The fine print matters in termination letters, even in mass layoffs. The wrongful dismissal case of Moffatt v. Prospera Credit Union, 2021 BCSC 2463 is a cautionary tale for employers in British Columbia.   In Moffatt, the Court took the highly unusual step of ordering the employer to pay punitive damages for mistakes in its termination letter.  In doing so, the Court recognized the vulnerability of recently terminated employees:

This is a situation concerning recently terminated employees who are potentially significantly vulnerable, and in distress.  The Defendant’s lack of attention to detail in the termination letter, especially where the errors fall so clearly in their favour, is unacceptable, and draws an award of punitive damages.

The errors in the termination letter included: (1) an offer of two weeks pay pursuant to the Employment Standards Act which was less than the three months the employee was entitled to receive based on her employment contract, and (2) a doubling of the non-solicitation period of the employee’s contract. The Court also noted that the employer instructed the employee to sign a release of claims within one week. 

Punitive damages are rarely awarded in wrongful dismissal cases. The Supreme Court of Canada has stated that “conduct meriting punitive damages awards must be ‘harsh, vindictive, reprehensible and malicious’, as well as ‘extreme in its nature and such that by any reasonable standard it is deserving of full condemnation and punishment.’” Honda Canada Inc. v. Keays, 2008 SCC 39.

In Moffatt, the employer argued that the errors were not intentional, harsh, vindictive, reprehensible or malicious, but were an oversight that occurred while preparing over 100 termination letters as part of a reorganization.  Basically, the argument was that it was just a mistake.  In rejecting this argument, the Court stated:

[T]here is an obligation on an employer terminating an employee in such circumstances to act in good faith and reasonably.  A ‘cookie cutter’ termination letter drafted without regarding to the individual circumstances of each employee falls short of the standard required.

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The volume of termination letters an employer issues does not lessen the obligation to ensure they are correct.  There is no volume discount on correctness for termination letters. 

The employer also argued that it was willing to correct the errors when the employee’s lawyer pointed them out.  The Court  refused to let the employer off the hook:

The Defendant’s argument highlights the crux of the problem.  In this instance, the Plaintiff hired a lawyer.  Had she not, these errors may not have been discovered and corrected.  Given the circumstances of a termination, and its highly emotionally charged nature, it is equally as likely that the plaintiff, or others in her position, could have simply signed the termination letter.

The Court acknowledged the test for punitive damages from Honda but noted that punitive damages may also promote the goals of deterrence and denunciation.  The Court went on to award punitive damages for the “purposes of deterrence and denunciation” in the amount equivalent to two-and-a-half months’ salary which was the amount the employee would have lost if she had signed the termination letter.  While not calculated in the decision, this appears to be around $7,500 in punitive damages.  The punitive damages were in addition to an award of 3 months’ pay in lieu of notice.

Lesson for Employers:  Termination letters should be prepared meticulously with careful reference to the employee’s employment agreement and the requirements of the Employment Standards Act.  Even innocent mistakes can be costly. 

Lessons for Employees:  Do not take an employer’s termination letter at face value.  Refer to your employment contract and the Employment Standards Act before signing a termination letter or release and have your termination package reviewed by an experienced employment lawyer. 


This blog is not intended to serve as legal advice, and only provides general information. Every situation must be considered on its own facts. Need legal advice? Contact us by phone at 604 535-7063 or email [email protected].

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