In March 2024, the Court of Appeal for Ontario dismissed an employer's appeal from the judge's decision in Teljeur v. Aurora Hotel Group, 2023 ONSC 1324 (“Teljeur”). The Honourable Justice Michael K. McKelvey of the Ontario Superior Court of Justice awarded seven months' pay in lieu of notice and $15,000 in aggravated damages to a dismissed employee. Justice McKelvey's decision was based on events at the time of and following the termination. The Court stated that the employer breached the provincial Employment Standards Act (ESA) in three instances. The Court found that the employer was dishonest by encouraging the employee to resign with assurances it would pay him eight weeks' pay in lieu of notice but failed to do so. The Court of Appeal found no error in the trial judge's ruling that the employer had not established that the employee failed to make reasonable efforts to mitigate his damages. Further, the appellate court found no error in the judge's decision that aggravated damages were warranted. The appeal was dismissed.
Facts
In October 2018, John Teljeur commenced his employment as the general manager of Pinestone Resort & Conference Centre, a resort and golf course operated by Aurora Hotel Group in Haliburton, Ontario. On the date of the termination of his employment, he earned an annual salary of $72,500 a year.
On December 6, 2021, two senior executives of the Pinestone Resort met with Mr. Teljeur to advise him that his employment was being terminated without cause. During the termination meeting, Mr. Teljeur surreptitiously recorded the meeting. A transcript of the recording was provided at trial, which revealed the following:
The way we're going to do it … you need 8 weeks' severance and obviously we'll still pay you for the rest of this week on top of that. You are going back and forth this week, right? So, I'm not expecting you to do that stuff for free so that's also going to get paid. I'm gonna put your termination date as of like Friday, so that you will still get paid for this whole week, and then you have another 8 other weeks of severance. It's really 9 weeks, almost, or 8 ½ weeks, right?
Despite this assurance, the employer paid Teljeur only his minimum entitlement under the ESA, and after a significant delay, issued a cheque for half the amount that he had been promised.
The transcripts also revealed that the employer tried to encourage the plaintiff to resign his employment. During the termination meeting, Mr. Teljeur was told that he could tell staff that he had resigned three weeks previously, which was false. During the course of the meeting one of the senior executives told him:
You don't have to resign. I'm saying it is better off for you to do it. They're offering for you to do that.
Mr. Teljeur worked for the employer for just under three years and was 56 years old at the time of his dismissal. He subsequently commenced a claim for wrongful dismissal plus additional damages for the manner of his dismissal.
Decision of the Superior Court of Justice for Ontario
The Honourable Justice Michael K. McKelvey awarded seven months' pay in lieu of notice and $15,000 in aggravated damages to Mr. Teljeur.
The Court's findings include:
The employer did not meet its burden to establish that Mr. Teljeur had not made reasonable efforts to mitigate his damages. The Court found no evidence “[that] would allow [a conclusion] that had Teljeur made better efforts to secure alternate employment, he could have done so during the period of reasonable notice. Neither are there any facts from which such an inference could properly be drawn. The [employer's] assertion… that it is entitled to a discount on account of mitigation is, therefore, dismissed.”
Justice McKelvey held that an award of $15,000 for moral or bad faith damages was appropriate, partly based on his determination that the employer was not compliant with the following ESA obligations:
- Not providing written notice of termination, in breach of s.45 of the Act;
- Violating s.11(5) of the ESA, which requires that the employee's ESAentitlement be paid within seven days after the employment ends or the next pay day;
- Leaving Mr. Teljeur to go through the holiday season without the benefit of such payment; and
- Breaching s.60(1)(a) of the Act, which prohibits the employer from reducing the employee's pay during the notice period, given that the out-of-pocket expenses Mr. Teljeur had incurred remained outstanding, representing approximately 23% of his annual income.
The Court found that the surreptitious recording of the termination “highlights a number of disturbing aspects about [Teljeur's] termination,” which Justice McKelvey considered significant and stated:
- Teljeur was assured that he would be paid eight weeks' severance but ultimately received only his minimum statutory entitlement, as was the fact that he was encouraged to resign, which was potentially designed to limit the employer's exposure in a wrongful dismissal claim.
- In acknowledging the requirement that an award for aggravated damages must reflect the actual damages suffered by the plaintiff and is intended to compensate for mental distress beyond the normal distress and hurt feelings associated with being dismissed, Justice McKelvey accepted Mr. Teljeur's evidence that the sum of the employer's actions “added significant stress to his life on top of the stress he was experiencing as a result of being terminated.”
As such, Justice McKelvey granted summary judgment in Mr. Teljeur's favour, and ordered the employer to pay him damages based on a seven-month notice period, less the amounts already paid; 10 percent of his compensation to the extent that benefits had not previously been provided; $16,680.03 reimbursement for out-of-pocket expenses; and $15,000 in aggravated damages.
The employer appealed to the Ontario Court of Appeal.
Decision of the Court of Appeal
The Ontario Court of Appeal unanimously dismissed the appeal, ruling that the trial judge did not commit any reversible errors.
The Court rejected the employer's submission regarding the judge's mitigation analysis, noting that the employer had conceded that his analysis had “engaged with the question of whether [the employer had] satisfied [its] burden of establishing that the steps taken by [Teljeur] would have resulted in employment,” and opining that “[t]his analysis clearly proceeds from the trial judge's determination that [Teljeur] made reasonable efforts to mitigate.”
The Court found no palpable and overriding error in the lost benefits award The Court also rejected the employer's argument that the judge granted moral damages on bases that were not pleaded, finding that “[t]he facts that the trial judge relied on to award moral damages were in fact pleaded and the trial judge made no error in making the award.”
Finally, the Court rejected the argument that the employer's conduct was “a far cry from the threshold for awarding moral damages,” observing that “[t]he conduct of the appellants was deserving of censure.”
In the result, the Court dismissed the appeal.
Key Takeaways
The takeaway from this case for employers is that the courts will thoroughly examine an employer's conduct related to the termination and will sanction bad faith conduct including actions contrary to the ESA, through an award of moral damages. Compliance with statutory obligations is critical. Employers should carefully review the terms of the employment contract and strict requirements of the ESA. Further, employers should be cautious about their representations made to the employee during the termination meeting. Any misrepresentation or failure to follow through on those representations may constitute bad faith conduct on the part of the employer. The Plaintiff's recording in this case was fatal to the employer's position.
This case also highlights that an employee's duty to mitigate can be satisfied by minimal job search efforts depending on the circumstances. For the employer to prove the employee did not take reasonable steps to mitigate their damages and that such steps would have resulted in the employee securing similar employment, is a high bar to meet. Employers should not make assumptions that the reasonable notice period will be discounted without solid evidence.
In this case, Justice McKelvey held that no evidence was presented by the employer to conclude that had the employee “made better efforts to secure alternate employment he could have done so during the period of reasonable notice.” The Court of Appeal upheld Justice McKelvey's decision and saw no reason to interfere with his ruling on the issue of mitigation.
The takeaway for employees is that if you record interactions at work – which is not illegal as long as you are a party in the recording – take caution that if you commence a legal action, you are going to be required to disclose all relevant documents, including recordings. It is advisable to consult with an employment lawyer when you are faced with such a circumstance.
Whether you are an employer or an employee who is going through a termination process, it is advisable to seek advice from an employment lawyer to help you navigate issues such as surreptitious recordings of termination meetings.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.