'Not paying the minimums under the ESA… opens the door for moral damages'
“If you plan on terminating [an employee], terminate properly – don't try to avoid employment standards entitlements.”
So says Christopher Achkar, an employment lawyer and principal at Achkar Law in Toronto, after an Ontario resort was ordered to pay a fired worker seven months’ salary and benefits plus an additional $15,000 in moral damages.
“The manner of termination should always be conducted as respectfully as possible, because that could avoid an employee going to a lawyer or being litigious,” he says.
“If you don't want to offer more, that's fine, but at least pay the statutory minimums as required by the legislation.”
General manager rehired
The 57-year-old worker was hired in 2015 by the Pinestone Resort – a golf and conference centre in Haliburton, Ont., operated by Aurora Hotel Group – to be a general manager. His employment was terminated in September 2016, about 16 months later.
Two years after his termination, Pinestone brought the worker back to be a general manager starting on Oct. 1, 2018. He wasn’t credited with any previous seniority and Pinestone treated him as a new employee.
As a general manager, the worker managed all aspects of the resort, including ensure staff were prepared with the proper resources. He was responsible for hiring and managing employees, co-ordinating staff schedules, and managing the resort’s social media pages and marketing. He also handled guest complaints.
Courts have been assessing whether the pandemic should be factored into fired employees’ notice entitlement, according to employment lawyers.
Terminated without cause
On Dec. 6, 2021, two senior executives met with the worker and informed him that his employment was being terminated for a second time. They said that there was no cause, but the resort had decided to retain an outside management company to manage the resort.
During the termination meeting, the worker asked three times for something in writing, but the resort didn’t provide anything. The executives suggested that he could tell staff that he had resigned three weeks previously and he would be “better off” if he did that. The worker refused.
The resort mailed the worker a cheque covering his statutory minimum severance entitlement on Jan. 14, 2022, but the worker claimed that he didn’t receive it. Another cheque was issued on Jun 8.
The worker sued for wrongful dismissal, claiming damages for 10 months’ reasonable notice plus 10 per cent for fringe benefits, reimbursement of more than $16,000 in out-of-pocket expenses he incurred while working, and $20,000 in moral damages for the breach of the duty of good faith.
The worker updated his resumé and accounts with three online job-search websites. He applied to three positions but was unsuccessful. However, he didn’t maintain many records in his search.
The resort’s parent company, Aurora, offered the worker an opportunity to help the company locate properties to purchase – the worker had a real estate license – but the worker didn’t accept.
A recent Ontario court decision fed uncertainty around terminations and the limit to notice entitlement, says a lawyer.
Inadequate mitigation, short service: employer
The resort argued that that notice period should be 3.5 to five months based on the worker’s short service time. It also argued that the worker didn’t adequately mitigate his damages, noting that he complained about the Pinestone Resort and its operators on Facebook and didn’t follow up on an opportunity that it offered him to find properties for purchasing.
The resort also said that it hadn’t paid for the worker’s expenses because he was demanding interest on the amount owed.
The Ontario Superior Court of Justice found that the worker’s duration of employment was relatively short at just over three years, but he was in a senior management role with significant responsibility. The worker’s age of 56 at the time of termination put him at a “senior age level” and the pandemic going on at the time of his dismissal added to the “challenging circumstances” in finding new employment, said the court.
The court determined that all of the factors pointed towards seven months as a reasonable notice period. It also found that an additional 10 percent for benefits during the notice period was a reasonable calculation based on previous court decisions and a lack of details on the benefits plan for Pinestone employees.
An Ontario employer was ordered to pay $50,000 in moral damages after misleading a worker on his job prospects after the sale of the company.
Service time only one factor
“The employer wanted to pay three-and-a-half to five months and it's frankly quite reasonable for someone who's worked somewhere for such a short period,” says Achkar. “But COVID played a factor and the court did say the duration of service is only one factor.”
Achkar points out that the main factors at play were the worker’ age, his length of service, and his salary – although the worker’s salary in this case – $72,000 – wasn’t high enough that the court considered it a hindrance to finding comparable employment.
The court disagreed with the resort’s argument that the worker didn’t adequately try to mitigate his losses. Although the worker’s job-search records were spotty, the resort didn’t provide any evident that if he had applied for other positions he would have been able to find comparable employment, said the court.
The court also discounted the opportunity with Aurora, as it was related to the worker’s work as a real estate agent, not with the resort. There was also no evidence on how much the worker would have earned doing that during the notice period or how much work was available, said the court in finding that there should be no deduction from the notice award.
HBC had to pay a fired worker $55,000 in moral damages after it didn’t pay the worker termination pay properly and it made a cynical re-employment offer.
Employer acted in bad faith
The court also agreed with the worker that the resort breached its duty of good faith by not providing him with written notice of termination and failing to deliver his statutory severance pay within seven days or the next payday, as required by the Ontario Employment Standards Act, 2000. This also meant that the worker went through the holiday season without any money from his employer, said the court.
The failure to pay the worker for his out-of-pocket expenses, regardless of his demand for interest, and trying to get him to resign – which would limit the resort’s liability – were also bad-faith conduct that were “untruthful, misleading, or unduly insensitive,” said the court in finding that $15,000 in moral damages was warranted.
The resort was ordered to pay the worker damages for reasonable notice for seven months, minus the statutory amounts already paid, plus 10 per cent for damages, moral damages of $15,000, and more than $16,000 reimbursement for work expenses.
The Pinestone Resort made two big missteps that exposed it to liability for moral damages on top of the wrongful dismissal damages, says Achkar.
“One, not paying the minimums under the Employment Standards Act – as soon as that is there, that opens the door for moral damages without the need for the second thing that went extremely wrong,” he says. “Then they outright tried to get the employee themselves to resign, and that’s a way to avoid having to pay that person anything.”
“Pushing an employee to resign is a way that employers try to circumvent the Employment Standards Act, and it's viewed terribly.”
