Labour & Employment Law Blog

Court Awards Moral Damages Because Termination Letter Was Misleading

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Case Summary

The Ontario Superior Court of Justice in Russell v. The Brick LP, 2021 ONSC 4822 held that an employer should pay moral damages to an employee because of the manner of dismissal. This case is noteworthy because of the rather strict position the court takes on how an employer should carry out a dismissal. Particularly, the judge was not happy with the employer’s termination letter to the employee because it did not set out that if the employee rejected the offer contained in the termination letter that the employer would still pay the necessary statutory minimum entitlements in Ontario’s Employment Standards Act, 2000 (“ESA”).

The parties in this case agreed that summary judgement was the appropriate procedure to determine the issues and that the plaintiff was entitled to notice. This dispute here centered on what was the appropriate length of the notice period.

The plaintiff argued that he was entitled to 30 months’ notice as he was a long-term employee of the defendant of nearly 36 years and was in a senior management position with the company. The defendant argued that 18 months was a more appropriate notice period. The court, having regard to the Bardal factors, found that the appropriate notice period for the plaintiff was 24 months at common law. To remind our readers, the amount of the notice is determined by using certain factors (called Bardal factors) found in the common law. Bardal factors include the dismissed employee’s age, length of service, character of employment or duties, etc.

However, that was not the end of the story in Russell v. The Brick LP. The plaintiff had also requested additional damages in the form of moral or aggravated damages. The court set out that in order to determine whether moral damages are appropriate, the analysis will focus on how the dismissal of the plaintiff was carried out by the defendant.

The court here had a major problem with the defendant’s termination letter to the plaintiff. The defendant’s termination letter was a without prejudice offer to the plaintiff in order to settle his claims of notice and/or severance. Generally, the termination letter will contain terms that are more generous than the dismissed employee’s statutory minimum entitlements in order to incentivize the employee to agree. Both parties would then be able to avoid settling the dispute in litigation. In the case at hand, the court set out that the defendant’s termination letter was not compliant with the statutory minimum entitlements under the ESA because it did not state that the plaintiff’s benefits would continue during the notice period. The termination letter also set out that vacation pay would only be paid until the date of termination. This is false as under the ESA vacation pay is paid throughout the statutory notice period.

Further, the court also did not like that the termination letter did not advise that if the plaintiff declined the defendant’s offer the plaintiff would be provided by the defendant his statutory entitlements under the ESA. The court found this to constitute a “serious defect” and that by failing to set out this information to the plaintiff the defendant was engaging in dishonesty.

The defendant had made a series of errors that resulted in a delay in providing the plaintiff with his statutory entitlements under the ESA. They also failed to provide him with a reference letter. The court set out that these errors caused the plaintiff the requisite degree of mental distress in order to claim moral damages. As such, the court awarded the plaintiff $25,000 in moral damages due to the defendant’s behaviour after dismissal.

Our Thoughts

Employers need to be mindful of how they conduct dismissals. This case serves as an example of how part of the analysis will be not only the employer’s active and purposeful behaviour but also actions or mistakes that cause the terminated employee distress.

Employers also need to ensure that their termination letters are accurate with respect to the dismissed employee’s benefits and statutory entitlements. Particularly, the termination should be clear that if the employee declines the offer that the employee is still entitled to their statutory entitlements under the ESA. Employers also should ensure that any errors in providing statutory entitlements to the dismissed employee are promptly rectified by the employer in order to avoid undue delay.

The above article is for general information purposes only, does not constitute legal advice or create a solicitor-client relationship. Because each case is unique and factually driven, if you have concerns with regard to the foregoing issues, please make an appointment with one of our lawyers or a qualified legal practitioner elsewhere. We represent clients in the Greater Toronto Area including Toronto, North York, Markham, Vaughan, Thornhill, Newmarket, Aurora, Brampton, Mississauga, Barrie, Ajax, Whitby, Pickering and Oshawa.