Employers lose appeal against long-serving worker’s wrongful dismissal claim

After 30 years of employment, individual dismissed after surgery without notice

Employers lose appeal against long-serving worker’s wrongful dismissal claim

The Court of Appeal for Ontario recently dealt with an employment law case involving the wrongful dismissal of a worker who had worked for his employer for nearly three decades.

The court had to consider several key issues, including the worker's duty to mitigate damages, the awarding of aggravated damages, and the joint and several liability of the employers.

In this case, the court discussed the complexities of employment law, addressing questions that often arise when a long-serving employee is terminated without cause or notice.

The decision sheds light on the obligations of both employers and employees during the dismissal process and provides valuable insights into the factors courts consider when determining appropriate remedies.

Background of the case

The worker began his career as a carpenter in 1976 and became a journeyman carpenter in 1983. In 1987, he began working in Thunder Bay, Ontario, in the maintenance department of Thunder Bay Electronics Limited (TBEL) and Hill Street Financial Services (together, the “employers”).

TBEL is in the business of television broadcasting. Hill Street provides administrative and accounting services for TBEL. Hill Street owns the building out of which TBEL operates.

Within 18 months, he was promoted to the position of building maintenance supervisor, a role he held until his employment was terminated in June 2016.

According to records, throughout his nearly 30-year tenure, the worker was a dedicated and skilled employee, taking on a wide range of responsibilities and physical tasks.

He was trained to work at heights, perform tower rescues, and climb transmission towers to service and change equipment, often in challenging weather conditions.

Termination and legal action

On June 13, 2016, just hours after the worker returned to work following back surgery, the employers terminated his employment without notice or cause.

At the time of dismissal, the worker was 59 years old and earning an annual salary of approximately $72,864.

The employers offered the worker a severance package of 16 months' salary and asked him to sign a Memorandum of Settlement and Release.

However, the worker refused and initiated legal action for wrongful dismissal, claiming damages for mental distress and aggravated/moral damages.

Trial court’s findings

The trial judge determined that the worker was entitled to a reasonable notice period of 24 months, based on his "exemplary loyalty and dedication" to his employers.

The court rejected the employers' argument that the notice period should be reduced due to the worker's alleged failure to mitigate damages.

The trial judge found that the worker was "unable to perform any meaningful physical labour due to his physical condition" during the reasonable notice period.

"Whether a terminated employee took reasonable steps to mitigate is largely a question of fact – absent an error in principle or a palpable and overriding error, a decision respecting mitigation is entitled to deference."

The Court of Appeal upheld the trial judge's findings, stating that there was no palpable and overriding error in concluding that the worker was physically incapable of performing comparable work during the notice period.

Aggravated damages

The trial judge awarded the worker $50,000 in aggravated damages, finding that the manner in which the employers terminated his employment was "the antithesis of an employer's duty" to be candid, reasonable, honest, and forthright.

The Court of Appeal agreed with this assessment, emphasising the importance of an employer's duty of good faith during the termination process.

"Breach of the duty of good faith occurs through conduct that is unfair or made in bad faith, as for example, by being 'untruthful, misleading or unduly insensitive'. Callous or insensitive conduct in the manner of dismissal is a breach of the duty to exercise good faith."

The court clarified that while normal distress and hurt feelings resulting from dismissal are not compensable, aggravated damages are available when an employer engages in conduct that is unfair or amounts to bad faith during the dismissal process, and the employee suffers damages as a consequence.

Joint and several liability

The trial judge held the employers jointly and severally liable for the damages awards, a decision that the Court of Appeal upheld. The court found that the worker had been employed by both companies for the duration of his employment, as evidenced by the Memorandum of Settlement and Release.

"Because [the worker] was employed by both [employers], the trial judge made no error in ordering them jointly and severally liable for damages arising from their wrongful termination of his employment."

The case serves as a reminder to employers of their obligations during the termination process. The court emphasised the importance of acting in good faith, being honest, and treating employees with sensitivity and respect.

Failure to do so can result in significant financial consequences, as demonstrated by the substantial aggravated damages awarded in this case.

"Reading the trial judge's reasons as a whole, it is clear that he accepted that as a result of the manner of dismissal, [the worker] was plagued by anxiety, depression, fear, poor sleep, frustration, and feelings of helplessness. That is, he found that [the worker] suffered harm beyond the normal distress and hurt feelings resulting from dismissal."

Furthermore, the decision highlights the need for employers to carefully consider an employee's individual circumstances, such as age, length of service, and physical limitations, when determining reasonable notice periods and assessing their duty to accommodate.

"In considering whether [the worker] had fulfilled his duty to mitigate, the trial judge acknowledged that his attempts to find alternate employment in the period immediately following termination were 'scant at best'. However, the trial judge was not persuaded that [the worker] failed to make reasonable efforts to mitigate during the notice period because, at that time, [the worker] was (1) 59 years old, (2) recovering from back surgery, and (3) 'significantly limited in his ability to perform the physical labour which his occupation demands on a daily basis'."

The Court of Appeal's ruling provided guidance for both employers and employees navigating the complexities of wrongful dismissal. It serves as a reminder that the manner in which an employment relationship is terminated matters and that courts will not hesitate to award significant damages when employers breach their duty of good faith.

"For these reasons, I would dismiss the appeal with costs to the [worker] fixed at the agreed-on sum of $12,000, all-inclusive," the decision concluded.

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