Ontario, Canada: Court Of Appeal Upholds $1.27 Million Damage Award For Constructive Dismissal

• Published date: 10 February 2021
• Subject Matter: Employment and HR, Litigation, Mediation & Arbitration, Contract of Employment, Unfair/ Wrongful Dismissal, Employee Benefits & Compensation, Employee Rights/ Labour Relations, Trials & Appeals & Compensation
• Law Firm: Littler - Canada
• Author: Ms Rhonda B. Levy, Barry Kuretzky and George Vassos

In McGuinty v. 1845035 Ontario Inc. (McGuinty Funeral Home), 2020 ONCA 816 (McGuinty), the Court of Appeal for Ontario upheld the Ontario Superior Court's decision to award an employee one of the highest damage awards ever granted in Canada for constructive dismissal ($1,270,000).

Background

The employee worked in his family's funeral home (Home) for 30 years. When he was 55, the employee sold the Home to the appellant company. The parties entered into a Transitional Consulting Services Agreement (TCSA), pursuant to which the employee would work as General Manager for a fixed term of 10 years. The TCSA included commissions and a vehicle and fuel allowance. The TCSA did not contain a provision addressing its early termination, but did contain a non-competition clause that barred the employee from working in the funeral home business for 10 years.

Conflict between the parties developed almost immediately after the employee began his employment. The company's co-owner required the employee to complete time sheets and asked the employee's subordinate to track the employee's time in the office. The co-owner also advised the employee that he could not use the company vehicle for personal use, and failed to pay commissions. After the employee entered the Home on a weekend to remove some furniture, the co-owner alleged that the employee threw out Home files without authorization. The owners changed the locks on the Home without notifying the employee. The employee then commenced a medical leave and sent a note stating: "I wish to make clear I am on medical leave and am not stepping down from my position as general manager at McGuinty Funeral...