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Moral damages and mitigation: Employer faces the consequences of its conduct

A recent employment law case, Teljeur v. Aurora Hotel Group, is an important cautionary reminder that employers need to be careful about their conduct when terminating an employee. This case also highlights the difficulty of proving that an employee has failed to “mitigate” their damages — which is their obligation to search for new employment after being terminated.

Background

The employee in this case, Teljeur, worked for three years as general manager (GM) for Pinestone Resort & Conference Centre and Aurora Hotel Group. He was 56 and had a salary of $72,500 per year.

On December 6, 2021, Pinestone Resort verbally informed Teljeur that his employment was being terminated. During this meeting, Pinestone Resort promised to give him eight weeks of severance. Teljeur also requested, multiple times, that Pinestone Resort provide him with something “in writing,” which Pinestone agreed to do.

Pinestone Resort provided Teljeur with three weeks’ compensation — his minimum entitlements under Ontario’s Employment Standards Act (ESA) — despite promising to provide eight weeks during the termination meeting. Further, Pinestone Resort delayed in paying Teljeur, making its first attempt to send a cheque on Jan. 14, 2022, more than a month after his termination.

Teljeur did not actually receive payment until sometime after June 8, 2022, when another cheque was reissued. This delay violated s.11(5) of the ESA.

Pinestone Resort failed to provide a written notice of termination — contrary to both its promise to Teljeur and to s.54 of the ESA.

Pinestone Resort also failed to reimburse him for $16,680 worth of business expenses incurred throughout Teljeur’s employment with the defendants. This was a significant amount which represented about 23% of his annual income.

Teljeur sued for wrongful dismissal, reimbursement of his incurred business expenses, and for moral damages.

Pinestone Resort admitted to owing the business expenses to Mr. Teljeur, but asserted that any amount owing with respect to wrongful dismissal damages should be reduced on the basis of Teljeur’s failure to make reasonable efforts to mitigate.

The court’s decision

The court determined Teljeur was entitled to seven months’ pay for his wrongful dismissal.

With respect to mitigation, the court held that there would be no discount on the basis of failure to mitigate. It was up to the employer to establish that Teljeur had failed to mitigate by:

• proving he did not make reasonable efforts to find a new job
• proving he would have obtained a new job if reasonable efforts had been made.

While Teljeur made poor efforts in attempting to find alternative employment — he had only applied to three jobs over a period of 10 months — Pinestone Resort was unable to establish that Teljeur would have found work comparable to his previous employment if he had made better efforts in searching for a new job.

The court awarded him $15,000 in moral damages for the employer’s bad faith conduct. The court took into consideration the violations of the ESA (delay in paying and the failure to provide written notice); the reneged promise to provide eight weeks’ severance pay; the failure to repay the incurred business expenses; and an attempt during the termination meeting to encourage Mr. Teljeur to resign.

Mr. Teljeur had surreptitiously recorded the termination meeting, which was used as evidence of Pinestone Resort’s conduct and reneged promises.

Key takeaways for employers

• This case is a cautionary reminder that employers must be careful about their conduct when terminating an employee, especially given the ease in which conversations, including termination meetings, can be recorded on devices such as cellphones.
•  Failure to fulfill statutory and contractual obligations, as well as reneging on a promise made to an employee, may increase the likelihood of paying moral damages to that employee following their termination.
•  If an employer wants to argue that a terminated employee has failed to mitigate their damages, it is not sufficient to simply demonstrate that the employee has made poor efforts towards mitigation. The employer must also be able to prove that the employee would have found other comparable work if they had made better efforts. Often, this type of evidence includes but is not limited to, providing information regarding the current market, job postings, and the like.

John Hyde is the managing partner at Hyde HR Law in Toronto. He advises management on all aspects of employment and labour law, including representation before administrative tribunals, collective agreement negotiation, arbitrations, wrongful dismissal defence and human rights.