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Employer’s Bad Faith Conduct Results in Higher Court Award

by | Jul 8, 2023

In a wrongful dismissal claim called Teljeur v Aurora Hotel Group, 2023 ONSC 1324, an Ontario court awarded the terminated employee seven (7) months’ damages for reasonable notice (financial severance package), in addition to $15,000 in moral damages as a result of the employer’s bad faith conduct in the manner of dismissal.  

This case is the latest illustration of the courts’ increasing willingness to scrutinize an employer’s behaviour during in the process of terminating an employee’s job (typically a stressful and vulnerable time, and hold them accountable for insensitive, uncivil and disrespectful actions. 

Facts

The 56-year old employee worked for the employer as the General Manger of a full-service resort and golf course for nearly 3 years, without having signed an employment contract. In his role, he was responsible for managing all aspects of the resort, including hiring and training employees, managing a team of employees, and managing the company’s marketing initiatives.

During his terminating meeting, two senior executives of the company met with him to advise that his employment was being terminated without cause (a meeting which he had surreptitiously recorded).

As a result of his termination of employment, he sued his former employer for wrongful dismissal, seeking:

1.        A declaration that both of the defendants are common employers and are therefore responsible for any damages for the relief claimed in this action;

2.        Damages for wrongful dismissal based on a reasonable notice of 10 months;

3.        Damages for loss of fringe benefits equivalent to 10% of the damages for reasonable notice;

4.        Expense reimbursement of $16,680.03; and

5.        Moral damages for the breach of the duty of good faith in the sum of $20,000.

The Court’s Decision

(a) Wrongful Dismissal Damages

The court found that, despite the employee’s only 3 years of service, his older age, difficulties he faced in finding new employment, along with the fact that he held a senior management role, he was entitled to a severance package of 7 months pay in lieu of reasonable notice (and 10% of pay in lieu of reasonable notice for loss of benefits).

In an attempt to reduce the employee’s wrongful dismissal severance package, the employer argued that the period of reasonable notice should be discounted because he did not make reasonable efforts to mitigate his damages by seeking alternate employment, specifically because:

  • he did not look long and hard enough for a new job, including only searching for jobs “a couple of minutes in the morning” and “five to ten minutes” on Indeed job website

  • he did not maintain a detailed job search chart

  • he only applied for 3 jobs over a 10-month period 

  • he made his own job search more difficult by making “number of social posts by complaining about” the resort

  • he failed to follow up on job opportunities sent by the employer to assist them in locating and purchasing new properties

The court rejected all of these arguments and refused to reduce the reasonable notice period for failure to mitigate. In the court’s view, he fulfilled his duty to mitigate his damages. Most importantly, the employer did not provide any evidence that to prove that the employee could have found new employment during the reasonable notice period had he made better efforts. From a legal test, the court noted it is generally difficult for employers to prove that an employee failed to mitigate wrongful dismissal damages, which consists of:
– first, proving whether the employee took reasonable steps, and
– second, if such steps had been taken that he would likely have obtained alternate employment

After considering all of the evidence, the court found that:

 “it is apparent… that there is no evidence in this paragraph from which an inference can be drawn that if the plaintiff had applied for other positions he would have been able to obtain comparable employment. I conclude, therefore, that this paragraph does not provide a basis for reducing any award on account of mitigation.”

(b) Moral Damages for Bad Faith Conduct in the Manner of Dismissal

As part of resolving this wrongful dismissal claim, the Court delved deeply into the employer’s conduct in the termination meeting. In doing so, the court relied on the employee’s surreptitious recording. While in many cases the courts have penalized employee’s for surreptitiously recording, this is one (rare) example where a used it to the employee’s advantage because it “highlights a number of disturbing aspects about the plaintiff’s termination.”

After reviewing all of the evidence, the court eventually found that the employer’s conduct was “untruthful, misleading and unduly insensitive” for the following reasons:

  • during the termination meeting, the employee repeatedly asked for confirmation of his termination “in writing” (which is required by the Ontario Employment Standards Act, 2000). While the employer agreed to do so, there was no evidence that it actually gave him notice in writing of his termination (or termination letter).
     
  • the employer failed to provide the employee with his minimum ESA entitlements within 7 days after his employment ended or on the next regular pay date. Instead, the employer had mailed a cheque covering his ESA entitlements more than 1 month after his termination. This was a significant delay that violated the Employment Standards Act, and also meant that he had to go through the holiday season without the benefit of any financial support from his employer.
     
  • the employer failed to reimburse the employee for $16,680.03 that he had incurred as out-of-pocket expenses on behalf of the employer prior to his termination. The Court found this resulted in a very significant financial burden, since it amounted to 23% of his annual income and he was unsuccessful in obtaining alternate employment. As a result, the employer’s refusal to reimburse him violated section 60(1)(a) of the Employment Standards Act, which prohibits employers from reducing the employee’s wage rate or altering any other term or condition of employment during the minimum ESA notice period.
     
  • during the termination meeting, the employer told the employee that he would receive 8 weeks’ severance pay. However, the employer later reneged and only gave him his (lower) minimum entitlements under the ESA.
  • during the termination meeting, the employer encouraged him to resign his employment instead, and told him that “it is better off for you to do it.”

As a result of the above conduct, the Court awarded the employee $15,000 in moral damages, concluding that:

 “in my view, constitute actions by the employer which were untruthful, misleading or unduly insensitive. They constitute a breach by the employer of their duty of good faith and fair dealing in the manner in which the employee was dismissed. I have also concluded that it would be within the reasonable contemplation of the employer that its manner of the dismissal would cause the employee mental distress.

… while there needs to be some evidence to support the requisite degree of mental distress, but it need not be proven by medical evidence. There is no medical evidence in this case to document the stress suffered by the plaintiff. Nevertheless, I am prepared to accept the plaintiff’s evidence that all of the factors enumerated above added significant stress to his life on top of the stress he was experiencing as a result of being terminated.”

Lessons Learned

This latest case, alongside other court decisions in Russell v. The Brick Warehouse LP, Humphrey v. Mene and Pohl v. Hundson’s Bay Company, illustrates the courts’ focus on ensuring employees are treated fairly, honestly and respectfully by their employer during termination. This could mean that courts could make exceptions to accommodate an employee’s tactic that are typically frowned upon, including relying on a surreptitious recording of a terminating meeting, they will do so to hold employers account for bad faith conduct during an employee’s most vulnerable time.

For employers, a prudent strategy would be to – at the bare minimum – fulfill all of their legal obligations under the Employment Standards Act, Human Rights Code and employment contract and, no matter what, to be honest, sensitive and respectful to an employee during the termination.

Employment Lawyer in Toronto

In Ontario employment law, it is important for employees to consult with a 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, 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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