Employee deserved payment despite ceasing employment before payout date, says judge
Ontario's Superior Court of Justice recently dealt with a wrongful dismissal claim filed by a worker who challenged the enforceability of his employment contract's termination provisions.
The worker argued that the termination clause in his contract failed to comply with the Employment Standards Act (ESA), rendering it unenforceable. He sought 14 months' reasonable notice and additional damages, claiming he learned of his dismissal through a colleague's text message while on holiday.
The employer countered that the contract had been freely signed and was valid, arguing for a reduced notice period based on the worker's alleged failure to properly mitigate his damages after termination.
The worker had been employed for about eight years at the company, holding the position of senior success signature engineer. On January 4, 2023, while on holiday, he received written notice that his employment would end eleven-and-a-half weeks later. He first learned about his termination through a text from a colleague who told him he had been "deactivated on Slack."
The employment contract contained a termination clause purporting to limit his entitlements. One document the worker signed when accepting employment was a "global employees handbook" that contained statements about employment "at will" - a concept not recognised in Ontario employment law.
Justice Brownstone found the termination provisions unenforceable, stating: "There is no practical way that an employee in Ontario could be aware, when signing the contract, of the terms that would govern his termination. The ambiguity contained in the documentation... is explained by [the employer]'s choice to use one contract for employees in many jurisdictions."
In determining the appropriate reasonable notice period, the court examined the worker's age (nearly 50), length of service (eight years), job responsibilities, and job market conditions.
The worker claimed he was induced to join the employer and argued his previous employment should factor into his length of service. The court disagreed: "I do not agree that [the worker] was induced to join [the employer]. The evidence shows that a recruiter sent him a message on LinkedIn and he then applied for the job, at which he would earn a higher salary."
Regarding his position, the worker described holding a specialized role integral to serving customers in urgent situations. He claimed his position was managerial because he was involved in mentoring and interviewing candidates.
The court found the evidence didn't support these claims: "[The worker] had no authority to hire, fire, or discipline employees. There is no evidence of him being involved in budgeting and no evidence that people reported to him. Rather, he was a senior-level technical employee."
The employer argued the worker's notice period should be reduced because he hadn't made reasonable mitigation efforts and refused to produce his Notice of Assessment, which would have verified his income during the mitigation period.
The court reviewed the worker's job search, which included 18 applications in the first three months before he decided to pursue additional certifications. Justice Brownstone noted: "The standard for job efforts in mitigation is not perfection." The court found insufficient evidence that his mitigation efforts were unreasonable.
However, the court took serious issue with the worker's refusal to produce his tax Notice of Assessment until just before the hearing. This refusal led the court to draw an adverse inference and reduce the notice period from 11 to 8 months: "I agree with [the employer] that in the circumstances, an adverse inference should be drawn that the document would not support [the worker]'s income figures."
In 2022, the worker received an annual bonus of $12,808.06. He sought both his stub bonus payment for fiscal 2023 and a pro-rated bonus for the notice period. The employer had paid an advance but argued their bonus plan excluded terminated employees.
The court sided with the worker: "I find that [the worker] is entitled to his bonus amount for fiscal year 2023. He ought to have been employed in April 2023, the date on which the bonuses were paid out." While the employer claimed the worker would have received a lower bonus in fiscal year 2023, they failed to provide supporting documentation.
The court determined the worker was entitled to benefits calculated at 5% of his base salary for five months and 10% for one month, plus pro-rated Registered Retirement Savings Plan (RRSP) contributions for the notice period.
The worker sought punitive or aggravated damages based on how his termination was handled - particularly learning about it through a colleague's text while on holiday. He argued the termination was "callous and impersonal" with no phone call or meeting to discuss the dismissal.
The employer responded that given the size of the workforce reduction (about 10% of employees, over 3,000 people), individual termination meetings weren't feasible.
Justice Brownstone acknowledged the circumstances were "not ideal" but found no bad faith: "[The worker]'s distress and feelings of hurt, disrespect, and anxiety are understandable feelings that accompany terminations and do not go beyond what would normally be expected."
The court distinguished this case from others with more egregious employer conduct: "[The employer] was managing a large layoff. It may have done so imperfectly, but it did not do so in a way that attracts moral, aggravated, or punitive damages."
In the final judgment, the court granted the worker eight months' pay in lieu of reasonable notice (reduced from 11 months), his 2023 bonus payment minus the advance, pro-rated benefits, and RRSP contributions, with credit for amounts already paid by the employer.
This case highlights the importance of crafting clear, jurisdiction-specific termination clauses that comply with local employment standards.
