Employment Law 2
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BUAD 374 Employment Law – Fall 2020
Assignment #2:
This assignment will be marked out of 10. It is due on Friday, November 13,
2020.
Simon is the Chief Executive Officer of Drunken Donuts (“DD”), a company that
operates franchised coffee and pastry shops throughout British Columbia and
Alberta. The production wrinkle that marks DD as unique is that its pastries –
donuts primarily – are dipped in non-alcoholic beverages, which gives them an
especially invigorating flavor.
The head office for the company is located in Kelowna. It is the premises where
all the senior managers and staff for the company go to work.
Five years ago Simon hired Melvin to be the Vice-President of Franchising at DD,
at an annual salary of $200,000.00, together with a bonus percentage payable if he
exceeded his annual budget target for revenue collected, access to the company’s
group medical and dental health benefits plan, the use of a luxury automobile, and
a gym membership.
Melvin’s job was to manage the identification and qualification of potential
franchisees, and to see that they purchased franchises.
The principal source of income for DD is royalties and franchise fees collected
from the various independently franchised DD retail locations. Senior
management has always considered it vital for the company’s success that once
budgets are fixed, they must be maintained. Failures to meet budgeted targets are
not tolerated.
In each of the first four years of his employment with DD Melvin met or barely
exceeded his budgeted financial targets. His bonus percentage payments were
therefore minimal. Each year the company raised Melvin’s budgeted targets by
2%. Melvin never objected.
Last year, Melvin’s budgeted target was again raised by 2%. Again, Melvin did not
object.
Six months into the budget year, it became obvious that Melvin would not meet his
target. Simon sent memos to Melvin expressing serious disappointment regarding
his apparent inability to meet his target. Melvin responded, stating that he was
concerned his performance was being so carefully monitored, and that it appeared
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“a case was being built against him.” Simon assured him that this was not the case,
but reaffirmed that the budget targets needed to be met.
At year’s end, it became clear that Melvin’s production had fallen below his target
by 10%. Simon was very unhappy, but his interactions with Melvin remained
cordial.
Assume you are the Human Resources Director at DD. Simon comes to you and
says he wishes to advise Melvin, immediately, that his salary will be reduced by
10% for the coming year, to reflect the failure to meet his budgeted target. That
will mean that Melvin will earn $180,000.00 in salary, instead of $200,000.00.
Simon says that all the other aspects of Melvin’s compensation package will
remain the same. Alternatively, Simon says that if Melvin does not wish to
continue as Vice-President of Franchising under these terms, Simon is prepared to
offer him a middle management position with less responsibility, at an annual
salary of $125,000.00, and a continuation of his other compensation benefits.
Simon also tells you he wishes to keep Melvin as an employee, but he wants to
find “the best fit” for him.
Prepare an opinion memorandum for Simon. It should be 5-6 pages long, inclusive
of any cover page, using 12 point type, and 1.5 line spacing. You should refer to
any binding statutory provisions that are applicable to this case. Your memo
should also include references to, and a discussion of, at least three binding or
persuasive decisions of courts or tribunals that would be relevant when considering
the issues raised in this case. Preference should be given to decisions of the
Supreme Court of Canada, or the courts and tribunals in the province of British
Columbia, if possible.
The memorandum should be in the form that you would deliver to a superior if you
were sitting in your shoes in this real world example. It should be a professional
piece of work. You will know, for example, that if there is litigation resulting from
Simon’s decision relating to Melvin, your memorandum may be disclosed to him,
and to the decision-maker adjudicating the matter, during the course of those
proceedings. You will need to identify the specific legal issues that Simon needs to
address in his decision regarding Melvin, as well as the legal tests that courts and
tribunals will apply in British Columbia in order to resolve them.
You will also need to set out a plan of action for Simon in order for him to meet his
legal obligations in this case. That plan of action must discuss in detail the legal
issues, and the legal tests that are applicable to the situation presented. You will
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also need to communicate precise recommendations to Simon, and give convincing
reasons for them, having regard to the relevant legal principles.
Please submit your assignment to Turnitin by midnight on November 13,
2020. Instructions for uploading your assignment (as a Word document only,
not a PDF) have been posted in the Moodle shell for this course.
Please note that I will deduct one full mark from the final grade for this
assignment for every day the assignment is submitted late.
Please note further that all students must prepare and submit this assignment
in order to pass the course.