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.