Judge Awards 24 Months Notice + $25,000 Moral Damages:

In Russell v The Brick Warehouse ( 2021 ONSC 4822) Justice Vella awarded 24 months notice to a 57 yearly Senior Supervisor making $75k with 36 years service.

However the surprising part of this case is that the Judge also awarded $25,000 for certain events following the termination. In essence, the Defendant failed to tell the Plaintiff that if he did not accept their offer ( which was in excess of the ESA minimums) they would nevertheless pay him his ESA minimums.

This is what the Judge had to say about the employer’s behaviour

[51] In considering the factors that inform an award for moral damages, the court is to look at the manner in which the dismissal was carried out. This can include conduct at the time of the dismissal and following the dismissal provided it is related to the dismissal: See Doyle at paras. 26 and 39. 

[52] The termination letter provided to Russell, dated July 21, 2020, is the focus of this analysis. It provided a without prejudice offer to settle Russell’s termination and severance obligations by providing terms that were, generally, more generous than the statutory minimum entitlement, but less than his common law entitlement for other aspects of his compensation. Russell had three days to accept this offer and would have had to sign a Release in favour of the employer. 

[53] The termination letter was not fully compliant with the minimum statutory entitlements of the ESA insofar as it did not reflect an extension of Russell’s employment related long term disability, accidental death and dismemberment coverage or ongoing participation in the Group RRSP and DPSP programs during the statutory notice period. Furthermore, the termination letter provided that vacation pay would only be paid accrued to the date of termination. Under the ESA, vacation pay continues to accrue over the statutory notice period, or eight weeks beyond termination in Russell’s case. 

[54] More importantly, the termination letter did not advise that if Russell declined the offer, he would be immediately provided with his statutory entitlements under the ESA. I find this to be a serious defect with the termination letter, as it implies employees will know that they can demand their statutory entitlements forthwith upon rejection of these types of offers. This defect reflects a failure by The Brick to deal fairly with Russell. By failing to include this proviso in the termination letter, The Brick was not being honest and forthright with Russell. 

[55] Furthermore, while The Brick’s failure to immediately transfer the correct amount of severance and termination pay into Russell’s RRSP was largely due to a series of “inadvertent” missteps on its conduct post termination, it nonetheless reasonably caused Russell distress beyond the “normal” hurt feelings that accompany termination without cause. 

[56] There is some evidence in the record that supports the requisite degree of mental distress, recognizing that mental distress need not be proven by medical evidence: Groves v. UTS Consultants Inc., 2019 ONSC 5605 at para. 113. 

[57] I recognize that an employee, like Russell, does not have a statutory entitlement to have his severance and termination pay directed to an RRSP. However, there is no suggestion by The Brick that it would not accommodate such requests from terminated employees and Russell made this request on July 23, 2020 – three days’ after receiving the termination letter – and this request was repeated by his lawyer. Eventually, The Brick did arrange for a direct deposit into Russell’s RRSP. 

[58] Russell was without income or, to his knowledge, benefits for approximately seven and a half months post termination. His spouse was forced to go back to work full time and Russell had to use his savings to make ends meet for the family during this period. Russell has been receiving some medical treatment and medication for stress related issues according to his unchallenged evidence. There was no good reason for The Brick to have failed to advise Russell by at least July 23, 2020 (after receiving his counterproposal) or shortly thereafter that the majority of his benefits would be extended beyond termination, in compliance with the ESA. There was also no good reason for The Brick to have not immediately advised Russell that he would receive his statutory notice and severance pay in the event its without prejudice offer was rejected. This is no way to treat any employee, much less a long-term loyal employee of over 36 years. 

[59] The fact that The Brick offered for Russell to keep the funds totalling the net ESA entitlements does not relieve it from its errors and lack of timeliness (see the chronology and evidentiary cites at para. 16 of Russell’s factum). The whole point was that Russell wanted the funds deposited into his RRSP so that there would be no personal tax withholdings from it. The 

Brick had already taken far too long to get the statutory entitlements right irrespective of the date when it was provided with the RRSP bank deposit information by Russell’s lawyer. 

[60] Furthermore, The Brick used the same basic template termination letter, modified to the circumstances of each terminated employee, as was used for Russell. While no direct evidence was led on the issue of how the “template” termination letters were modified, the inference is either none of the termination letters reflected the advice to employees terminated at around the same time as Russell that if The Brick’s offer to settle was rejected, they would receive the statutory minimum entitlements, or the other letters did reflect that advice and it was omitted from Russell’s termination letter. Either way, this factor supports an award of moral or aggravated damages, in combination with the other factors reviewed. 

[61] Russell asks for an award of $50,000 as moral or aggravated damages. 

[62] In the circumstances of this case and having regard to awards made by this Court in other cases featuring similar types of unfair dealings during the course of termination, I am awarding $25,000.00 as moral damages for the following reasons: 

a) A lack of transparency and fair dealing by The Brick in the termination process by failing to advise that Russell would be provided with his full statutory (ESA) entitlements in the event he rejected the offer reflected in the termination letter; 

b) A lack of transparency and fair dealing by failing to advise Russell that his benefits would be extended consistent with his statutory notice period irrespective of whether he accepted The Brick’s offer; 

c) The failure of the offer to meet all of the statutory entitlements, including vacation pay accrued over the course of the statutory notice period; and 

d) Mental distress Russell suffered beyond the usual hurt feelings and distress of being dismissed, and which was reasonably foreseeable to The Brick arising from its lack of transparency and fair dealing in the manner of terminating his employment. 

My Comments:

This is another example of how the Courts are reacting to behaviours by the employer that in their opinion fall below the acceptable standard.

For instance ,the Court felt that not telling the Plaintiff that if did not sign the release he would still be paid his ESA minimums was wrong. However, within one month of his termination he retained an experienced employment counsel who would have told him this. In fact, within 10 days of his termination the employer not only paid the ESA minimums but overpaid it by paying it twice. Therefore how was the Plaintiff possibly misled?

The problems seem to arise from this “overpayment “. Once they realized this “overpayment” the Defendant  asked that the Plaintiff return the portion in excess of his ESA. The Plaintiff refused and instead the Plaintiff returned the whole net amount. Why did he not simply keep all the money and tell the defendant it was a credit to his common law entitlement?

Through a series of screw ups the ESA payment was not properly paid to his RRSP until 7 months later.

The Judge made references to  some without prejudice offers made by both the Defendant and the Plaintiff . Funny, I always  thought that offers that were not accepted were not even to be disclosed to the Court, let alone referred to or relied upon.

One of the basis for the moral damages was the failure to pay vacation pay on the termination pay. At 12% of 8 weeks salary  at $75,000 /year this would amounted to $1,385.  But in fact the Defendant paid twice the ESA amount , an overpayment of 34 weeks ( $50,480) which more than covered the vacation pay underpayment of $1,385. Remember, the Plaintiff chose to repay the entire amount ( presumably because he wanted it in RRSP not subject to tax withholding ) and now was complaining that he did not get his ESA payments for 7 months.

My personal feeing is that certain judges feel compelled by the Court of Appeal to cap notice periods at 24 months absent special circumstances. However they feel that the Plaintiff should receive more than this informal cap and therefore will find other creative ways of rewarding extra monies to plaintiffs they believe are deserving by focusing closely on the Employer’s actions at the time of and following the termination.

If you would like a copy of this case, send me an email at barryfisher@rogers.com.