May 24

Wrongfully Terminated Employees are still Entitled to the Cost of Benefits, Regardless of Whether they use them, Toronto Employment Lawyer


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Earlier this year, the Ontario Superior Court released a decision that clarifies a point of contention when discussing a terminated employee’s benefit entitlements upon termination.

It is already well established that an employee is entitled to be made “whole” throughout the notice period. The Supreme Court in Sylvester v. British Columbia, 1997 CanLII 353 (SCC) states that wrongful dismissal damages should place an employee in the same financial position that he or she would have been had reasonable common law notice had been provided.

Ontario’s highest court affirms this in Singer v. Nordstrong Equipment Limited, 2018 ONCA 364 (CanLII). The Appeal Judge in Singer determined that an employee would be entitled to all employment-related components through the notice period. This includes all health and dental benefits the employee received during their employment.

The question of whether an employee actually uses the benefits has long been a point of contention. Employers often do not see why they should have to pay a lump sum value for the employee’s benefits, especially when the employee likely would not use them all or there is no evidence of an employee’s loss.

In Davidson v. Alleliz Inc. (1991), 7 OR (3d) 581; 86 DLR (4th) 542 (CanLII), the Court of Appeal disagreed that the loss of benefits was limited to expenses actually incurred.

In Klimczewski v Nytric Ltd., 2019 ONSC 1322 (CanLII), the Plaintiff did not actually incur any medical or dental expenses that were recoverable under his benefit plan, and additionally, did not incur any costs to purchase additional coverage. The Judge echoed Davidson, and determined that it did not matter that the Plaintiff did not incur any medical expenses during his reasonable notice period. What mattered is that the Plaintiff had these benefits while he was an employee and therefore he should receive the value of them throughout his reasonable notice period.

The Judge in Klimczewski, left with no evidence of the premiums the employer paid to provide the employee benefits, awarded the Plaintiff payment equivalent to 10% of his base salary to compensate for his loss of participation in the employer’s group benefit plan over the reasonable notice period.

If you have questions about your entitlements upon termination, call Monkhouse Law for a consultation.

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