Bad Faith Conduct by Employer Results in Moral Damages

In the recent case called Teljeur v. Aurora Hotel Group, 2023 ONSC 1324, the Ontario Superior Court decision provides an important reminder for employers about always acting with fairly and properly when terminating employees, to avoid having to pay employees moral damages in addition to a severance package.

In this case, an employer operating a golf course decided to terminate the employment of one of its managers on a without cause basis. The manager was 56-years-old at the time of his employment termination and had worked for the employer for 3 years.

Given their previous working relationship, the employee decided to secretly record the termination meeting. In many previous cases, the courts have actually used this to justify an employer’s claim that it had just cause for dismissal because it had not authorized the record. However, in this case, the employee’s recording was accepted as evidence by the court to award moral damages for bad faith behaviour by the employer.

Facts

The employee was informed of the termination of his employment in a closed-door meeting with two senior executives. In the termination meeting, the senior executives made several assurances to the employee, including that the company would provide him with with eight (8) weeks’ pay in lieu of notice, which was greater than his minimum entitlements under the Employment Standards Act, 2000 (“ESA”).

Following his termination of employment, the employee brought an action against the company( and a related company) in a wrongful dismissal claim. In addition to seeking a financial severance package, he sought to use his secret recording of the termination meeting as evidence that the employer treated him in bad faith in the manner of dismissal.

Court Decision

In finding in favour of the employee, the court awarded him seven (7) months’ common law reasonable notice, as well as compensation for unpaid expenses that remained owing to him after his wrongful dismissal.

However, beyond his severance package, the employee was able to successfully convince the court he should be awarded additional moral damages for the employer’s unfair conduct during the employment termination process. Generally, moral damages are awarded by a court to an employee where an employer engages in conduct during the course of a wrongful dismissal that is extremely unfair or is in bad faith being. This could include, for example, an employer being untruthful, misleading or unduly sensitive. On this basis, the court held that moral damages were appropriate in this case because the employer failed to adhere to the minimum statutory termination pay and severance pay requirements under the Ontario Employment Standards Act, 2000, while also not following through on their promises made during the employment termination meeting. The court agreed the employer’s failure to fulfill its promises resulted in the employee experiencing mental distress.

In particular, the court held that the employer acted in a manner that was “untruthful, misleading or unduly insensitive” due to the following “disturbing aspects” of the plaintiff’s termination:

it failed to give the employee written notice of termination after the employee specifically asked on at least three occasions for something “in writing”. This is contrary to section 54 of the Ontario Employment Standards Act, 2000, which requires employers to provide wrongfully dismissed employees with more than three (3) months of service written notice of termination (after completing probation)
The employer failed to deliver the employee’s Ontario Employment Standards Act, 2000‘s minimum legal entitlements within seven (7) days of the day employment ended or the employee’s next regular payday, contrary to section 11(5) of the legislation. The employer’s significant delay in issuing a cheque to the employee meant that he had to go through the holiday season without any financial support from his employer.
The employer failed to reimburse the employee $16,680 for his incurred business expenses, which amounted to nearly 23% of his annual income. This caused the employee a significant financial burden following his termination of employment. In the termination meeting, the employer told the employee he would be paid out “before the next week or so,” but did not do so until trial itself.
In the termination meeting, the employer assured the employee he would receive eight (8) weeks of severance or additional pay, but instead limited the amount paid to his Ontario Employment Standards Act, 2000 entitlement.
In the termination meeting, the employer encouraged the employee to resign (quit) his employment, suggesting to him that “it is better off for you to do it”. The court found this was likely the employer’s attempt to limit how much it has to pay the employee in a severance package given his wrongful dismissal claim.

Key Takeaways for Employers

While generally frowned upon by the courts, there are cases where an employee’s secret (surreptitious) recording of an employee’s termination meeting will be allowed as evidence in court, particularly when it is used to prove an employer’s bad faith conduct in the manner of dismissal. This is due to the courts’ increasing focus on ensuring employers do not mistreat employee’s when terminating their employment, which is usually a highly vulnerable and stressful time. For instance, besides this case, a recent case called Pohl v Hudson’s Bay Company, 2022 ONSC 5230 led a court to award an employee in a wrongful dismissal claim significant compensation of $55,000 in moral and punitive damages for the employer’s conduct during and after the termination (in addition to their severance package).

Call an Employment Lawyer in Toronto

For an employee who believes they were wrongfully dismissed, it is important to speak with an experienced Toronto wrongful dismissal lawyer as soon as they are told by an employer that their employment will be terminated. If you are an employee who believes you have been wrongfully dismissed and the decision to terminate was unjust or discriminatory, please speak with our experienced wrongful dismissal lawyer in Toronto regarding your options, including negotiating your severance package to obtain the severance compensation you deserve, as well as wrongful dismissal claim.

Contact us by phone 647-822-5492 or fill out the contact form to the side. Our employment lawyer in Toronto would be happy to assist in your employment law matter as quickly as possible.

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