated without cause she is entitled to 12 months’ severance plus 2 months for every completed year thereafter. Doing rough math, it’s been six years since 2009, so that makes 12 months on top of the original 12 months. So it looks like her contractual entitlement was to 24 months. Certainly it was at least 20 months. That was the deal she made and the City agreed to when she took the job on. Frankly, it’s the kind of deal I would tell a client in circumstances similar to Ballem to insist upon, given the risks associated with such a high profile position. So there’s no surprise here. It looks like the City is actually paying Ballem less than she is entitled to.
Second, at common law, an employee who is dismissed without cause is entitled to “damages in lieu of notice.” The amount depends upon things like the responsibilities of the job, the length of service, the age of the employee, and so on. The senior executive of a billion dollar a year plus organization with thousands of employees etc. etc. who is fired without cause at age 65 or thereabouts would ordinarily be entitled to at least 24 months’ severance. Certainly more than the 20 months she will be paid.
You might want to argue that Ballem was overpaid while she was city manager, but it looks as though her salary was comparable to other big city managers in Canada. The real point here is simply that the arrangements for her severance were made when she was hired, they were the basis upon which she agreed to take the job and the City was able to hire her. So there is no surprise that, having decided to terminate her without good reason, the City is obliged to pay her what they promised six years ago.
11 responses so far ↓
1 Mike // Sep 23, 2015 at 3:34 pm
But… I wanted to have my cake (hating on Ballem as city manager) and eat it too (hating on Gregor for firing her).
What am I supposed to do with the pitchfork, Bula?!?!?!?
2 IanS // Sep 23, 2015 at 4:06 pm
I’ll bite. 🙂
The first part of the comment seems to be simple math. I haven’t read the contract, but 12 months severance + (2 months / yr * 6 years) does = 24 months. If she was terminated without cause and if the contract provides for such notice, then, yes, she is entitled to 24 months notice.
(As an aside, that being the case, I wonder why she would agree to accept less than the amount to which she’s contractually entitled.)
As for this: “Frankly, it’s the kind of deal I would tell a client in circumstances
similar to Ballem to insist upon, given the risks associated with such a
high profile position”, absolutely. If a client is able to obtain a contract which provides for notice on those terms, they should take it.
However, I’m not so certain I agree with the conclusion that Ms. Ballem would automatically have been entitled to 24 months notice at common law.
An employee dismissed without cause is entitled to damages in lieu of notice. The traditional factors a court will take into account in determining the appropriate notice period are the character of the employment, the length of service, the age of the employee and the availability of similar employment. Application of these principles in the case of Ms. Ballem would support a substantial notice period, without doubt.
However, the factor of “character of employment” (ie. the seniority of the terminated employee), a point highlighted by the commentator, is significantly less important now than it used to be. Given the relatively short period of service (six years), I am doubtful that Ms. Ballem would be entitled to damages based on a 24 month notice period. In the case of a common law claim, there would also be a duty to mitigate which would, in all likelihood, reduce the notice period.
Having said that, I have no difficulty with the proposition that Ms. Ballem is entitled the severance set out in her employment contract.
3 Kevin // Sep 23, 2015 at 5:12 pm
At the end of the clause 2.4 of her contract it says that she gets 2 months additional sevarance per year to a maximum of 20 months.
4 IanS // Sep 23, 2015 at 6:04 pm
That explains the 20 months then. 🙂
5 francesbula // Sep 23, 2015 at 7:42 pm
Well, that was a short-lived bit of excitement. My lawyer friend can’t believe he didn’t see that.
But his comments, that the city/Vision willingly signed this contract seven some years ago, still stand, I think.
6 Kevin // Sep 23, 2015 at 8:35 pm
Yes, I imagine your lawyer friend is feeling a bit sheepish (especially after you talked up his seniority and credibility)
7 francesbula // Sep 23, 2015 at 8:39 pm
And I didn’t check the contract myself, was inclined to believe it could be so, because I had heard that when Ballem first heard the suggestion from the mayor’s office that she gracefully retire, she told them it would cost a million to pay her out. I was actually surprised when I saw that it was only $556,000.
8 IanS // Sep 23, 2015 at 9:31 pm
In my experience, it’s usually the junior lawyers who actually read the documents and brief them for senior guys. 🙂 So it’s an easy mistake to make.
9 peakie // Sep 24, 2015 at 10:04 am
Barbara Yaffe: Vancouver’s severance too generous
Taxpayer tally: Other city managers in Canada make the same amount, but have contracts with term
By Barbara Yaffe, Vancouver Sun September 23, 2015
Last paragraphs:
Read more: vancouversun.com/news/barbara+yaffe+vancouver+severance+generous/11383725/story.html
10 Everyman // Sep 25, 2015 at 8:28 am
Far too generous. And doesn’t the City have a set retirement age?
11 Marilyn Michaels // Sep 25, 2015 at 8:32 am
There is no set retirement age. In fact, the Province doesn’t have a set retirement age as of January 1, 2008.