'Wrongful' termination conduct leads to massive moral, punitive damages

Case serves as a reminder on how to properly terminate long-time staff

'Wrongful' termination conduct leads to massive moral, punitive damages

An employer's "wrongful" conduct in terminating a long-time employee resulted in moral and punitive damages totalling $55,000. The employer is a Toronto-based retail company that fired an employee who worked there for 28 years because of nation-wide restructuring. During the dismissal, the company only provided the employee a termination letter and offered a separation package of 40 weeks, including entitlements under the Employment Standards Act (ESA).

However, when the employee turned this down, the company provided him his ESA entitlements and offered to continue his employment, but in a lower position. The employee still declined the offer and took court action against the employer, claiming wrongful termination, as well as moral and punitive damages.

Court's decision

In its decision, the Ontario Superior Court sided with the employee and said he is entitled to a 24-month notice period, citing how the employee "spent his entire working life" in the company and the availability of similar roles that are relevant to his training and experience.

"Employers, employees, and the courts all recognize length of service as an important factor in determining fair and appropriate compensation at the time of termination," read the decision.

The court also awarded the employee $45,000 in moral damages after his employer "breached the duty of good faith and fair dealing at the time of the termination." According to the court, the employer's decision to walk out a "loyal" employee to the door was "unduly insensitive."

"[The employee] had committed no misconduct. There was no reason to treat him so insensitively," said the court.

The offer of a sales associate job, which had a lower compensation offer, as a "continued employment" was also "misleading and a breach of the duty of good faith and fair dealing," cited the court. The employer also violated the ESA when it did not pay the wages it owed the employee in a lump sum within the required period, according to the court, calling the employer's move to pay out the termination and severance pay in instalment as "unacceptable."

"It is a large, sophisticated employer and there is no excuse for it not complying with its obligations under the ESA," said the court. "Employers are required to comply with the ESA and should not be surprised when they face consequences if they fail to do so."

In addition, the court also said the employer failed to properly issue a record of employment within five days of the employee's interruption of earnings. It agreed that the employer placed its interests above the employee's and that it "increased [his] sense of exploitation, humiliation, and depression."

"I find that the wrongful conduct of [the employer] caused [the employee] mental distress beyond the understandable distress and hurt feelings normally accompanying a dismissal," said the court.

In awarding $10,000 punitive damages, the court cited the employer's failure to pay out wages in accordance with the ESA and its failure to issue a timely or correct record of employment.

This means the employer would have to pay the moral and punitive damages, in addition to the 24-month salary, cost of replacement benefits, and employer contribution to pension, to total $149,662.50.

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