Wrongful Dismissal Damages in Employment Law

When a dismissed employee sues their former employer the potential cost to the employer can often be estimated early on in the process. This can help both the employee and the employer reach a satisfactory settlement. In certain cases however the unexpected happens and an employee’s claim becomes far greater than originally anticipated. The recent employment law case of Brito v. Canac Kitchens demonstrates how an employee’s damages can expand in a wrongful dismissal claim.

In the majority of cases an employee who is wrongfully dismissed by their employer is entitled to reasonable notice damages. These damages represent the amount of notice that the employer should have given to the employee that they were going to lose their job. In most wrongful dismissal cases the majority of the damages awarded are reasonable notice damages in the form of a continuing salary during the notice period. The notice period may last anywhere from a few weeks to 24 months. During the notice period employers are responsible not only for an employee’s salary but also for the other benefits an employee received, including long-term disability benefits if applicable.

In the Canac Kitchens case, about 16 months after being laid off, the plaintiff, a dismissed employee of Canac Kitchens, underwent surgery for laryngeal cancer and would have became eligible for the long-term disability benefits formerly provided by his employer. At trial, the judge found that the plaintiff had become disabled during the reasonable notice period that his employer ought to have, but did not, provide. Because the employer had chosen not to continue the plaintiff’s long-term disability benefits during the notice period the employer was held liable to compensate the employee for his lost benefits. This finding by the judge more than doubled the damages award provided to the employee. In addition, the judge described Canac’s conduct as “reckless, outrageous, and high-handed” and an additional award of $15,000 was provided to the plaintiff as ancillary damages. The Canac Kitchens case is an excellent example of how what may seem to be a simple dismissal case can become very costly to an employer when an employee becomes disabled during the notice period. To read the entirety of the decision click here.

Frequently Asked Questions

What is "just cause" in employment law?

Last month local newspapers reported the case of a McDonald’s employee in Kanata who was dismissed after receiving poor performance reviews. The employee received more than $100,000.00 in court. Why?

‍The short answer is that the judge in this case found that although the employee’s performance was not perfect the employer did not have “just cause” to terminate her employment contract. If a business chooses to dismiss an employee the employer has to first decide if they have just cause to end the contract or not. Just cause exists when an employee has committed a serious breach of contract such as theft or continually missing work without reason. If the employer does not have just cause then in most cases they have to provide compensation which can equal up to a month of salary for every year of the employee’s service.

Many employers have staff who they believe are poor performers. Performance reviews are often done to encourage better performance but may also be an attempt to build a case for a just cause dismissal. After several poor performance reviews an employer may choose to dismiss an employee for just cause. However, a decision to terminate an employee for just cause can be challenged in court where employers often find it difficult to prove that the alleged breach of contract was serious enough to warrant a just cause dismissal. Poor performance reviews may show that an employee was less than perfect but this alone is usually not enough to disentitle them to some compensation when they are dismissed. Because compensation is typically based on the number of years the employee has worked, the amount owing to dismissed employee can be significant which is what occurred in the case of the former McDonald’s employee.

Are managers and supervisors ineligible for overtime pay?

I recently changed roles at work. My new title is “Accounts Manager” and I am responsible for all the company’s accounts payable and receivable. I also help other staff price our products and develop new accounts. I am very happy about my new role but my job used to be “9 to 5” and now I have to work late and on weekends. I asked my boss about overtime but was informed that managers and supervisors do not receive overtime pay. Is this true?

For most employees in Ontario overtime hours start after 44 hours of work in a week. For every hour worked in excess of 44 hours an employee is supposed to receive time and a half.

Under the Employment Standards Act there are exceptions to the general rule including that managers and supervisors do not receive any overtime compensation. For this “manager exception” to apply, an employee generally needs to be performing work that involves the supervision of other employees in a leadership role as opposed working in general administrative duties. Also, the exempt employee must be working in the manager role the majority of the time while at work - not just every now and then. The fact that someone’s job title includes the word “manager” or “supervisor” does not determine their entitlement to overtime pay. Rather, it depends on what the actual duties of the employee are.

Although many job titles, such Accounts Manager, include the word “manager” this does not necessarily mean you don’t get overtime pay. If your job does not involve supervising other employees this is a good indication that you may be entitled to overtime compensation. For more information you can seek legal counsel or examine the Ministry of Labour’s website at http://www.labour.gov.on.ca/.

Fired without Cause - Should you take the offer?

I was fired without cause. My employer has given me an offer. Should I take it?

Answer: Employers aren’t handcuffed to their employees. If they act in accordance with their statutory and common law obligations, employers are free to part ways with employees without cause. Typically, the employer is obliged to provide statutory or common law reasonable notice or payment in lieu of notice. Costs, benefits, risks and reward of bringing legal action, should all be considered, prior to starting a claim.

Needlessly pursuing litigation could potentially prejudice the employee. You could delay the settlement and run the risk of losing a fair offer. You may find another job in the weeks following termination. If this happens, then the employer’s settlement may be subject to mitigation which means that they are credited the wages you obtain from that new job. You may also pay more in legal fees then the additional notice you should have received.

There are cases where employees are grossly underpaid when it comes to severance, so I do advocate that everyone who faces termination seek counsel to go over any severance offer. Do not sign it blindly. Speak to a Lawyer and make sure the offer is fair. Employers will often expect and, if prudent, will insist that their past employees reach out to counsel when deciding to sign a severance offer. You should do so as soon as possible after receiving the offer.

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