A former chief executive officer has been awarded more than $184,000 in damages after his employer failed to pay the severance outlined in his employment contract, according to an Ontario Superior Court of Justice ruling.
R.B. sued 6Harmonics Inc. for wrongful dismissal after the company terminated his employment in May 2024 but only paid him two weeks’ wages instead of the nine months’ severance specified in his employment agreement.
The company was noted in default after failing to defend the proceeding, and the court granted judgment in favour of the plaintiff through a motion for default judgment.
Employment terms clearly outlined
R.B. had worked as CEO of 6Harmonics since September 2021 under a written employment agreement that included specific termination provisions. The contract stated that in the absence of cause, the company could terminate his employment by providing “six (6) months, plus an additional three (3) months after two years of employment with the Company, and an additional three (3) months after four years of employment with the Company, subject to a combined maximum of twelve (12) months.”
Having worked for nearly three years, R.B. was entitled to nine months’ notice or pay in lieu under the terms of his contract.
On May 17, 2024, 6Harmonics advised R.B. that his employment was being terminated effective May 31, 2024, and that he would receive “pay in lieu of notice through salary continuance in accordance with the Company’s normal payroll practices for the period from the Termination Date until the date which is nine months after the date of this letter.”
However, the company only paid R.B. until his last day of work and failed to provide the promised severance payments.
Court finds breach of contract
The court found that 6Harmonics breached the employment agreement by failing to pay the full nine months’ severance. At the time of termination, R.B. was earning $21,666.67 per month, making his total entitlement $184,166.69 for the remaining eight and a half months.
The judge noted that the employment contract did not impose any duty on R.B. to mitigate his damages, and cited established case law stating that when an employment contract stipulates a fixed term of notice or payment in lieu, it should be treated as fixing liquidated damages with no obligation on the employee to mitigate.
No additional damages for mental distress
R.B. also sought damages for mental anguish and financial hardship, arguing that the company’s refusal to honour its obligations had caused him distress. However, the court rejected this claim, distinguishing the case from precedents where additional damages were awarded for employer misconduct during dismissal.
The court found that 6Harmonics had not alleged cause for dismissal or engaged in conduct that was “unfair or in bad faith by being, for example, untruthful, misleading or unduly insensitive.” The company’s only wrongdoing was failing to pay the contractual severance and not responding to the lawsuit.
The judge also noted that R.B. had found alternative employment in January 2025, albeit at a lower salary, and had not provided specific evidence of particular financial hardship or mental anguish beyond general statements in his affidavit.
Costs awarded on partial indemnity basis
R.B. had requested substantial indemnity costs of $76,009.54, but the court awarded only partial indemnity costs of $4,920 plus HST and disbursements totalling $6,235.80.
The court found that substantial indemnity costs were not warranted as 6Harmonics had not engaged in behaviour that was “reprehensible, scandalous, or outrageous, and worthy of sanction.” The company’s failure to defend the action alone did not justify elevated costs.
The judge noted that R.B.’s costs demand appeared to be based on a contingency fee retainer with his lawyer, but found no authority for awarding costs based on such an agreement against the defendant.
Default judgment considerations
The case demonstrates the court’s approach to default judgments in employment matters. Even when a defendant fails to defend and facts are deemed admitted, the court still requires that those facts entitle the plaintiff to judgment as a matter of law.
The judge applied the established test for default judgment, examining whether the deemed admissions from the statement of claim, combined with evidence from R.B.’s affidavit, entitled him to judgment on his pleaded claim.
6Harmonics was given an opportunity to respond to the motion for default judgment but failed to do so despite proper service of documents to the company’s official email address and to a director personally.
Pre-judgment interest awarded
The court also awarded pre-judgment interest at 5.3% on the damages, recognizing that R.B. had been deprived of the money he was contractually entitled to receive from the date of termination.
The ruling reinforces the importance of employers honouring contractual severance provisions and the courts’ willingness to enforce such terms even when the amounts exceed statutory minimums. It also highlights that failure to defend employment litigation can result in significant financial consequences for employers.
For more information, see Barlow v. 6HARMONICS INC., 2025 ONSC 3610 (CanLII).
