A recently dismissed Starbucks store manager who made an inappropriate comment to a non-binary employee was awarded eight months’ reasonable notice in a wrongful dismissal case heard by the Court of King’s Bench of New Brunswick.
The court determined that R.M., a 50-year-old store manager with approximately seven years and seven months of service, was entitled to reasonable notice despite being terminated for commenting “Is that going to fit the girls?” when a non-binary employee requested a medium-sized t-shirt during a training program.
Background
R.M. began working for Starbucks in Toronto in February 2015. During the COVID-19 pandemic, he relocated to Fredericton, New Brunswick, at Starbucks’ suggestion when the company was considering closing several Toronto locations.
In September 2022, while overseeing a training program where staff received t-shirts, several female employees returned medium-sized shirts as too small. When a non-binary staff member later requested a medium shirt, R.M. made the inappropriate comment, which he acknowledged was synonymous with “breasts.”
The staff member filed a formal complaint, prompting Starbucks to investigate in October 2022. The investigation concluded R.M. had breached the company’s anti-harassment standard, and he was terminated without cause on November 10, 2022, for “violation of standards of business conduct.”
Notice period determination
The court examined several factors in determining the reasonable notice period, including R.M.’s age, length of service, education, employment history, and position.
“Having regard to the Bardal factors outlined above and reviewing the cases submitted by the parties, I conclude that the reasonable notice period for Mr. MacDonald is 8 months,” the court stated.
Failure to mitigate?
Starbucks argued that R.M. failed to mitigate his damages by not actively seeking employment between November 2022 and February 2023, and again from May to September 2023.
R.M. testified that his persistent depressive disorder (PDD) prevented him from job searching during the first period, and that his symptoms continued into the second period when he focused on home renovations to attract renters to help with his financial situation.
Despite Starbucks’ argument that R.M. provided no expert medical evidence to support his claim, the court accepted R.M.’s testimony, which was supported by evidence of therapy sessions and prescription medications.
“I am satisfied that Mr. MacDonald was suffering mental distress that precluded his ability to seek alternative employment,” the court wrote. “Courts have recognized that a dismissed employee may require an amount of time to recover from the emotional upset from termination.”
The court concluded that R.M. made reasonable efforts to find alternative employment given his capacity, noting he applied for eight jobs and regularly conducted internet job searches during the notice period.
Bonus entitlement
The court ruled that R.M. was not entitled to damages for lost bonus income during the notice period due to clear language in the company’s Retail Store Management Incentive Plan (RMIP).
The court applied the two-part test from Matthews v. Ocean Nutrition Canada Ltd., determining that while the bonus was an integral part of R.M.’s compensation, the RMIP unambiguously restricted his common law right to bonus payments.
“The language of the RMIP is clear: one is entitled to a prorated bonus if termination is due to death, disability or retirement but no bonus is payable otherwise. Further eligibility for a bonus is forfeited upon engaging in misconduct,” the court explained.
“Read as a whole, the RMIP ‘anticipated the very event that occurred,’ being Mr. MacDonald’s termination without cause for misconduct.”
Fringe benefits
On the issue of fringe benefits, the court awarded R.M. damages for:
- CPP contributions ($3,754.45)
- Out-of-pocket prescription medication and psychotherapy expenses that would have been covered by group benefits ($1,513.47)
- RRSP contributions (4% of salary, totalling $2,042.80)
However, citing precedent that “a terminated employee receive any statutory vacation pay to which they are entitled upon termination, but no further vacation pay during the notice period because they are expected to take time off during that period,” the court denied R.M.’s claim for vacation pay during the notice period.
Final award
The court awarded R.M. a total of $52,251.02 in damages, calculated as:
- 8 months’ salary minus 4 weeks’ termination pay already paid: $44,940.30
- CPP contributions: $3,754.45
- Loss of group benefits: $1,513.47
- RRSP contributions: $2,042.80
The award also included interest at 4% per annum from the date of termination.
For more information, see MacDonald v Starbucks Coffee Canada Inc., 2025 NBKB 67 (CanLII).
