Gibson Building Supplies has been ordered to pay its former executive assistant nearly $20,000 in damages, including $10,000 in punitive damages due to the employer’s violation of the Employment Standards Act (ESA) and reprehensible conduct.
B.W., who was employed as an executive assistant, was terminated without cause and without notice on Oct. 29, 2020, just over four months into her tenure at Gibson Building Supplies. The court found that the termination provisions in her employment agreement were unenforceable because they violated the ESA.
Justice Vermette, who presided over the case, ruled that B.W. was entitled to two months’ notice, rather than the two weeks specified in her employment contract.
Unenforceable employment agreement
Justice Vermette highlighted several issues with the termination provisions in the employment agreement. The agreement stipulated that if B.W. were terminated without cause, she would receive two weeks’ notice or pay in lieu of notice, in addition to any applicable notice and severance requirements under the ESA.
However, the court found this provision violated the ESA, as it limited her entitlements to base salary and some benefits, excluding vacation pay, bonus, and other benefits such as life insurance and accidental death and dismemberment insurance.
The termination without cause provision does not include vacation pay, bonus, and the other benefits B.W. was entitled to under the employment contract, the court said. This constituted a breach of sections 60 and 61 of the ESA. Furthermore, the provision required B.W. to execute a full and final release in a form acceptable to Gibson in exchange for pay in lieu of notice, which is not permitted under the ESA.
The termination with cause provision also fell short of ESA standards by listing categories that did not align with the statutory exemptions. For example, it included “unacceptable performance standards” and “repeated, unwarranted lateness,” which do not necessarily meet the deliberate misconduct required by the ESA.
Justice Vermette concluded that these provisions created ambiguity and confusion, violating the ESA’s intent to provide clear and unambiguous terms regarding an employee’s entitlements upon termination.
Calculating damages
B.W. was awarded $7,500 for lost salary over the two-month notice period, $750 for benefits, $900 for earned bonus, $726.92 for accrued but unpaid vacation pay, and $46.93 for reimbursement of expenses related to the 407 ETR highway charges. (The 407 is a toll highway in Ontario.)
The court adopted a common approach of fixing the entitlement to benefits at 10% of the employee’s base salary, as Gibson failed to provide evidence of the cost or value of benefits.
With regard to the bonus, B.W. provided evidence that she had completed two of the bonus tasks agreed upon with Gibson’s CEO prior to her termination. Gibson’s own termination Letter implicitly acknowledged this by stating that an additional bonus of 1%, equivalent to $450, would be provided. Justice Vermette accepted B.W.’s evidence, awarding her $900 for the completed bonus tasks.
Mitigation of damages
Gibson argued that she failed to mitigate her damages by not making reasonable efforts to seek comparable employment. However, the court found that B.W. had applied for over 245 positions and maintained a detailed mitigation journal.
The employer failed to demonstrate that she could have found comparable employment during the notice period.
Punitive damages
The court’s decision to award $10,000 in punitive damages was based on Gibson’s conduct. The company repeatedly failed to pay B.W. her minimum entitlements under the ESA, issued her Record of Employment late, and did not reimburse her for legitimate business expenses incurred during her employment.
“What I find particularly egregious is the fact that Gibson’s affiant showed up for his cross-examination without knowing whether or not Gibson had paid (B.W.) her ESA minimum entitlements,” Justice Vermette noted. Despite being repeatedly informed of its failures, Gibson took no steps to rectify the situation, leading to the conclusion that punitive damages were necessary to punish the employer and deter similar misconduct in the future.
Mental distress damages
While B.W. sought aggravated and moral damages for mental distress, the court dismissed this claim due to lack of supporting evidence.
Her affidavit contained a single sentence claiming she suffered mental and financial distress, but she provided no particulars or evidence, such as medical records or documentation of financial hardship, to support her claim.
For more information, see Wilds v. 1959612 Ontario Inc., 2024 ONSC 3452 (CanLII).
