The importance of playing nice: when employer misconduct leads to wrongful dismissal

"Employers ought to be aware of this case, as well as the issues that arose in this case, because it is important for employers to not only be aware of their obligations but to comply and avoid any conduct that could be seen as high-handed behavior or behavior that would attract criticism by the courts."

So says Daniel Wong, partner at WeirFoulds in Toronto, about a recent wrongful dismissal decision by the Ontario Superior Court of Justice that he says serves as a cautionary tale on the benefits of adopting a more cooperative approach to terminations and the value of taking the high road.

The employee in question was 52-year-old woman who had worked for the employer, a roofing and exterior building supply company, for 4.5 months as an executive assistant before being terminated without cause.

The employer failed to provide the employee with the required notice or pay in lieu of notice under the Employment Standards Act, 2000, the court found. Additionally, they refused her requests for a reference letter and reimbursement for valid business expenses. Despite acknowledging these entitlements during litigation, the employer cited a clerical error as its reasons for falling short of its obligations.

The employee sued for wrongful dismissal, seeking five months' notice damages, mental distress damages, and punitive damages. Gibson countered, claiming the employment agreement was enforceable and that Wilds failed to mitigate her damages by not diligently seeking new employment.

Employer support of employees post-termination being scrutinized by courts

One major takeaway from the ruling is the importance of providing sufficient assistance to terminated employees, Wong says.

"I often assist employers when they receive demand letters from counsel who have been retained by a terminated employee, and there's either a request or a demand for various types of assistance for their client,” Wong says.

“I am seeing a little bit more of those demands being more aggressive, in terms of the various things that an employee may be asking the now former employer to provide them as a means for support."

Wong also emphasized the necessity of providing some form of employment confirmation: "The case law does recognize that where an employer fails to provide some type of letter confirming employment where requested, that can be conduct that is punishable by the court."

He also noted the distinction between a reference letter and a letter of employment, stating, "I've seen some cases that talk about a reference letter versus a letter of employment, which in my view, are two substantively different things."

Employee applied to over 245 jobs

The Justice’s ruling further concluded that the employer had failed to present adequate evidence that the employee could have obtained alternative employment with greater effort.

She had documented her applications to over 245 jobs, while the employer provided only minimal evidence of job search results.

"To mitigate any damages arising from dismissal, an employee must make reasonable efforts to seek comparable employment. It remains the employer’s burden to prove the employee’s failure to do so. The employer bears the onus of demonstrating both that an employee has failed to make reasonable efforts to find work and that work could have been found,” the court stated.

The court also noted that the employer’s failure to provide the employee with letters of reference or of employment hindered her efforts to mitigate.

The crucial role of employment contracts in preventing wrongful dismissal claims

Wong highlighted the impact of the major 2020 Ontario Court of Appeal decision Waksdale v. Swegon North America Inc., 2020 which significantly changed the landscape of employment contract law in Ontario.

The Court referenced Waksdale in this decision, he points out.

"Termination provisions in many agreements that were drafted before 2020 are likely unenforceable,” Wong says.

"Employment contracts that were entered into pre-Waksdale – almost every one has a problem that renders a termination provision unenforceable. So employers need to be aware of that."

Moving forward, employers must carefully draft termination provisions in employment agreements to ensure enforceability, he stresses.

"Employers need to recognize the importance of carefully drafting termination provisions in an employment agreement to make sure that they are enforceable," he advises, "and therefore the benefit of a legal employment lawyer reviewing it can be very helpful to employers."