Top Ontario employment law decisions of 2023, part two

Law360 Canada (January 11, 2024, 9:49 AM EST) --

Inna Koldorf

In 2023 we saw Ontario courts taking very clear (and sometimes surprising) stances on employment law issues. From awarding a longer notice period due to the pandemic, to finding that condonation of a change to the employment relationship requires positive action, the following is the second half of a two-part article on the top five decisions from 2023.

3. Fixed-term contracts

In 2016 in Howard v. Benson Group Inc. (2016 ONCA 256) the Ontario Court of Appeal held that employees who work under a fixed-term contract do not have a duty to mitigate their damages to remain entitled to damages equal to the loss of remuneration for the balance of the fixed term when the employer ends the contract prior to the expiry of the fixed term.

In June of 2023 the Court of Appeal confirmed its decision in Howard vis-à-vis employees, but found that independent contracts do, in fact, have an obligation to mitigate their damages when their fixed-term contracts are terminated early. In Monterosso v. Metro Freightliner Hamilton Inc. (2023 ONCA 413), Antonio Monterosso entered into a six-year contract for services with Metro Freighlinter Hamilton Inc. Metro terminated the contract only seven months after its commencement.

Monterosso sued Metro for compensation for the remaining 65 months of the contract. Given the law in this area, he won and was awarded $552,500 for loss of remuneration for the balance of the contract. However, the Court of Appeal found that while employees do not have a duty to mitigate their damages in these circumstances, independent contractors do. The court found that the duty is on the employer to establish that the independent contractor failed to mitigate by leading evidence to establish that there were other jobs that the independent contractor could have taken. In Monterosso the employer failed to lead such evidence. As a result, there was no decrease in the damages awarded to Monterosso for the early termination of his fixed-term contract with Metro despite his obligation to mitigate.

4. Contravention of a settlement

In a rare decision imposing consequences on an employee who violated the confidentiality agreement in a written settlement agreement, the Human Rights Tribunal of Ontario ordered an employee to repay all the funds paid by the employer under the written settlement after the employee posted about the settlement on LinkedIn.

In L.C.C. and L.C. v. M.M. (2023 HRTO 1138) the employee filed an application with the tribunal against the employer and another employee alleging sex discrimination at work. The application was settled, and a settlement document was executed. The settlement document contained robust confidentiality, mutual non-disparagement and breach clauses. Specifically, the confidentiality clause required the employee to only state that the matter has been resolved when an inquiry is made to the employee. The breach clause stated that the employee would have to repay the settlement amount as liquidated damages if the confidentiality and non-disparagement clauses are breached. After execution of the settlement, the employee posted a statement on LinkedIn advising that the human rights application against the employer and the individual employee for sex discrimination had been resolved. The statement named the employer and the individual employee who were respondents in the employee’s application. The statement appeared in the first sentence of the employee’s public LinkedIn biography, in the “About” section, and was posted for a year before it was discovered.

The employer and individual employee who were respondents in the original application before the tribunal filed an application with the tribunal alleging contravention of the settlement between the parties. The tribunal found that the LinkedIn post breached the confidentiality and non-disparagement clauses in the settlement document. The tribunal enforced the breach clause in the settlement document and ordered the employee to pay as liquidated damages the amount of the settlement that the employee received.

5. Costs awards

Ontario courts have issued significant costs awards in 2023. In Giacomondonato v. PearTree Securities Inc. (2023 ONSC 5628) the Ontario Superior Court of Justice ordered an employer to pay an employee costs of the proceeding on a partial indemnity basis in the amount of $830,761.

The employee filed a claim for wrongful dismissal. The employer counterclaimed for breaches of restrictive covenants when the employee went to work for a competitor a few months after the termination. The employer claimed that it suffered nearly $1.6 million in damages and sought $1 million in punitive damages. It then abandoned both of these claims mid-trial, though it continued to pursue the counterclaim on other grounds. 

The counterclaim was dismissed, and the court found that the non-competition and non-solicitation clauses relied on by the employer were unenforceable. The court also found that there was no evidence that the employee breached other restrictive covenants that remained enforceable. The court found that the employer’s counterclaim was obviously meritless and warned employers not to engage in tactical litigation designed to discourage employees from pursuing their rights and entitlements.

In awarding costs of $830,761 to the employee, the court added that the employer disclosed relevant documents late in the process, invited the litigation through its conduct, conducted the litigation in what the court called “unforgiving, scorched earth and bare-knuckle manner,” and did not miss an opportunity to hurt the employee. Although the court found that the hours and rates claimed by the employee for the 10-day trial were reasonable, it is clear from the court’s repeated commentary about the employer’s conduct that costs were also awarded as a form of punishment for the employer’s behaviour throughout the litigation.

In Park v. Costco Wholesale Canada Ltd. (2023 ONSC 1885), the shoe was on the other foot. In this case the Ontario Superior Court of Justice awarded the employer $120,000 in costs after an employee with 20 years of service was terminated as a result of deliberately deleting the website that he had built in the course of his employment, twice, because he was angry with management. The employee filed a claim for wrongful dismissal. The court found that the employer was justified in terminating the employee’s employment for just cause. Since the employer was entirely successful at trial, its costs of $120,000 on a substantial indemnity basis were awarded.

Honourable mention also goes to Summers v. OZ Optics Limited (2023 ONSC 723), where $25,000 in costs were awarded to a successful employee who was awarded $35,743.13 in damages, and to Chin v. Beauty Express Canada (2023 ONSC 56), where no costs were awarded to a successful employee because the court found that the notice period claimed was excessive.

This is part two of a two-part series. Part one: Top Ontario employment law decisions of 2023, part one.

Inna Koldorf is a partner in KPMG Law LLP’s employment and labour law group, where she advises employers on labour, employment and human rights issues.

The opinions expressed are those of the author and do not reflect the views of the author’s firm, its clients, Law360 Canada, LexisNexis Canada, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

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