Canada: Don't Make Promises You Can't (Or More Accurately, Don't Intend To) Keep Or It May Come Back To Bite You In The Bottom (Line)!

I recently spoke at a Lancaster House webinar on the topic of "good faith and honest performance" in the employment context, and the recent case of Teljeur v Aurora Hotel Group2023 ONSC 1324 is a good illustration of how those concepts apply in respect of a termination of employment.

In this case, the employer let go the General Manager of their resort and golf course located in Haliburton, after 3 years of service. There were no allegations of just cause, nor any suggestion of poor performance; rather, during the termination meeting it was simply communicated to the plaintiff that the company had decided to retain an outside management company to manage the resort.

However, various other statements and assurances that the employer gave during the termination would come back to haunt them at the summary judgment motion heard almost a year later - the employee had surreptitiously recorded the meeting, which evidence was then considered by the motions judge. In determining that the plaintiff was entitled to $15,000 in "moral damages" for the employer's conduct, the motions judge cited "disturbing aspects" of the termination of the plaintiff's employment, including:

• In the termination meeting the employer advised the employee that he would receive additional pay (on top of his ESA entitlements) but instead then limited the amount paid to his ESA entitlement, which was also not paid on time (see below);
• In the termination meeting the employer encouraged the employee to resign suggesting that it was "better off for [him] to do it,", which the court considered a possible attempt to limit the employer's exposure in the event of a wrongful dismissal lawsuit (although this was not taken into account in the contemplation of the claim for moral damages);
• After assuring the plaintiff in the termination meeting that they would be paid out in short order, the Employer failed to reimburse the plaintiff for over $16,000 of incurred business expenses, and had not done so even by the time the summary judgment motion was heard;
• The Employer contravened the ESA in both not providing notice of the termination in writing - even after being asked by the plaintiff on more than one occasion for "something in writing" - and by failing to deliver the payment of the plaintiff's ESA entitlements within the 7-day period stipulated in the ESA.The court found the second of these contraventions to be especially distressing since the timing of the termination and a significant delay in providing that payment left the plaintiff without funds during the holiday season.

The court dismissed the other aspects of the claim for moral damages which mainly centred around the employer restricting access to the premises, ruling that those restrictions, while no doubt upsetting to the plaintiff, were within the employer's rights. The motions judge then stated at paragraph 56:

Having said that, the other issues as set out above do, in my view, constitute actions by the employer which were untruthful, misleading or unduly insensitive. They constitute a breach by the employer of their duty of good faith and fair dealing in the manner in which the employee was dismissed. I have also concluded that it would be within the reasonable contemplation of the employer that its manner of the dismissal would cause the employee mental distress.

In awarding $15,000 in moral damages for the manner of termination, the court continued the promulgation of the doctrine of good faith and fair dealing. While this is a concept that has been developing since Honda Canada Inc. v. Keays,2008 SCC 39 , through Bhasinv.Hrynew, 2014 SCC 71 and most recently in Pohl v Hudson Bay Company, 2022 ONSC 5230 (excellent commentary on that case by our own Danielle Jager can be found here), awards for these types of damages are certainly more prevalent now than they were even 5 years ago. In short, employers must ensure that they act in good faith and deal honestly and fairly with their employees even - or perhaps especially - at the end of that employment relationship or they will be held accountable. For advice and assistance in effecting a termination without running afoul of these obligations, contact any of the CCPartners team.