Wrongful Dismissal Damages in Employment Law

When a dismissed employee sues their former employer the potential cost to the employer can often be estimated early on in the process. This can help both the employee and the employer reach a satisfactory settlement. In certain cases however the unexpected happens and an employee’s claim becomes far greater than originally anticipated. The recent employment law case of Brito v. Canac Kitchens demonstrates how an employee’s damages can expand in a wrongful dismissal claim.

In the majority of cases an employee who is wrongfully dismissed by their employer is entitled to reasonable notice damages. These damages represent the amount of notice that the employer should have given to the employee that they were going to lose their job. In most wrongful dismissal cases the majority of the damages awarded are reasonable notice damages in the form of a continuing salary during the notice period. The notice period may last anywhere from a few weeks to 24 months. During the notice period employers are responsible not only for an employee’s salary but also for the other benefits an employee received, including long-term disability benefits if applicable.

In the Canac Kitchens case, about 16 months after being laid off, the plaintiff, a dismissed employee of Canac Kitchens, underwent surgery for laryngeal cancer and would have became eligible for the long-term disability benefits formerly provided by his employer. At trial, the judge found that the plaintiff had become disabled during the reasonable notice period that his employer ought to have, but did not, provide. Because the employer had chosen not to continue the plaintiff’s long-term disability benefits during the notice period the employer was held liable to compensate the employee for his lost benefits. This finding by the judge more than doubled the damages award provided to the employee. In addition, the judge described Canac’s conduct as “reckless, outrageous, and high-handed” and an additional award of $15,000 was provided to the plaintiff as ancillary damages. The Canac Kitchens case is an excellent example of how what may seem to be a simple dismissal case can become very costly to an employer when an employee becomes disabled during the notice period. To read the entirety of the decision click here.

Frequently Asked Questions

Are paid and unpaid internships illegal in Ontario?

I own a small events and promotions business. Every so often I get emails from students asking if they could volunteer to learn about the business. I’ve never hired a student because they’re inexperienced but I’m considering hiring one as an intern this summer. I don’t have the budget for a full time employee but I would be willing to pay them a modest stipend. I’ve heard both paid and unpaid internships are illegal in Ontario. Is this true?

In Ontario, the rules around internships are strict and in recent years some employers have been required to change their internship programs as a result. If someone is receiving on the job training from a business they are considered to be an employee of the business under Ontario law. As an employee they are entitled to a minimum wage under the Employment Standards Act so paying them a stipend that does not meet the minimum wage is against the law.

There are two exceptions to this general rule which recognize the educational value of internships. The first is internship programs approved by a college or university which are permitted.

The second exception is internships that meet criteria set by the Ministry of Labour. These requirements include that the intern is receiving valuable training, is not taking someone else’s job, and has not been promised a job after their training. The most important feature is the educational component: the primary purpose of internships is to teach valuable skills, not to provide cheap labour to businesses.

The safest way to ensure compliance with the law is to have an internship approved as part of a college or university program. Alternatively, you should design the internship ahead of time to focus it around training and skills development.

When can my insurer review my entitlements to disability benefits?

I have a chronic medical condition which unfortunately has become worse over time. For the last two years I have been receiving benefits through my employer’s disability insurance plan. Recently, the insurer wrote to advise me that the terms of the policy have changed and that they now require additional medical information - why is this happening and am I at risk of losing my benefits?

‍Most disability insurance policies provided by employers have different coverage for different periods of time. For the first two years of an employee’s disability benefits are generally provided on the basis that you cannot perform the essential duties of your existing occupation. The definition of disability changes after two years in most policies.

One of the first steps in your case is to obtain a copy of the policy from your employer. This policy will usually include a brief description of the criteria that an employee must meet to be entitled to disability benefits. In the vast majority of cases after two years of paying benefits policies will limit an employee’s entitlement to further benefits unless the employee is unable to work in any occupation to which they are reasonably suited.

Because of this change to the disability definition, insurance companies will generally review files and seek additional medical information if someone has been receiving benefits for two years. However, Ontario courts have recognized that whether an individual is able to perform any occupation depends not only on their particular disability, but also their basic skill set and educational background. In many cases insurers won’t cut off benefits once they have completed their review and have received additional medical information. However, if you and your insurer disagree about whether you are capable of returning to the workforce it may be time to contact a Lawyer.

Are managers and supervisors ineligible for overtime pay?

I recently changed roles at work. My new title is “Accounts Manager” and I am responsible for all the company’s accounts payable and receivable. I also help other staff price our products and develop new accounts. I am very happy about my new role but my job used to be “9 to 5” and now I have to work late and on weekends. I asked my boss about overtime but was informed that managers and supervisors do not receive overtime pay. Is this true?

For most employees in Ontario overtime hours start after 44 hours of work in a week. For every hour worked in excess of 44 hours an employee is supposed to receive time and a half.

Under the Employment Standards Act there are exceptions to the general rule including that managers and supervisors do not receive any overtime compensation. For this “manager exception” to apply, an employee generally needs to be performing work that involves the supervision of other employees in a leadership role as opposed working in general administrative duties. Also, the exempt employee must be working in the manager role the majority of the time while at work - not just every now and then. The fact that someone’s job title includes the word “manager” or “supervisor” does not determine their entitlement to overtime pay. Rather, it depends on what the actual duties of the employee are.

Although many job titles, such Accounts Manager, include the word “manager” this does not necessarily mean you don’t get overtime pay. If your job does not involve supervising other employees this is a good indication that you may be entitled to overtime compensation. For more information you can seek legal counsel or examine the Ministry of Labour’s website at http://www.labour.gov.on.ca/.