A person’s employment is integrally linked not only with their livelihood but also with their self-esteem and self-worth. Being dismissed from employment (i.e., being terminated) can be a traumatic event for an employee, not only financially but also emotionally. Employers are expected to recognize the distress, vulnerability, and humiliation often experienced by employees who are being dismissed and respond appropriately both during the termination process as well as after.
Employers’ Termination Responsibilities
Generally, when an employee is fired “without cause” (i.e., without sufficient reason) in Canada, they are owed termination entitlements. An employee’s termination entitlements will differ depending on many factors including the jurisdiction in which they work, whether they have a valid and enforceable termination agreement, their age, tenure, availability of comparable employment, etc. You can read more on termination entitlements in this article. In most situation, employers are legally required to pay at least the minimum termination entitlements immediately after the employee is dismissed.
Furthermore, when an employee is dismissed, the employer has a legal obligation to pay the employee everything they have earned up to the date of termination, and to provide the employee with a Record of Employment (ROE) within 5 days of termination. The ROE allows the dismissed employee to seek employment insurance (EI) benefits, if eligible, while they look for other work.
Often, employers are unaware of their obligations to employees and make missteps when dismissing employees due to sheer ignorance. Other times employers are simply behaving badly and flouting their obligations either in hopes of saving money, inflicting some financial or emotional pain to the former employee, or both.
The Price for Behaving Badly – Recent Case Law
In my 10+ years of practicing law, I have seen my share of employers behaving badly when dismissing an employee (whether inadvertently or deliberately), and getting away with it. But in the last few years the Courts have become increasingly willing to punish such employers for their behaviour through awards of moral and punitive damages.
Moral damages (also known as “aggravated damages”) are usually awarded when the manner of termination is done in bad faith and ends up causing the employee mental distress.
Punitive damages (also known as “exemplary damages”) are awarded where the employer’s behaviour is so deplorable that it warrants punishing the employer.
Below are just a few of the recent cases that have punished employers for behaving badly both during and after dismissal of an employee.
The Russell Case – Ontario
In Russell v. The Brick Warehouse LP, 2021 ONSC 4822 (CanLII) Mr. Russell, a 36-year employee of The Brick, was terminated at the age of 57 due to a company restructuring resulting from the Covid-19 pandemic. On dismissal, Mr. Russell was provided with a termination letter that included an offer of certain payments which were conditional on him signing a full and final release (meaning that Mr. Russell would have no legal recourse against The Brick). The termination letter did not tell Mr. Russell that if he did not sign the release, he would still receive his minimum termination entitlements, as is legally required.
Upon receipt of the letter, Mr. Russell immediately requested that his entitlements on termination (including statutory minimums to severance and pay in lieu of notice of termination) be deposited directly into his RRSP. Through what the court described as a series of “inadvertent missteps” The Brick ended up withholding these minimum payments until the start of the trial, which was some 7 months after Mr. Russell’s termination.
Ultimately, the court held that the failure to advise Mr. Russell of his unconditional right to the statutory minimum payments was a “serious defect” and amounted to a failure to treat him honestly and in a forthright manner. Along with 24 months of pay in lieu of notice amounting to approximately $170,000, Mr. Russell was awarded $25,000 in moral damages because of the employer’s failure to provide him with appropriate information regarding his minimum entitlements and lack of timeliness of payment.
Takeaways for Employers
We anticipate these decisions to be a harbinger of things to come when it comes to censuring employers who fail to meet their obligations to employees or who behave in a manner that the courts deem worthy of punishment. Importantly, it is apparent that courts are less and less willing to overlook bad behaviour that is framed as a mere “misstep” or “clerical error” because the potential unintended consequences to the employee are too great to ignore.
These cases serve as a reminder, if not a wake-up call, to Canadian employers that they must treat their employees with propriety, respect and dignity not only throughout the employment relationship, but as it is ending and afterward. A great part of that is ensuring that employees receive all of their termination entitlements and are receiving proper information from the employer.
Employers can protect themselves from such unintended consequences by obtaining good legal and HR advice BEFORE terminating an employee and ensuring that terminations are conducted properly in all respects.
About the Author
Ljubica Durlovska is an Employment Lawyer at HRC Law Professional Corporation. With a passion for employment and labour law, she has spent many years helping employers with a wide range of workplace issues, including assisting clients with employment contracts, discipline, investigations, policy development, accommodation, termination, and employment-related human rights and health & safety matters. Ljubica also has previous experience in corporate/commercial law and leasing.
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