In Teljeur v Aurora Hotel Group, 2023 ONSC 1324, a wrongful dismissal case, the court awarded the plaintiff-employee seven months’ damages for reasonable notice, and $15,000 in moral damages due to the employer’s bad-faith conduct in the manner of dismissal.  The court denied the employer’s claim that it was entitled to a discount of the reasonable notice period because the employee failed to make reasonable efforts to mitigate his damages. 

Background

The general manager (employee) of a resort in Ontario (employer) was advised in December 2021 that his employment was being terminated without cause because the employer intended to retain an outside management company to manage the resort.  The 56-year-old employee was first employed by the resort from May 2015 to September 2016, and then resumed his employment in the fall of 2018.  The employee surreptitiously recorded the termination meeting. 

The employer argued, among other things, that the employee did not make reasonable efforts to mitigate his damages by seeking alternative employment, and the employee sought an award of $20,000 in moral damages based on an allegation of bad faith by the employer.

Decision

Mitigation

The court reviewed the caselaw on mitigation and noted that it provides that the onus is on the employer to establish that the employee failed to mitigate by (a) determining whether they took reasonable steps to mitigate; and (b) whether, if such steps had been taken, the employee would have been likely to obtain comparable alternate employment. 

The court dismissed the employer’s argument on the mitigation issue because there was no evidence from which an inference could be properly drawn that a better job search by the employee could have resulted in his obtaining comparable employment; and even if there had been such evidence, there was no evidence regarding how much the employee could have earned by way of mitigation.

Moral Damages

The court reviewed the case law pertaining to awards of moral damages based on bad faith in the manner of dismissal, and found that such damages are available where: (a) the employer engages in conduct during the dismissal that is unfair or in bad faith because it is untruthful, misleading or unduly insensitive, and the employer is not candid, reasonable, honest and forthright with the employee; and (b) the employee can prove that the manner of dismissal caused mental distress that was in the contemplation of the parties, and beyond the understandable distress and hurt feelings normally accompanying a dismissal.

The court concluded that the employer engaged in conduct during the dismissal that was in bad faith, which added significant stress to the employee’s life on top of the stress he was experiencing because of his dismissal.  Accordingly, the court awarded the employee $15,000 in moral damages based on the following “disturbing aspects” of the employee’s termination, which were highlighted in the surreptitious recording of the termination meeting:

• Section 54 of the Employment Standards Act, 2000 (ESA) provides that no employer shall terminate the employment of an employee who has been continuously employed for three months or more unless the employee has been given written notice of termination.  At the termination meeting, the employee asked at least three times for something “in writing.” The employer agreed to provide it, but then failed to do so.

• Section 11(5) of the ESA requires the employer to deliver the employee’s ESA entitlement no later than seven days after the employment ended or the next pay day. The employer failed to do so, and the employee went through the holiday season without any financial support from his employer.

• Section 60(1)(a) of the ESA provides that during the notice period the employer must not reduce the employee’s wage rate or alter any other term or condition of employment. The employer conceded that it owed the employee $16,680 for out-of-pocket expenses that he incurred on behalf of the employer prior to the termination of his employment.  At the time of his termination, the employee was told by his employer that they needed to figure out his credit card expenses so he could get paid out, “before the next week or so”; however, the employee was not paid for these expenses.

• In the termination meeting the plaintiff was told that he would receive slightly more than eight weeks’ severance; however, the employer limited the amount paid to the plaintiff to his ESA entitlement.

• During the termination meeting, the employer encouraged the employee to resign. In considering the employee’s claim for mental distress, the court did not rule out the possibility that this was encouraged to limit the employer’s exposure in a wrongful dismissal claim.

Bottom Line for Employers

Aurora Hotel cautions employers that it is not enough to establish that an employee failed to take reasonable steps to mitigate their damages upon termination of their employment; employers must also establish that if the employee had taken such steps, they would have been likely to obtain comparable alternate employment.

Aurora Hotel also cautions employers that when they terminate an employee’s employment they must act in good faith, including by complying with their minimum statutory obligations to the employee under the ESA, and by paying the employee anything more that was promised to them; an employer’s failure to conduct itself in this manner can cause a court to find it liable for a significant quantum of moral damages, provided the employer’s conduct caused the employee to experience mental distress greater than that normally experienced upon a dismissal.  For this reason, employers are encouraged to ensure that their human resources personnel, supervisors, and managers are well trained in their policies for appropriate conduct during an employee’s dismissal, and reminded that employees may surreptitiously record termination meetings, and that surreptitious recordings may be submitted as evidence.