How Does a Wrongful Dismissal Case Work in Ontario?

What did the court decide?

In terms of deciding on the severance package the was entitled to receive, the court considered the Bardal factors to determine the length of common law notice, including his significant responsibilities as age, 18.5 years of service, role as Vice President of the company, age, his contribution to the corporation’s growth, the obstruction to his re-employment opportunities due to defamatory allegations and the baseless counterclaim for breach of fiduciary duty as reasons why he was entitled to a longer notice period.

The court was specifically upset about the fact that the employer responded to the employee’s decision to start a wrongful dismissal claim by taking aggressive defense and counterclaim against him, alleging just cause and breach of fiduciary duty. In fact, it sought recovery of the eight weeks statutory pay.

After concluding that the employer’s that the employer’s was entirely without merit, the court ruled his termination of employment was without cause and set the period of common law notice to 24 months of severance pay compensation. Specifically, the court awarded the employee with a severance package consisting of 24 months’ pay in lieu of notice ($471,461.68), and due to the employer’s conduct, an additional $50,000 in aggravated/moral damages, $50,000 in punitive damages, and $192,112.19 in legal costs. In fact, the court refused to reduce his “mitigation earnings” of $8,842 he earned after his termination because they were earned from jobs that “were not reasonably comparable to his senior management role with the defendant.”

Additional Compensation for Bad Faith and Punitive Damages 

As a result of the employer’s unfair and egregious conduct leading up to and in the manner in which it carried out his dismissal, the employee was awarded $50,000 in aggravated/moral damages for the manner of his dismissal. For instance, the court found that instead of taking steps to terminate his employment by providing prior reasonable notice or a severance package, the employer “set out to destroy his reputation”. To add insult to injury, the employer continued its unfair behaviour by advanced “groundless allegations of breach of fiduciary duty”, such as an unwarranted counterclaim.

Following a recent trend in Ontario courts scrutinizing an employer’s behaviour towards an employee in wrongful dismissal or constructive dismissal cases, especially when employers bring meritless counterclaim, the court awarded the employee $50,000 in punitive damages. Among other things, the court relied on the following unfair conduct by the employer it found had:

“embarked on a malicious campaign to undermine the plaintiff’s ability to carry out his job functions and attempted to destroy his reputation with customers and clients of the defendant by making bizarre and defamatory statements about the plaintiff, accusing him of criminality and dishonesty, without a shred of justification. She then pursued a baseless counterclaim in this action and maintained her position that the plaintiff was dismissed for cause and sought repayment of the eight weeks severance the defendant paid out at the time of termination. She then caused the defendant to default on the order of this court to appoint new counsel and caused the defendant to abandon the defence of this proceeding and simply chose not to attend the trial with no communication to the court or to plaintiff’s counsel of any kind.”

In doing so, the court quoted a recent Ontario Court of Appeal case called Humphrey v. Mene Inc., 2022 ONCA 531, 475 D.L.R. (4th) 68, where it stated:

“Punitive damages in breach of contract or tort cases are exceptional: their purpose is to punish a defendant for conduct that is reprehensible, and a “marked departure from ordinary standards of decent behaviour”. Whereas damages for conduct in the manner of dismissal are compensatory, punitive damages are “restricted to advertent wrongful acts that are so malicious and outrageous that they are deserving of punishment on their own”: Honda, at para. 62. They should be awarded, in addition to the compensatory damages already awarded, when rationally required to punish a defendant to meet the objectives of retribution, deterrence and denunciation, in an amount no greater than necessary to satisfy these objectives: Boucher v. Wal-Mart Canada Corp., 2014 ONCA 419, 120 O.R. (3d) 481, at para. 79.”

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