An Ontario court awarded $15,000 in moral damages after finding that an employer handled an employee’s termination unfairly and failed to comply with the Employment Standards Act, 2000 (ESA). In T. v. Aurora Hotel Group, 2023 ONSC 1324, the court concluded that the employer’s conduct during and after the termination was misleading, insensitive, and contrary to Ontario employment law. The decision highlights an important principle: how an employer dismisses an employee can affect the compensation owed.
What Happened
The employee worked as the general manager of a resort in Ontario for just over three years. In December 2021, the employer terminated the employee’s employment without cause after deciding to hire an outside management company. The court later found that the termination process involved several serious problems, including violations of the ESA and promises that were never fulfilled.
Key Problems With the Termination
Failure to Provide Written Notice
The employee asked several times for written confirmation of the termination. The employer never provided it. The court held this violated the ESA requirement that employees with at least three months of service receive written notice of termination.
Late Payment of ESA Entitlements
The employer also failed to provide the employee’s statutory termination pay within the legally required timeframe. Under the ESA, termination pay must be paid within seven days of termination or on the next regular payday. Instead, payment was delayed for more than a month, and the employee testified that the original cheque was never received.
Unpaid Business Expenses
At the time of termination, the employer owed the employee more than $16,000 in business expenses that had been paid personally by the employee. Although the employer promised the expenses would be reimbursed shortly after the termination meeting, the money still had not been paid nearly a year later when the case reached court.
Broken Severance Promises
During the termination meeting, the employer told the employee he would receive approximately eight weeks of severance pay. The conversation was recorded. Despite this assurance, the employer ultimately paid only the minimum ESA entitlement.
Pressure to Resign
The employer also suggested that the employee should resign rather than be terminated, stating that doing so might be better for him. The court noted that encouraging a resignation in these circumstances may raise concerns that the employer was attempting to limit its legal liability.
Moral Damages for Bad Faith Dismissal
Employers must act honestly and in good faith when dismissing employees. If an employer behaves in a misleading, insensitive, or unfair way during a termination, courts may award moral damages in addition to wrongful dismissal compensation.
In this case, the court concluded that the employer’s conduct met that threshold. The employee testified that the employer’s actions placed him and his family in a financially vulnerable position and caused significant stress. The court awarded $15,000 in moral damages.
Reasonable Notice
The court also determined the appropriate period of reasonable notice. After considering the employee’s age, senior management position, length of employment, and the availability of similar work, the court awarded seven months of reasonable notice, plus compensation for lost benefits during that period.
The Employer’s Mitigation Argument Failed
The employer argued that the employee’s compensation should be reduced because he had not made enough effort to find new work. The court rejected this argument.
To reduce damages based on mitigation, an employer must prove:
- the employee did not make reasonable efforts to find work; and
- comparable employment likely would have been available.
The employer failed to prove that comparable work was available.
Key Takeaways for Employees
- Employers must follow the ESA, including providing written notice and timely payment of termination entitlements.
- Statements made during termination meetings can matter if an employer later fails to follow through.
- Employers must act honestly and fairly when terminating employees.
- Medical evidence is not always required for a moral damages claim.
- An employer must prove that comparable work was available to reduce damages based on mitigation.
The Court’s Award
- Seven months of pay in lieu of notice
- Compensation for lost benefits
- $16,680.03 in unpaid business expenses
- $15,000 in moral damages
- Pre-judgment and post-judgment interest
Speak With an Employment Lawyer
Termination of employment must be handled lawfully and fairly. Employers who violate the Employment Standards Act, 2000 (ESA), delay payments, or mislead employees during a termination can face financial consequences beyond standard wrongful dismissal damages.
If you have been dismissed and believe your employer handled the termination improperly, you may be entitled to compensation.
The employment lawyers at Monkhouse Law represent employees across Ontario and can review your situation to help you understand your legal rights. Contact us to book a free 30-minute telephone consultation.