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Employment - Fringe Benefits. Hill v. 1359768 Ontario Inc. (B&B Towing)
In Hill v. 1359768 Ontario Inc. (B&B Towing) (Ont CA, 2026) the Ontario Court of Appeal partially allowed an employer's appeal, this where the "trial judge found that the appellant, a towing services company, had constructively dismissed the respondent by demoting him from the managerial position of a road boss to a tow truck driver".
Here the court considers the loss of 'fringe benefits' in a wrongful dismissal context:i. Governing principles re: fringe benefits
[43] The trial judge correctly referenced the principle that a wrongfully dismissed employee is entitled to claim as damages the pecuniary value of all the compensation and benefits that would have been received during the period of reasonable notice: Davidson v. Allelix Inc. (1991), 1991 CanLII 7091 (ON CA), 7 O.R. (3d) 581 (C.A.) (“Davidson (Ont. C.A.)”), at p. 589, rev’g on other grounds [1987] O.J. No. 1350 (H.C.) (“Davidson (Ont. H.C.)”)[4]; Paquette v. TeraGo Networks Inc., 2016 ONCA 618, 352 O.A.C. 1, at para. 16.
[44] The onus is on the employee to establish the facts of damages and their amount on the evidence: Red Deer College v. Michaels, 1975 CanLII 15 (SCC), [1976] 2 S.C.R. 324, at p. 331. Damages in a wrongful dismissal action are not limited to compensation for salary and may include compensation for the value of fringe benefits to which an employee was entitled. The employee’s onus to establish damages therefore includes proving their entitlement to and the value of fringe benefits.
[45] A company car or cellphone may constitute a fringe benefit – for which a wrongfully dismissed employee will be compensated – if proven by an employee to confer a personal benefit as part of their contractual compensation: Peck v. Levesque Plywood Ltd. (1979), 1979 CanLII 2055 (ON CA), 27 O.R. (2d) 108 (C.A.), at p. 113, citing Lawson v. Dominion Securities Corp., [1977] O.J. No. 1609 (C.A.), at para. 14; Davidson (Ont. H.C.), at paras. 54, 57; Cormier v. 1772887 Ontario Limited (St. Joseph Communications), 2019 ONCA 965, 58 C.C.E.L. (4th) 177, at paras. 30-33, aff’g 2019 ONSC 587, 53 C.C.E.L. (4th) 60; Donovan v. Quincaillerie Richelieu LTD., 2021 NBQB 189, at para. 70, rev’d in part on other grounds 2022 NBCA 45, 472 D.L.R. (4th) 660; and Ellerbeck v. KVI Reconnect Ventures Inc., 2013 BCSC 1253, at para. 56.
[46] The question is whether the company car or cellphone provides a perquisite or personal benefit for which a wrongfully dismissed employee is entitled to be compensated or whether the company car and cellphone are employment tools, like any other tool supplied to an employee to do their job. If they are employment tools, there is no entitlement to compensation for use of a tool that is no longer being used for the benefit of the employer during the period of reasonable notice: Gazier v. Ciena Canada, ULC, 2024 ONSC 865, 92 C.C.E.L. (4th) 372, at paras. 54-55; Sanghvi v. Norvic Shipping North America, 2021 ONSC 1211, 70 C.C.E.L. (4th) 160, at para. 4; and Jardine v. Phoenix Petroleum Ltd., 2021 NBQB 213, at para. 25.
[47] As company cars and car allowances are commonly claimed as employment benefits, there is significant consideration of them in the case law and employment law texts. Whether an employee has established that a company car or car allowance is an employment benefit depends on whether it is to be used for business purposes and not personal use. Where there is evidence of personal use, as the Nova Scotia Court of Appeal stated in Silvester v. Lloyd’s Register North America Inc., 2004 NSCA 17, 221 N.S.R. (2d) 230, at para. 29, with reference to Ontario case law, “a reasonable approach ... would support recovery based upon a rough estimate of the employee’s actual personal use together with an amount in recognition of the benefit of the automobile’s availability for personal use”.
[48] As this court observed in Davidson (Ont. C.A.), at p. 585, a company car, to the extent of personal use, would be a taxable benefit. Although not dispositive of the issue, as noted in David Harris, Wrongful Dismissal (Toronto: Thomson Reuters Canada Limited., 2025) (loose-leaf updated 2025, release 11), at § 6:52, “[o]ne test that has been used to distinguish the use of a car for company purposes from the ‘perk’ of a car allowance for personal use is whether, and how, the employee reports it on his or her income tax return.” See also Rowley v. High Strength Plates & Profiles Inc., 2011 ONSC 6221, at paras. 44-50; Quesnelle v. Camus Hydronics Ltd., 2022 ONSC 6156, 85 C.C.E.L. (4th) 104, at paras. 106-12. Consistent with that point, in Underwood v. Western World Communications Corp., 9 C.C.E.L. (2d) 129 (B.C.S.C.), at para. 11, the court found that an employee, after termination, “cannot now seek to recover a benefit she never reported as such when she was employed”.
[49] An employee’s claim for the loss of use of a company car is only for the personal benefit that he lost during the notice period: see e.g., Martell v. Ewos Canada Ltd. and Statkorn Holdings ASA, 2005 BCCA 554, 218 B.C.A.C. 241, at para. 35; Dennis v. Barr et al., 2010 ONSC 4057, at paras. 24, 26. There is no entitlement where the company car was principally made available to the employee for use in association with his employment; incidental or negligible personal use does not ground entitlement: Hare v. Pender Distributors Ltd., [1982] S.J. 649 (Q.B.), at para. 12.
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