While an employer is entitled to terminate an employee at any time, the employee may bring a wrongful dismissal action if the employer does not provide sufficient notice or pay in lieu of notice, as required by law.
This article looks at the recent decision of the Ontario Superior Court of Justice in Gracias v Dr. David Walt Dentistry. This case raised several interesting issues, including whether the parties can contract out of the requirement to pay reasonable notice upon termination and whether Canada Emergency Response Benefit (CERB) payments should be deducted from damages awards. In addition, the employer went to lengths to try to show that the employee had fabricated records of her job applications to prove that she had not mitigated her loss.
The plaintiff was dismissed without cause from her almost six-month employment
In September 2019, the plaintiff employee accepted a full-time job offer from the defendant, Walt Dentistry. She is a 39-year-old dental hygienist.
Her employment contract stated that she could be terminated without cause for any reason upon the provision of the minimum notice required to be provided under the Employment Standards Act 2000 (ESA) and that no further amounts shall be due, including under the common law. It also stated that she could be terminated for cause in certain circumstances without notice or compensation in lieu of notice.
After five months and twenty-one days of employment, the plaintiff was dismissed without cause on March 15, 2020. She received $16,000 in CERB payments between March and September 2020. In September, she was hired by another company to provide dental practice management and advisory services.
The plaintiff was entitled to notice under the common law despite her employment contract attempting to preclude this
Justice Perrell explained that employers and employees could rebut the presumption of reasonable notice by agreeing to a different notice period. Still, their agreement will be enforceable only if it complies in its entirety with the minimum employment standards of the ESA.
His Honour decided that the terms of the plaintiff’s employment contract dealing with termination for cause did not comply with the ESA. Specifically, these provisions would deny the plaintiff any notice and her benefits under the ESA for conduct that may not amount to wilful misconduct. This is the benchmark set by the Act for depriving an employee of statutory notice.
As a result, even though the termination without cause provision in the contract may be lawful, the unlawful termination provision could not be severed and tainted the entirety of the contract’s termination provisions. His Honour held that the plaintiff was entitled to her common-law entitlements for dismissal without cause.
The role of the COVID-19 pandemic in the assessment of damages
Justice Perrell explained that some court decisions had found CERB payments were not to be deducted from a wrongful dismissal award, while others had found that they were. Without explanation, his Honour stated that he preferred the reasoning in the former group of cases and decided not to deduct the CERB payments from the plaintiff’s damages.
His Honour explained that economic factors such as a downturn in the economy or in a particular industry or sector that indicate that an employee may have difficulty finding another position might justify a longer notice period. However, his Honour preferred the employer’s evidence that, despite the pandemic, there was a robust enough market for dental hygienists such that the downturn in the economy did not justify a longer notice period.
Three months notice period was reasonable
Justice Perrell applied the Bardal factors to determine the length of reasonable notice. Although the plaintiff had worked for less than six months, his Honour considered three months a reasonable notice period. His Honour noted that the plaintiff was in the prime of her career with considerable work experience and her age, credentials, and experience presented competitive advantages in the job market.
The employer did not establish a failure to mitigate
Justice Perrell explained that the onus was on the defendant to establish a failure on the part of the plaintiff to take reasonable steps to find a comparable position. “Releasing the dogs of litigation war and going for the jugular”, the employer sought to demonstrate that the plaintiff had falsified evidence of her Internet job applications.
His Honour preferred the plaintiff’s evidence that she did not falsify documents to that of an expert forensic examiner retained by the defendant, who opined that she had falsified most (but not all) of the 139 job applications she claimed to have made.
His Honour found that there was insufficient evidence to conclude that the plaintiff had fabricated the applications and that it was far more plausible that any anomalies were a product of mistake or misadventure in the plaintiff’s use of a job application website or her email account. His Honour said:
There was no purpose to fabrication, and it would be idiotic for her to falsify evidence … She had 37 of the 139 job applications that are acknowledged to be genuine. That would have been enough to rebuff Walt Dentistry’s attack, because the law is that mitigation needs only to be reasonable, not comprehensive, and she did not need so much evidence, nor did she need to prove that she applied to every dental job posted on Indeed.com or posted elsewhere.
Justice Perrell awarded the plaintiff a three-month notice period.
Contact Haynes Law Firm in Toronto for Guidance on Employee Termination and Employment Contracts
Haynes Law Firm helps employers and employees throughout Ontario achieve effective solutions to legal issues and conflict management in employment law and civil litigation. We ensure our employee clients leave nothing on the table when negotiating the terms of their dismissal so they have the resources they need while they seek new employment. We also help employers manage employee terminations to limit their exposure to legal claims. We carefully draft employment contracts to limit reasonable notice. Please contact us online or call us at 416.593.2731.