Employers Beware: A Poorly Drafted Termination Letter Leads to a Damage Award of $25,000

Written by on October 14, 2021 in Employment Law Blog, Focus on Canadian Cases
Termination Letter

In Russell v. The Brick Warehouse LP, 2021 ONSC 4822, the Ontario Superior Court of Justice awarded $25,000 in aggravated and moral damages against The Brick in a wrongful dismissal case brought by a terminated employee, due to The Brick’s lack of transparency in the termination letter.

The employee was 57 years old and had worked for The Brick for 36 years. The Brick terminated the employee without cause on July 21, 2020. In relying on the Bardal factors, the Court awarded the employee 24 months’ notice. The Court noted that the fact that he was a long service employee weighed in favour of a longer notice period.

The employee also claimed aggravated / moral damages for the mental suffering caused by the manner in which the termination was carried out. The focus of the Court’s analysis for aggravated / moral damages was the termination letter, specifically how it was drafted and the exclusion of specific statutory entitlements.

The Court found that the termination letter, which contained a without prejudice offer, failed to:

a)  extend the employee’s benefits over the statutory notice period, as required by the Employment Standards Act, 2000 (“ESA”);

b)  failed to allow the accrual of the employee’s vacation pay over the statutory notice period, as required by the ESA;

c)  and failed to inform the Employee that if he did not accept the without prejudice offer, that he would nevertheless be paid his ESA

With respect to this last point, the Court found as follows:

“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.”

Moreover, after the employee received his termination letter, he requested that his statutory minimums be placed into his RRSP account. Due to a series of inadvertent missteps by The Brick, it was not until seven and half months later that the employee received his statutory minimum entitlements. This resulted in the employee being without income or his benefits for seven and a half months after his termination, leading him to dip into his savings. The Court found that this caused the employee to suffer from mental distress that went beyond the normal feelings of emotional distress an employee suffers from upon their termination.

The Court found that the following factors entitled the employee to an award of $25,000.00 for aggravated / moral damages:

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;

d) The use of a template termination letter; and

e) Mental distress the employee 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.

Termination Letter Takeaways

Employers should seek the advice of an employment lawyer before drafting a termination letter. If an employer chooses to draft a termination letter without the advice of an employment lawyer, which is strongly discouraged, an employer should remember to:

  1. Always comply with all minimum ESA entitlements, including paying an employee their ESA termination and severance pay within 7 days after their terminate date, or in the next pay period, whichever is earlier, extending an employee’s benefits over the full statutory notice period and allowing for the accrual of vacation pay over the full statutory notice period;
  2. Expressly inform the employee in the termination letter that, should they refuse to accept a “without prejudice” offer, they will nevertheless receive their minimum ESA entitlements; and
  3. Avoid using a template termination letter.

Contact Minken Team

If you are an employer who is planning to terminate an employee please consult one of our experienced employment lawyers as early as possible to assist you with the termination process and to avoid costly mistakes. Contact Minken Employment Lawyers today to schedule a consultation.

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