Category: Wrongful Dismissal

Categories
Constructive Dismissal Wrongful Dismissal

Mitigating Damages in Wrongful Termination: Understanding Your Obligations

When a person is terminated from their employment, they are generally entitled to compensation in the form of termination and severance pay. If there is no employment contract or the applicable contract is invalid, appropriate damages are typically awarded by what the court assesses as the ‘reasonable notice’ period. However, damages for wrongful termination may be reduced in certain circumstances, including when the wrongfully terminated employee fails to mitigate their damages appropriately.

This begs the question: what constitutes the duty to mitigate in the employment context? In other words, what expectations exist of employees who have been wrongfully terminated to mitigate their damages?

In this blog, we explore the duty to mitigate in the employment context, including what the duty entails, who bears the burden of proving that the duty has been fulfilled, and the consequences of failing to satisfy the duty appropriately.

Dismissed Employee Seeks Damages for Wrongful Termination

The case of Wilds v 1959612 Ontario Inc. involved a plaintiff who had been terminated from her position as an executive assistant of the respondent employer after only 4.5 months of employment. Her termination was carried out without cause or notice. The plaintiff, who was 52 years old at the time of the termination of her employment, commenced a claim before the Ontario Superior Court of Justice in which she sought damages for wrongful termination of her employment, including reasonable notice damages, reimbursement of business expenses she had incurred on the behalf of the defendant employer before her termination, and additional punitive and mental distress damages.

The employer countered that the employee was not entitled to reasonable notice damages because she had been provided pay in lieu of notice and further argued that, in the event the former employee was found to be entitled to reasonable notice damages, some amount should reduce such damages to compensate for the plaintiff employee’s failure to mitigate her damages adequately.

Defining the Duty to Mitigate in the Employment Context

In the employment context, the duty to mitigate encompasses an obligation on the part of the departing employee to undertake reasonable efforts to find reemployment comparable to the position from which they were terminated. This is because the departing employee is expected to limit the damage suffered from losing their employment, whether wrongfully or for just cause.

Importantly, comparable employment has been defined by the court to encompass any employment similar to the position from which the employee was dismissed in terms of compensation, status and hours of work.

The Test and Burden of Proof for Mitigation

The burden of proving that a particular employee has failed to undertake adequate mitigation of their damages is borne by the employer, who must prove their assertion on the balance of probabilities, which means a certainty of 51 per cent.

The test for mitigation is bifold and mandates that the employer prove two things: that the employee in question failed to make suitable, reasonable efforts to mitigate and that, had the employee undertaken such reasonable efforts, then the employee in question would have secured comparable alternative employment (i.e., comparable employment was available to the employee, if only they had made efforts to find it).

The burden cannot be discharged simply because the employer makes bald assertions that the employee failed in their duty; rather, the employer must prove that the employee failed to undertake sufficiently reasonable efforts and that, had they done so, they would have secured alternate employment. Thus, even if it can be demonstrated that a terminated employee made absolutely no efforts to find reemployment, this conclusion would have no bearing on the damages awarded unless the employer can successfully demonstrate that, had the employee undertaken reasonable efforts, there were jobs they would or could have been hired for, given their expertise and skillset. As such, and as noted by the courts of Ontario on numerous occasions, the burden is not insubstantial and requires significant evidence on the employer’s behalf.

Did the Employee in this Case Successfully Mitigate her Damages?

In the case at hand, the court was satisfied, upon thorough review of all of the evidence, that the employer had not adequately demonstrated that the employee failed in her duty to mitigate. In particular, the court noted that the employer provided no evidence to support the contention that the employee would have likely secured comparable employment in the months immediately following her termination if only she had undertaken certain steps. Rather, the employer had merely provided a list, attached to an affidavit, of job searches for executive assistant positions within two different time frames; no explanation was provided regarding when or how the search was conducted or from where it had been obtained. Moreover, the printed list omitted full descriptions of the positions listed, making it impossible to determine whether such positions constituted employment comparable to that the employee had enjoyed when working for the defendant’s employer.

The court also noted that the employer, in this case, had persistently refused to provide the employee with a letter of reference or even a letter to simply confirm her employment, which had impeded the employee’s job search in that she had no reference in respect of this period of her curriculum vitae. Furthermore, the employee provided a thorough, extensive ‘mitigation journal’ detailing her months-long job search, including companies and positions she applied to and the dates corresponding to them. In light of the employee’s extensive evidence of her efforts to mitigate and the lack of evidence on behalf of the employer that there were jobs the employee could have secured if only she had undertaken appropriate efforts, the court was satisfied that the employer had failed to prove a lack of mitigation effort on the employee’s part. As such, the employer’s argument concerning mitigation was dismissed as meritless.

Contact Haynes Law Firm for Experienced Employment Law Advice

If you find yourself facing an employment-related issue, whether it involves constructive or wrongful termination, interpretation of an employment contract, or employment discrimination, then you need legal advice to help guide you through the complicated legal process.

At Haynes Law Firm in Toronto, we provide knowledgeable, strategic legal advice to ensure that your rights are protected and your interests advanced throughout the legal process. Contact us online or by telephone at (416) 593-2731 to schedule a consultation today.

Categories
Employee Terminations Wrongful Dismissal

Employer Ordered to Pay Former Employee Damages After Providing Defamatory Reference

Can an employer give a former employee’s prospective employer a negative reference? The Ontario Superior Court of Justice recently grappled with this question in a case where an employee suspected of engaging in fraudulent transactions resigned from his position and sought work in the same industry. However, the employee’s former employer advised prospective employers of how the employee’s role ended when conducting a reference check. The issue was that the former employer did not have evidence of the employee’s suspected wrongdoing to support this negative reference. 

Employee Subject of Fraud Investigation; Resigns From Job

In the case of Gary Curtis v. Bank of Nova Scotia, the plaintiff employee (the “employee”) had been employed by the defendant employer (the “employer”) for 12 years and was a top mortgage salesperson in Toronto. In April 2012, the employer commenced an investigation after learning of allegations that the employee had accepted and relied on customer documentation, which included fraudulent information. It was also alleged that the employee had accepted referrals from mortgage brokers, which he was not permitted to do because another section of the bank’s mortgage department handled them. 

The employee was suspended with pay pending further investigation of “procedural irregularities.” However, since the employee was on 100% commission, it was unclear how this differed from a suspension without pay. The employee subsequently resigned as he was unsure how long we would be left without any income. He subsequently sought employment at the bank’s competitors. However, this made it easy for the employer to conclude he left to escape or “outrun” a fraud investigation.  

Employee Makes Claim for Defamation Against Employer

The employer accepted the employee’s resignation and closed his employment file with the code “ineligible for rehire.” On May 3, 2012, the investigator-initiated a “SIFT” alert on the Bank Crime Prevention and Investigation Office (BCPIO) of the Canadian Bankers Association (CBA) database. This alert indicated “strong evidence” suggesting that the employee knowingly uttered fraudulent documents on several mortgage applications and highlighted that he had resigned during the investigation.

The employee received job offers from several major banks. In each case, the prospective employer contacted the employee and was told that the employee had “submitted fraudulent documentation in support of mortgage applications.” Accordingly, the job offers were withdrawn. The SIFT alert at the CBA was also maintained for seven years, which prevented the employee from securing a new job in the same industry. During this time, the employee made multiple attempts to have this alert lifted; however, his efforts were unsuccessful. 

Ultimately, the employee commenced a claim for wrongful dismissal or constructive dismissal and defamation against the employer. However, the employee withdrew the employment law claims and amended the claim, reducing the case to one founded in defamation. The employee sought general damages of $10,000,000, aggravated damages of $3,000,000, special damages of $3,000,000, and punitive damages of $2,000,000.

Court Rejects Bank’s Defences of Justification and Qualified Privilege

The Court noted that the employee’s status as “not eligible for rehire” was “not defamatory as an internal statement, and there was insufficient evidence of the bank having communicated it outside its own organization.” The Court did note, however, that “[h]ad the SIFT alert not been requested unjustifiably by the bank investigator, the inference can be drawn, as invited by the bank in defence of the damages case, that the plaintiff could have accepted any of the three employment offers he received in May 2012.”

Thus, while the bank did not defame the employee by internally noting that he was ineligible for hire, “the report to BCPIO for inclusion on the SIFT database, as well as the communications to inquiring employers that [the employee] had submitted fraudulent mortgage documents, established prima facie liability on the part of the bank. The bank conceded this, and it relied on the two defences.”

Defence of Justification

The employer advanced the defences of justification and qualified privilege. However, upon reviewing the investigation, the Court determined that the employee did not engage in wrongdoing. Moreover, the investigator concluded their investigation after only reviewing one of the employee’s allegedly problematic files. 

Thus, the Court rejected the employer’s defence of justification after finding that the employer failed to prove the truth of its statement about the alleged fraudulent behaviour. It was also determined that the investigation should have continued even after the employee submitted his resignation and commenced the claim against the employer. 

Defence of Qualified Privilege

The Court also rejected the employer’s defence of qualified privilege, which allows a person in a position of authority to make a statement that would otherwise be defamatory if the statement was made without malice. This came after the Court found that the employer had failed to prove its actions were made without malice. Given the inconclusive investigation, the employer did not have reason to believe that the plaintiff had committed fraud. 

The Court held that the employer’s failure to retract the libel, despite knowing its negative impact on the employee’s future job opportunities, constituted malice. The Court noted that employers treat litigation as a “cloak for freezing activity.” However, “litigation is the time to investigate, investigate, and investigate.”

Employee Awarded Substantial Damages

The trial judge concluded that the evidence, at its highest, showed that the employee broke the employer’s policies and failed to exercise due diligence; alternatively, the employer acted with malice. Ultimately, the Court ordered the employer to pay damages to the employee in the following amounts:

  • $175,000.00 in general and aggravated damages to account for the personal harm suffered by the employee as a result of the employer’s conduct;
  • $475,000.00 for special damages to compensate the employee’s lost earnings following his resignation, although this award could have been higher as the employee’s evidence was unsupported by any labour market expert evidence; and 
  • $200,000.00 in punitive damages to demonstrate the need for accountability in this case and to deter employers from engaging in similar conduct. In this case, the defamation impeded the employee’s future employment prospects and was harmful due to the importance that employment places on one’s personal identity and social status. 

Contact Haynes Law Firm in Toronto for Trusted Legal Advice on Wrongful and Constructive Dismissal Claims 

The trusted employment law team at Haynes Law Firm in Toronto helps employees and employers resolve their workplace disputes as efficiently and effectively as possible. We work closely with each client to understand their circumstances and identify the most advantageous path to address employment-related issues through mediation, arbitration or litigation when necessary. We are dedicated to finding the best resolution for you.

To book a confidential consultation, please contact us online or by phone at 416-593-2731.

Categories
Wrongful Dismissal

When Can Harassment of An Employee Result In Punitive Damages?

In a wrongful termination, employers must provide reasonable notice or pay in lieu of notice. In addition, employers may be liable for aggravated or punitive damages, depending on the manner of dismissal. In other words, the employment relationship can end on poor terms, so employers need to consider how they are terminating the employee, as it could result in additional damages beyond the reasonable notice period. The aggravated or punitive damages can also be as significant as several thousands of dollars. In particular, bullying and harassment at the time of termination could mean that the employer needs to pay aggravated or punitive damages. However, it can be difficult to pinpoint exactly what kind of behaviour by the employer would warrant punitive damages.

In this post, we will discuss when harassment of an employee may result in aggravated or punitive damages. In particular, we will examine the test for when aggravated or punitive damages may arise in a wrongful dismissal, including its relationship to the manner of dismissal during a termination. We will also discuss what evidence needs to be provided for punitive damages based on harassment or bullying at termination. To illustrate these principles, we will discuss a case example, Chin v Beauty Express Canada Inc., 2022 ONSC 6178, in which the court found that insensitive comments at the time of termination did not rise to the level required to find that aggravated or punitive damages were necessary. This post will provide important takeaways for employers seeking to understand their obligations during the time of termination and for employees seeking to understand their rights for wrongful dismissal.

Manner of Dismissal in Wrongful Termination

Aggravated or punitive damages can arise when an employer breaches their duty of good faith when terminating an employee. These types of damages are often raised in wrongful dismissal cases. The court will examine the way that the employer dismissed the employee. In particular, if the manner of dismissal caused injury to the employee, the employee can be compensated with aggravated or punitive damages on top of the reasonable notice period or amount that they are entitled to upon termination.

This also raises the question of what period of conduct is included in assessing the manner of dismissal in a wrongful termination. In particular, the court can consider conduct beyond the exact moment of termination for aggravated or punitive damages. In other words, pre-termination and post-termination conduct may be relevant for assessing whether the manner of dismissal warrants aggravated or punitive damages.

Mental Distress Required for Punitive Damages Based on Harassment or Bullying

Employers have a duty of good faith to protect employees from bullying, intimidation, and harassment from managers. The employee is responsible for showing that they suffered a loss to be compensated for aggravated damages. Some evidence must demonstrate that they suffered from compensable injuries to prove this. Injuries can include humiliation, embarrassment, and damage to the employee’s self-esteem and sense of self-worth. Providing medical evidence of negative psychiatric impacts is not required to find that aggravated or punitive damages are appropriate.

To find that aggravated or punitive damages are necessary, there must be something more than hurt feelings arising from the termination. This is because hurt feelings are commonly associated with termination, and these are considered to have always been contemplated by the parties at the time that they entered into the contract.

Some examples of when aggravated or punitive damages may be available include situations where:

a)    the employer is attacking the employee’s reputation;

b)    there is misrepresentation over the reason for the dismissal;

c)     the dismissal is meant to deprive the employee of a benefit such as a pension benefit, immigration status, etc.

Punitive Damages for Wrongful Dismissal Generally Rare

Generally, aggravated or punitive damages in wrongful dismissal cases are rare. In particular, punitive damages exist to punish harsh, reprehensible, and malicious conduct. They are also meant to prevent employers from conducting similar acts in the future, as significant costs are associated. The court has recognized that punitive damages are only available in exceptional cases, and the award of punitive damages is to be treated with restraint. Punitive damages are reserved for wrongful acts that are particularly malicious or outrageous, such that they deserve their own punishment.

Also, for punitive damages, which can be seen as being one level of damages above aggravated damages, the focus shifts so that the employee doesn’t need to prove that there was a compensable loss.

Court Finds No Punitive Damages for Insensitive Comments During Wrongful Dismissal

In the Chin case, the employee claimed wrongful dismissal. She worked as an esthetician for 6 years with her current employer. Before the business was sold to the current employer, she worked for the company for 14 years. The employee argued that she was singled out to be harassed during her termination. As a result of the change, her hours shifted from full-time to part-time, and she expressed dissatisfaction with her supervisor. She claimed she was terminated in retaliation for her negative comments about her reduced hours.

At the time of termination, the employee claimed that the employer breached their duty of good faith by failing to ensure that the employee was protected from bullying, harassment, and intimidation in the workplace.

The court found no evidence that the employee was targeted, as her termination was part of a restructuring that also affected 49 other employees at the time.

The employee also claimed that she should receive aggravated or punitive damages due to a post-termination meeting that occurred. She claimed she was mistreated and faced oppressive conduct at this meeting.

While the court found that the meeting was ill-conceived and involved crude language, this did not rise to the level of requiring aggravated or punitive damages. The court also found that while the employer should not have dissuaded employees from seeking legal advice, this did not warrant aggravated or punitive damages. These actions did not involve more than hurt feelings common in terminations.

No aggravated or punitive damages were awarded in this case. The court reiterated that punitive damages are meant to punish exceptional behaviour and not to police words, which would be more associated with etiquette rather than oppressive conduct.

Contact The Toronto Employment Lawyers for Advice on Termination and Wrongful Dismissal Claims

Employers may be subject to moral damages for bad faith conduct during a termination. Our experienced employment law legal team at Haynes Law Firm in Toronto can assist you with issues that arise from termination. Our goal for employees is to ensure that they understand their rights and receive maximum compensation in wrongful dismissal cases. Haynes Law Firm also assists employers in avoiding liabilities that may arise from terminations that are not permitted by the legislation. We are dedicated to finding the best resolution for you.
To book a consultation, please contact us online or by phone at 416-593-2731.

Categories
Wrongful Dismissal

Duty to Mitigate for Employees with Medical Conditions

After an employee is terminated, they may want to pursue a wrongful dismissal claim if they did not receive the expected compensation. For instance, employers must provide terminated employees with reasonable notice or pay in lieu of notice. If the termination occurs right away, then the employer may need to pay for the amount of the reasonable notice period, which can vary at common law, depending on the employee’s length of tenure, their type of role, their age, etc. However, this amount may be reduced if the employee fails to mitigate damages, meaning that they did not make adequate efforts to secure another job and their financial situation has worsened after termination. Employers are not responsible for the damages involved when an employee has failed to mitigate.

This can be a different matter for terminated employees with medical conditions. Their health condition can be considered if it is relevant to their duty to mitigate damages in the wrongful dismissal. In this post, we will discuss an employee’s duty to mitigate and how this applies when the employee faces medical conditions after termination that impact their ability to find a new job. This post will provide important takeaways for employees seeking to understand their duty to mitigate and for employers to understand how it applies to a wrongful dismissal case.

What is the duty to mitigate a wrongful dismissal?

In a wrongful dismissal, employers must give the employee reasonable notice or pay in lieu of notice. In exceptional circumstances, the reasonable notice period can run from a few weeks to two years or more. The reasonable notice period at common law varies depending on the employee’s age, role with their employer, how long they worked with the employer, and more. The notice period can also be modified based on the agreement in the employment contract. 

The notice period can also be shortened if the employee fails in their duty to mitigate damages. After a termination, an employee is expected to make reasonable efforts to secure a new job. An employer is not responsible for additional damages arising from the employee’s lack of effort in searching for a new role during the reasonable notice period. The employee is required to find and accept new employment that is a comparable role. 

There must be evidence that the employee applied for a new position soon after termination. Some evidence of the employees’ efforts can be gathered by gathering additional information on new roles. The court will also consider the frequency of the employees’ applications and the types of roles that they were applying for. For example, if they were applying for roles that were not suited for them based on their work history and could not secure a role, then the court may not find that the employee made reasonable efforts in their duty to mitigate. 

Therefore, if the employee still needs to mitigate their damages in this way, their damages arising from the wrongful dismissal may be less than the full reasonable notice period. 

How is the failure to mitigate damages proven in a wrongful dismissal case?

It is important to note that it is not the employee’s responsibility to prove that they mitigated damages. However, preparing this evidence may be helpful if the employer alleges that they failed their duty to mitigate. The employer must prove that the employee failed to mitigate damages after termination. In particular, the employer must show that the employee could have found similar employment if they properly searched for a new role. In other words, the employer must show that the employee could have reasonably avoided some or part of the loss coming from termination. 

The employer must show that the employee failed to mitigate damages, as the courts recognize the power dynamic that often exists in the employment relationship. The employee is often in a vulnerable position because they need to secure another job, and they are the ones who suffer from a wrongful dismissal.  

How can employees with medical conditions fulfill their duty to mitigate a wrongful termination?

For employees with medical conditions, the analysis of the duty to mitigate may be different. The court will consider the employee’s circumstances, including their health conditions if they cannot find a new role during the notice period. 

In Krmpotic v. Thunder Bay Electronics Limited, 2024 ONCA 332, the court found that the employee did not fail to mitigate damages when the employee could not find a new role after termination. In this case, the employee worked as a carpenter for the employer. After a year and a half of working with the employer, the employee was promoted to building maintenance supervisor. The parties did not have a written employment agreement. 

After working with the employer for 30 years, the employee was terminated without notice at the age of 59. He was terminated during his medical leave while recovering from back surgery. The back surgery arose from workplace injuries while he was working for the employer. 

The employer offered the employee 16 months’ salary in exchange for signing a release. The employee refused and brought a wrongful dismissal claim. During the 16 months after his termination, the employer paid for 16 months of salary and continued his benefits plan. 

At trial, the court found that the employee was entitled to 24 months of notice or pay in lieu. 

The employer appealed to reduce the damages, claiming that the employee failed in his duty to mitigate as he did not make efforts to secure a new job during the reasonable notice period. However, the Court of Appeal confirmed the trial decision that the employee fulfilled his duty to mitigate damages. The court found that the employee made limited efforts to find a new job because he was recovering from his back surgery and had several lasting effects of his workplace injuries that made it difficult for him to obtain a new job. The court also found that the employee was not required to provide expert medical evidence to show why he could not search for a new job. The employer’s claim to reduce damages was dismissed. 

Toronto Employment Lawyer Advising on Termination and Wrongful Dismissal Claims

In a wrongful dismissal case, employees have a duty to mitigate damages. However, employers are responsible for demonstrating that the employee contributed to the loss by failing to search and obtain comparable employment properly. Our experienced employment law legal team at Haynes Law Firm in Toronto can assist you with issues that arise from termination. Our goal is to ensure that employees understand their rights and receive maximum compensation in wrongful dismissal cases. Haynes Law Firm also assists employers in avoiding liabilities that may arise from terminations that are not permitted by the legislation. We are dedicated to finding the best resolution for you.

To book a consultation, please contact us online, or by phone at 416-593-2731.

Categories
Wrongful Dismissal

Employer’s Conduct at Termination May Increase Damages

People may not always end on the best terms at the end of an employment relationship. There may be concerns over how an employee was terminated, and the employer’s conduct can play an important role in determining the damages owed if there has been a wrongful dismissal. If the employer acted in bad faith, they may owe the terminated employee moral damages on top of what they needed to pay as part of the reasonable notice period. These damages can be significant, as in Teljeur v. Aurora Hotel Group, 2023 ONSC 1324, in which the employer was ordered to pay $15,000 in moral damages to the employee for bad faith conduct during the termination. Whether the employer’s conduct rises to the level of bad faith highly depends on the circumstances of the case.

In this post, we will discuss the factors determining whether an employee can receive moral damages due to bad faith from the employer. We will examine the Teljeur case as an example of where the employer’s conduct resulted in significant moral damages. This post will provide important takeaways for employees seeking to understand their rights from wrongful dismissal and for employers seeking to understand their obligations when terminating an employee.

What additional damages can an employee receive due to the employer’s conduct during termination?

Generally, upon a wrongful termination, the employee can receive pay in lieu of their reasonable notice period, which varies depending on the facts of the case. Employees are entitled to prompt payment of their minimum compensation under the Employment Standards Act.

Beyond these forms of compensation, the employee may also be entitled to moral or aggravated damages on top of these payments. Moral damages may be available if the employer acted in bad faith during termination. In particular, moral damages are only available if the employer engaged in unfair or bad faith conduct, such as being untruthful, misleading, or unduly insensitive. Given the power dynamic between employers and employees, with employees generally in a vulnerable position, the courts have recognized that moral damages may be appropriate if the employer exacerbates the difficulties arising from a termination.

When may an employee receive moral damages for a wrongful termination?

A high standard exists to find that moral or aggravated damages should be awarded in a wrongful dismissal case. For instance, the employer’s conduct must have risen to the level of being unfair and in bad faith, which can include being untruthful, misleading, or unduly insensitive to the employee. While the claim may involve the employee’s mental distress, finding an independent actionable wrong is no longer necessary before moral damages can be awarded to an employee upon termination.

For wrongful dismissal cases, damages arising from an employer’s bad faith conduct should be separate from the damages as part of the reasonable notice period. In other words, the court is not to extend the reasonable notice period if the employer acted in bad faith because the moral damages are to be assessed similarly to other cases that address moral damages.

The court will consider the following factors to determine if moral damages should be awarded:

a)    The employer has breached its duty of good faith and fair dealing in the way that the employee was dismissed;

b)    The employer’s breach of good faith or fairness can include if the employer’s conduct was untruthful, misleading, or unduly insensitive;

c)     The employer failed to act in a way that was candid, reasonable, honest, and forthright with the employee;

d)    The employer could have reasonably known that the manner of dismissal would cause the employee mental distress;

e)    The employer’s wrongful conduct must have caused the employee’s mental distress beyond understandable distress and hurt feelings that are typically associated with a termination;

f)      The grounds for moral damages are to be assessed depending on the unique circumstances of the case.

Notably, not all forms of distress or discomfort arising from a termination will result in moral damages, as the court recognizes that termination will usually be difficult.

Also, it can be difficult to determine when moral damages may apply as it highly depends on the facts of the case. We will discuss an example using the Teljeur case below to illustrate how an employer’s conduct may be considered in bad faith during a termination.

Employer Required to Pay $15,000 for Bad Faith Conduct During Termination

In the Teljeur case, the employee worked as a general manager for a resort. After three years, he was terminated as the employer decided to hire an external management company in place of the employee’s role.

The court found that the employer had acted in bad faith and should pay moral damages to the employee. While the court recognized that the employee secretly recorded the termination, and this was not to be encouraged, the recording revealed some concerns about the employee’s termination.

For instance, the Employment Standards Act requires that terminations be produced in writing to employees. During the termination meeting, the employee asked several times for his termination to be in writing. The employer agreed, but written termination was never provided.

Under the Employment Standards Act, the employer was also required to provide his final pay within 7 days of the termination or the next payday. However, the employer did not mail the final cheque until over a month after the termination meeting. When the employee claimed that he had yet to receive the cheque, a new one was reissued 6 months later in June. Even when accounting for when the first cheque was mailed out, there was a significant delay from when the employer was required to provide the minimum payment to the employee. As a result, the employee also did not have the benefit of pay over the holidays. This was considered to be bad faith conduct.

The employee was also promised 8 weeks severance, but this was never provided. The employer also did not reimburse the employee for out-of-pocket expenses of almost $17,000. This represented a significant portion (almost a quarter) of the employee’s income and was considered a significant financial burden. These actions also contributed to a finding that the employer acted in bad faith.

The court awarded the employee $15,000 in moral damages for the employer’s bad-faith conduct.

Contact Haynes Law Firm in Toronto for Advice on Termination and Wrongful Dismissal Claims

Employers may be subject to moral damages for bad faith conduct during a termination. Our experienced employment law legal team at Haynes Law Firm in Toronto can assist you with issues that arise from termination. We aim to ensure that employees understand their rights and receive maximum compensation in wrongful dismissal cases. Haynes Law Firm also assists employers in avoiding liabilities arising from terminations not permitted by the legislation. We are dedicated to finding the best resolution for you.

To book a consultation, please contact us online or by phone at 416-593-2731.

Categories
Wrongful Dismissal

Is Accepting a New Job During a Layoff a Resignation?

A layoff can significantly impact an employee and be difficult to navigate, especially if the layoff is temporary or uncertain. During the pandemic, many experienced being laid off, and the court was required to clarify rules surrounding an employee’s rights and an employer’s obligations during a layoff. As businesses evolve, they may not find enough work for a certain role as they once did. Employees will need to look elsewhere for a full-time position. However, is accepting a new job during a layoff considered a resignation?

In this post, we will discuss whether accepting a new role is considered a resignation by the employee. This is important to determine, as it may affect the employee’s rights and the employer’s obligations. In particular, if the employer permanently terminates an employee after they accept a new job elsewhere, they may be liable for wrongful dismissal damages because this may not have meant that the employee resigned during a temporary layoff. We will discuss a case example, Hurlbut v Low & Low Limited, 2024 CanLII 28332 (ON SCSM), in which the court found that the employee did not resign during a temporary layoff when they accepted a new position with a different employer. This post will provide important takeaways for employees and employers to understand their rights and obligations during a layoff. 

What is a temporary layoff under the Ontario Employment Standards Act?

Under the Ontario Employment Standards Act, an employee may be on a temporary layoff if the employer limits or stops the employee’s work but has not ended their employment. For example, this may occur when there is not enough work to sustain a full-time role as the business needs change or due to external circumstances like during the pandemic. Since layoffs often involve some uncertainty, a layoff can still be considered temporary even if there is no specified date when the employee can return. 

It is also necessary to have terms in the employment contract that allow an employer to lay off an employee. Otherwise, it could be seen as a fundamental change to the employment contract and, therefore, a constructive dismissal. If this is the case, the employer may be liable for damages for constructive dismissal. 

How long can a temporary layoff be?

A layoff is considered temporary if it is less than 13 weeks for 20 continuous weeks. If the layoff is more than 13 weeks, it can still be considered a temporary layoff if it is less than 35 weeks in 52 weeks, if one or more of the following apply:

  1. The employer continues making substantial payments to the employee; 
  2. The employer continues to pay for the employee’s benefits under a group or employee insurance plan, or retirement or pension plan; 
  3. The employer pays the employee additional unemployment benefits; 
  4. The employee would have been entitled to receive additional unemployment benefits, but is not receiving them because they work elsewhere; 
  5. The employer recalls the employee within a time period that is approved by the Director of Employment Standards (ie. for a period longer than set out in the legislation);
  6. The employer recalls the employee within a time period as specified in an agreement with the employee (and union, if applicable).

If the employee is not recalled for longer than the period specified above, unless the Director otherwise approves it of Employment Standards, then the employee is considered to be terminated by the employer. In these cases, the employee would be entitled to termination pay from the employer. 

What are an employer’s obligations during a layoff?

Employers are not required to provide notice to employees of a temporary layoff. The employer is also not required to provide a reason for the layoff unless it is otherwise required in the employment contract. 

If the layoff is not considered a temporary layoff under the ESA, or the layoff is not permissible under the employment contract, then the employer may need to pay termination pay or damages for a constructive dismissal. 

What happens when an employee accepts a new job during a layoff?

When an employee accepts a new job during a temporary layoff, the employer may consider this as the end of their employment relationship. However, this is not always true, as seen in the Hurlbut case, where the employee’s acceptance of a new job after a layoff was not considered a resignation. 

Employee Accepting New Job Not Considered Resignation

In the Hurlbut case, the employee worked as a full-time funeral director for a funeral home since 2018. The parties did not have a written employment contract. The employee was laid off shortly after the pandemic began in March 2020. 

Initially, the employee requested the layoff so that she could care for her children at home. Later on, layoffs were required as the health protocols in the province restricted funeral services. This led to the employer closing one of their locations, and there needed to be more work for the employee. During the layoff, the parties were in communication, and while the employee had wanted to return, there was not enough work to sustain a full-time role. At this point, there was also uncertainty about the state of the pandemic that would affect funeral services. 

During the layoff, the employee accepted a new role with another employer. The funeral home owner was notified of this and claimed that this meant that the employee resigned. He issued an ROE in November 2020. Before issuing the ROE, the employer had continually paid the employee’s benefit premiums. 

However, the employee claimed she was wrongfully dismissed because she had not resigned. 

The court found that she could legally do so without resigning from her original position unless the contract restricted the employee from working for multiple employers. The court stated that the employer could have reached out to clarify whether the employee was resigning. There was also evidence that the employee advised her former employer that she wanted to return, given that her new role also paid significantly less and was not the same type of role that she held before.

Ultimately, the court found that the employee did not resign, and she was wrongfully dismissed. The employer was required to pay damages for wrongful dismissal. 

Key Takeaways 

During a temporary layoff, it is important to clarify if the employee intends to return, as securing a new role is not considered a resignation. Otherwise, the employer may be liable for damages caused by wrongful dismissal.

Contact Haynes Law Firm in Toronto for Advice on Termination and Wrongful Dismissal Claims

If an employee has not resigned and they are terminated, the employer may be liable for wrongful dismissal damages. Our experienced employment law legal team at Haynes Law Firm in Toronto can assist you with issues that arise from termination. Our goal is to ensure that employees understand their rights and receive maximum compensation in wrongful dismissal cases. Haynes Law Firm also assists employers in avoiding liabilities that may arise from terminations that are not permitted by the legislation. We are dedicated to finding the best resolution for you.

To book a consultation, please contact us online or by phone at 416-593-2731.

Categories
Wrongful Dismissal

Terminated Employees Expected to Accept Comparable Employment

When employees are terminated, they are to receive reasonable notice of their termination or pay in lieu of notice. If the employer provides neither, the employee may be able to recover damages in a wrongful dismissal claim. However, after termination, there are obligations on the employee also to fulfill their duty to mitigate damages. Generally, this means that the employee is expected to make efforts to secure a new role. If the employee refuses to accept a comparable offer, the court may find that they failed to mitigate damages, and the employer may be subject to a lower amount of damages. 

This post will discuss the employee’s duty to mitigate and how this can affect damages in a wrongful dismissal case. We will examine a case example, Gannon v. Kinsdale Carriers, 2024 ONSC 1060, in which the court found that the employee failed to mitigate their damages after being terminated by their employer because they refused to accept an offer for a comparable role, as they wanted to head in a different career direction. This post will also provide important takeaways for employees and employers to understand the employees’ obligations to mitigate after termination. 

Damages for Reasonable Notice of Termination

When an employer is terminating an employee, they must provide reasonable notice or pay in lieu of notice. The reasonable notice period would include the minimum standard under the Employment Standards Act and common law notice, which can extend beyond the minimum standard. Under the Employment Standards Act, the amount of notice depends on how long the employee worked for the employer. However, there may be terms in the contract that limit damages under common law. 

The common law standard for reasonable notice depends on several factors, including the employee’s age at termination, the nature of the employment, the length of employment, and the likelihood that the employee will find similar employment, given the employee’s skills, experience, and qualifications. Generally, the employee would be entitled to a longer notice period and, therefore, more pay in lieu for this period if they had worked for the employer for a long time, worked in a management role, and were relatively older at the time of termination. This is meant to recognize that it is difficult to secure similar employment for older employees and those who have worked for the employer for many years, as they tend to be viewed as being set in their ways after working for the employer for such a long period. 

In addition to termination pay, the employee may be entitled to benefits, bonuses, or commissions during the notice period, even if they were not provided sufficient notice. These entitlements can also depend on the terms of the employment contract, which may exclude or limit these benefits. Therefore it is very important to determine the length of the reasonable notice period as it significantly impacts the amount of damages an employee could receive as a result of termination. 

What is an employee’s duty to mitigate damages after termination?

Employees also have a duty to mitigate damages after being terminated. They are obligated to seek similar employment, which includes a role with similar status, hours, and remuneration to their previous role. 

The employer holds the responsibility of proving that the employee failed to mitigate, which includes showing the following:

  1. The employee did not take reasonable steps to find comparable employment; and
  2. If the employee had adequately searched, they could have found comparable employment.       

An employee’s duty to mitigate would involve finding a new role, such as submitting applications to relevant or comparable postings. Also, if the employee is offered a similar position and refuses to accept it, they may fail to mitigate damages. 

If the employee is found to fail to mitigate damages, their damages for wrongful dismissal will be reduced because they had exacerbated the issue. 

What is a comparable position after an employee is terminated?

Comparable employment includes a comparable position in terms of its status, hours, and level of compensation. It is not required for this new role to be the same as the previous position as long as it is a comparable position that is reasonably adapted to the employee’s abilities. 

In the Gannon case, the court found that the employee did not fulfill her duty to mitigate damages, as she refused to accept an offer for a comparable position. In this case, the employee worked for the employer, a trucking company, for 22 years from 1998 to 2020. She held the roles of dispatcher, accounts receivable, and office clerk. When she was terminated, she was 57 years old. Her salary was approximately $43,000. 

When the employee started, she was hired for an accounts receivable and office clerk role. In 2015, the company’s dispatcher resigned, and the employee took on some dispatch duties. The employee denied doing so. However, she received a wage increase, recognizing that she had accepted new dispatch duties. She claimed that less than half her duties involved dispatch tasks. 

The company was set to shut down by the end of 2020, and the employer sent out a letter to all employees two weeks before the closure to announce the closure. The employee claimed she learned about the company closure when she received the letter.

After the announcement, the employer provided the employee with contact information for another local trucking company. Soon after, the employee contacted this company to inquire about a job. She claimed that the role available was for a full-time dispatcher, even though she had specified that dispatch tasks were not her primary role. She claimed she was not provided any information about the start date and was never extended a formal offer.

However, the court found she was offered a role with the new company. During the interview, the new company clarified that the employee’s salary and hours would remain the same and that the tasks would involve both dispatch and administrative duties. The court found that a verbal offer was made, which was acknowledged by the employee, as she had texted the new company, stating that she had given “this” (i.e. the offer) a lot of thought.

After refusing the offer, the court found that the employee failed to mitigate her damages. The court found that the employer went out of their way to assist the employee in finding new employment, such as referring her to the new company. While the employee wanted to explore other roles and education to move away from her dispatch duties, it was not the employer’s responsibility to fund those pursuits. 

Contact Haynes Law Firm in Toronto for Advice on Termination and Wrongful Dismissal Claims

In a wrongful dismissal case, employees have a duty to mitigate damages. However, employers are responsible for demonstrating that the employee contributed to the loss by failing to search and obtain comparable employment properly. Our experienced employment law legal team at Haynes Law Firm in Toronto can assist you with issues that arise from termination. We aim to ensure employees understand their rights and receive maximum compensation in wrongful dismissal cases. Haynes Law Firm also assists employers in avoiding liabilities arising from terminations not permitted by the legislation. We are dedicated to finding the best resolution for you. To book a consultation, please contact us online or by phone at 416-593-2731.

Categories
Employee Terminations Wrongful Dismissal

New Perspectives on Just Cause Termination

An employment relationship can end for a variety of reasons. These reasons can be separated and defined as being terminated “without cause” or for “just cause.” The legal difference is significant; without cause, termination entitles the employee to notice of termination or payment in lieu, whereas just cause termination is based on specific employee misconduct and requires no notice or severance. 

This blog will explore the level of an employee’s misconduct required for an employer to terminate for just cause. A recent decision before the Ontario Superior Court of Justice will be used as context, where the Court dismissed a wrongful dismissal claim and agreed that an employer was entitled to dismiss the employee due to their conduct. 

Legal Definition and Test for Just Cause

The Employment Standards Act (ESA) establishes minimum labour standards, covering aspects like wages, working hours, and leave entitlements, ensuring basic protections for employees in various jurisdictions. It also includes a standard for just cause, defined as “wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.” This high standard prevents employers from terminating employees for just cause where they did not demonstrate some intention in their actions. Employees not meeting this standard are entitled to bring a wrongful dismissal lawsuit. 

The common law also provides a framework for judges to determine whether the conduct meets this standard in McKinley v. B.C. Tel, the Supreme Court of Canada made it clear that the entire context of the dispute is relevant. The Ontario Court of Appeal expanded on this principle in Dowling v. Ontario (Workplace Safety and Insurance Board), noting that the process consists of “1. determining the nature and extent of the misconduct; 2. considering the surrounding circumstances; and 3. deciding whether dismissal is warranted (i.e. whether dismissal is a proportional response).” The three-step analysis is highly contextual and includes considerations of the employee’s role, responsibilities, and the degree of trust reposed in the employee. 

In Lagala v. Patene Building Supplies Ltd, an employee was terminated for cause after her employer discovered she failed to report her own workplace injury. The Judge was highly influenced by the circumstances of the employee’s role and conduct surrounding the injury. 

Employee’s Injury and WSIB Claim

The plaintiff, Shari Lagala, was the Defendant’s Health, Safety and Training Manager at Pantene Building Supplies Ltd (Pantene). She was a longtime and respected employee of Pantene, and her responsibilities included ensuring Pantene: a) met health and safety requirements per the legislation, b) had an effective system for investigating accidents and incidents, c) established appropriate policies and procedures to minimize accident costs, including WSIB claims. 

On March 28, 2019, she allegedly fell in the parking lot of Pantene’s facility and was injured. She testified that at the time, she did not view the injury as serious, so she did not report the incident to a manager despite being required to do so by Pantene’s policies. However, she allegedly complained of the injury to several employees. The reason she relied on for not reporting the incident was embarrassment based on her position. 

Several months later, the injury worsened, so she filed a claim with the WSIB without notifying Pantene’s management. She also omitted the accident from the monthly incident reports she was required to provide to Pantene’s management. 

The WSIB subsequently allowed her claim. Once the claim came to management’s attention, she was terminated for cause on December 18, 2019. She commenced a wrongful dismissal lawsuit shortly after. 

Employee’s Role and Responsibilities Important Contextual Factors

The Judge examined the entire context of the dispute in line with the process required by the case law. The Judge found multiple unexplained inconsistencies in the employee’s testimony, so when examining the entire context, the Judge often rejected the employee’s explanation or version of events and found concerns with the employee’s credibility and reliability. 

Even so, the Judge was also influenced by the employee’s failures to abide by Pantene’s policies (which she had helped develop and implement), given the employee’s position as Health, Safety and Training Manager. She failed to report her incident until many months after it occurred, a breach of Pantene’s accident reporting policies and a violation of the Workplace Safety and Insurance Act 1997. The Judge found that by failing to report this accident to the WSIB in a timely manner, the employee had put Pantene at risk of non-compliance with the applicable legislation, which could have resulted in an offence. Protecting the company from such proceedings was part of the employee’s job. 

The Judge subsequently ruled that she failed to protect the employer’s interests because she was directly responsible for administering Pantene’s health and safety policies, which entitled Pantene to terminate her for just cause. 

Consult the Toronto Employment Lawyers at Haynes Law Firm for Your Wrongful Dismissal Dispute

The trusted employment lawyers at Haynes Law Firm help demystify employment and human rights in the workplace for employees and employers. Our team helps simplify the law to help clients understand their options and make informed decisions. Our lawyers regularly advise clients on discrimination, accommodation of disability and illness, harassment, wrongful dismissal, termination packages, and more. Call us at 416-593-2731 or contact us online to schedule a consultation with our experienced employment law team member.

Categories
Employment Contracts & Policies Wrongful Dismissal

What Happens When An Employee Cannot Return to Work?

In some cases, employees may face medical conditions, illness, or injury requiring a leave of absence. These employees may be eligible for short-term or long-term benefits based on their insurance plan. However, issues may arise when it is unclear when the employee can return, if at all. An employee’s employment contract may be terminated if he or she can no longer work for the employer in any capacity. When an employment contract is frustrated, the employee can no longer perform the duties set out in the original contract. This would highly depend on the facts of the case, as illness itself is insufficient to find that an employment contract is frustrated. 

This post will discuss what can happen when an employee cannot return to work. We will discuss the factors determining if an employee’s leave may lead to a frustrated employment contract. In particular, we will examine a case example, Nagpal v. IBM Canada Ltd., 2019 ONSC 4547, in which the court found that the employment contract was not frustrated despite the employee’s leave of absence due to illness. This post will provide key takeaways for employees seeking to understand their rights, given a leave of absence for a medical condition, illness, or injury, and for employers seeking insights on addressing issues arising from an employee’s extended leave of absence.

Short-Term or Long-Term Benefits May Be Available For Employees Facing Illness or Injury 

Employees may be entitled to short-term or long-term benefits under their company’s insurance policy, depending on the employment contract. The policy typically sets out criteria for when an employee is entitled to these short-term or long-term benefits under the plan and what they would receive. For example, the benefits may cover some or all of the employee’s salary during the policy’s application, as was the case with Nagpal, which will be discussed further below. Furthermore, the employee will typically need to provide medical evidence of their inability to work due to illness or injury. 

A common scenario is for an employee to receive short-term or long-term benefits under an insurance provider while on a leave of absence. However, suppose the leave of absence is lengthy, and there is no foreseeable return to work. In that case, there may be frustration with the employment contract, meaning that the contract’s original terms can no longer be performed, and the contract is invalidated.

Overview of Frustration of Contract – When the Original Contract Can No Longer Be Performed 

Frustration of contract means that the original contract can no longer be performed, and it, therefore, cannot be upheld. This principle can also apply to employment contracts, and a common circumstance is when an employee cannot return to work for the foreseeable future.

However, frustration of contract should be understood carefully and analyzed based on the case’s specific facts because if an employee was terminated on this basis, there may be a wrongful dismissal case if the contract was found not to be frustrated at all.

When Is An Employment Contract Frustrated Due To An Employee’s Leave Of Absence?

An employment contract may be frustrating if the employee is not likely to return to work within a reasonable time. If an employer claims that the employment contract was frustrated by an employee’s illness or incapacity, this would only be successful given the context. In particular, an employee’s illness or incapacity would only frustrate the contract if it was likely to continue for such a period of time that the employee would never be able to perform the intended duties set out in the original contract. An employment contract could also be frustrated if it would be unreasonable for an employer to wait any longer for the employee’s recovery and return to work. In its analysis, the court must look at the connection between the term of incapacity or absence, the duration of the contract, and the nature of the employee’s duties.

In some cases, if the employer provides arrangements for long-term disability plans, this may suggest that the employer has a tolerance for long absences due to illness. In these cases, a longer absence may be required to find that the employment contract was frustrated. 

These considerations will be illustrated in the Nagpal case below, in which the court found that the employment contract was not frustrated due to the employee’s medical leave.

Employer Must Prove Employee Cannot Return To Work Within Reasonable Time

In Nagpal, by the time of the trial, the employee had worked for the employer for 23 years. He had received positive performance reviews until 2013 when he began his new leadership role and faced challenges with a difficult employee. He claimed that he was experiencing severe stress and mental health challenges during this time and raised this with management.

By March 2013, the employee called in sick with a recommendation from his doctor to take six weeks off. The employer referred him to the company’s insurance provider for short-term disability benefits. The plan set out that he would be compensated fully for his salary for the first 26 weeks of leave. He was required to provide evidence of his illness or injury that would prevent him from performing his essential duties. Under the plan, if the benefits are denied, the employee can choose to return to work or appeal the decision and take an unpaid leave of absence until the appeal is concluded. In this case, if the employee did not appeal the decision within one month of the start of unpaid leave, he was expected to return to work immediately, or it could be assumed that he had resigned. 

The employee provided evidence from his psychiatrist and psychologist, who said that he struggled to cope with stress, experienced cognitive impairment, and limited energy for an unknown duration. The doctors did not recommend that he return to work immediately. However, by July 2013, the employee was informed that his short-term disability benefits would be terminated. He did not appeal the decision, and the employer advised that this would mean that he was resigning from his position. The employee’s position remained that he required a leave of absence, as recommended by his doctors, and he was not prepared to return to work then.

In this case, the court found that the employer had not provided or sought out evidence that the employee could not return to work within a reasonable time. The employer could not rely on the fact that the employee could not work several years later, as this was not known until after the termination. Furthermore, the employer’s benefits plan included long-term benefits, suggesting that a longer absence period was required to find an employment contract would be frustrating. There was also no evidence that the employee’s absence had negatively impacted the business. The employer also made no efforts to inquire further and gather more information on the employee’s illness and the duration of his leave. Finally, when the employee was terminated, there was little evidence that the illness was permanent or long-term. As a result, the employee’s leave did not frustrate the contract. 

As the contract was not frustrated, the employee was wrongfully dismissed and entitled to damages from the employer. 

Contact Haynes Law Firm in Toronto for Advice on Termination and Wrongful Dismissal Claims

Our experienced employment law legal team at Haynes Law Firm in Toronto can assist you with issues that arise from termination. For employees, our goal is to ensure that they understand their rights and receive maximum compensation in wrongful dismissal cases. Haynes Law Firm also assists employers in avoiding liabilities that may arise from terminations that are not permitted by the legislation. We are dedicated to finding the best resolution for you.To book a consultation, please contact us online or by phone at 416-593-2731.

Categories
Employee Benefits Wrongful Dismissal

Can a Book of Business be Included in Severance Pay?

When an employee is terminated without cause, employers must ensure that the employee is provided reasonable notice of their termination or pay in lieu of notice. If an employee is not asked to continue after they have been informed of the termination, then the employer will need to arrange severance pay to cover the minimum standards in the Employment Standards Act. An employee may also be entitled to a longer notice period under case law and, therefore a larger amount of severance pay in lieu of this notice period. Additionally, the employee may be entitled to certain benefits, bonuses, or commissions beyond their salary during the notice period. The benefits, bonuses, or commissions available will depend highly on the employment contract terms. 

In this blog, we will discuss when a book of business may be included as part of the employee benefits to be retained during the notice period. We will examine the case of Ratz-Cheung v. BMO Nesbitt Burns Inc., in which the court discusses when a book of business may be part of the compensation to an employee upon termination.

When can a book of business be included in a severance package?

Generally, employees are entitled to compensation for all losses that arise from an employer’s failure to provide proper notice, which is considered a breach of contract in a wrongful dismissal claim. The damages awarded should put the employee in the same financial position as if they had been provided notice and worked until the end of the reasonable notice period. Therefore, damages would include any benefits the employee would have received during the notice period. Damages could also include the lost opportunity to earn a bonus or benefit, including where this bonus or benefit forms a significant part of the employee’s compensation or even when the bonus or benefit is discretionary. 

Determining whether damages include benefits and other payments

There is a two-step process for determining whether damages would include bonus payments and other benefits that would have been received during the notice period:

  1. Would the employee have been entitled to the benefit, bonus, or commission as part of their compensation during the reasonable notice period?
  2. If so, are there any terms in the employment contract or bonus plan that clearly take away or limit that entitlement?

In the second step, the terms of the agreement must be absolutely clear and unambiguous. For example, if the term requires that an employee be a “full-time” or “active” employee to receive the benefits, this is not sufficient to limit the employee’s entitlement to damages. This is because if the employee was provided reasonable notice and worked during that period, then they would have been considered a “full-time” or “active” employee during the notice period. 

It is not sufficient for the contract to state that the employee’s rights to damages are not available for a termination “with or without cause”, as a termination without cause does not mean that there was a termination without notice. The employment contract will also not end until after the reasonable notice period expires. This language will not satisfy the second step of the test. Therefore, a term in the employment contract that states that a bonus or benefit is only available if the payout is prior to the termination will not limit the employee’s rights to a bonus or benefit that they would have earned during the reasonable notice period. 

Loss of opportunity to sell a book of business

The loss of opportunity to sell a book of business can be included as part of the damages if it can be shown that the employee was entitled to the value during the notice period if the employment contract does not clearly and unambiguously limit that entitlement and if the employee can demonstrate that they were prepared to go forward with selling the book of business. There may be terms set out in the employment agreement to specify when this may be available. 

Terminated employee fails to prove damages for loss of opportunity to sell book of business 

The employee in the Ratz-Cheung case was an investment advisor who was dismissed without cause at the age of 54. She had worked for the employer for 24 years at the time of termination. As part of her claim for wrongful dismissal, she sought approximately $375,000 in commission and over $1.1 million as a loss of opportunity to sell her book of business. The court found that while she was entitled to a 24-month notice period and $240,000 for commission, she failed to prove that she was also entitled to the loss of opportunity to sell her book of business. 

The employer had a policy setting out their investment advisors’ retirement agreements, the “BSA Program.” The court found that the employee would have been entitled to take advantage of the program during the notice period. In particular, she met the eligibility requirements, including the years worked for the employer and the value of assets managed. There were also no meaningful performance issues that would have limited her eligibility. Overall, there were no reasonable grounds for the employer not to approve her participation in the program. 

No evidence to show that employee intended to retire

The BSA program also did not contain terms that would unambiguously remove her entitlement. The program stated that an “[employee] who has been terminated, with or without cause, whether or not working notice or payment in lieu of notice termination and/or severance has been offered to the [employee]”, but this was not sufficient to find that her entitlement was clearly removed, as the employment contract is not terminated until the end of the notice period. 

However, the employee failed to prove that she would have retired by entering into a retirement agreement under the BSA program to sell her book of business during the notice period, as there was no evidence that she intended to retire. This was distinguished from another Court of Appeal decision, in which there was clear evidence that before the employee’s termination, he was seeking to retire and already reached an agreement with another investment advisor to sell his book of business. 

Contact Haynes Law Firm in Toronto for Advice on Employee Benefits in Wrongful Dismissal Cases

Our experienced employment law team at Haynes Law Firm can assist you with wrongful dismissal claims, including where employee benefits are involved. For employees, our goal is to ensure that they understand their rights and receive maximum compensation in wrongful dismissal cases. Haynes Law Firm also assists employers in avoiding liabilities that may arise from wrongful dismissal claims. We are dedicated to finding the best resolution for you.

To book a consultation, please contact us online or by phone at 416-593-2731.