The Future of Wallace Damages in Ontario Employment Law

Law Times has a good analysis today on the future of Wallace damages in Ontario wrongful dismissal proceedings. These damages have typically been granted where an employer has acted in bad faith in the termination of employment.

With the Ontario Court of Appeal's June 25, 2009 ruling in Slepenkova v. Ivanov, it is now clear that the nearly-universal pronouncements by management lawyers as to the death of this head of damages after Honda and Keays may have been a bit premature.

In Slepenkova, the Ontario appellate court upheld a two-month notice extension for an employer's bad faith termination, even though no evidence was led at trial as to the specific damages the employee directly incurred as a result of the bad faith. This appeared to place the trial Judge's decision at odds with the new Wallace test set out in Honda.

One employers' counsel, quoted in the article, sums up management's employment law litigation equation as follows:

“Employers always have to ask themselves whether it’s worth going to trial in employment cases...And you can never tell what the judge is going to do because employment cases are always crapshoots where sympathetic judges have enough leeway to fit the facts around the law.

See the full Law Times article: Wallace Damages are not Dead

Prior to Honda, the Wallace damages claim had become a virtually "boilerplate" feature in employment law litigation, rearing itself in a very significant percentage of employees' wrongful dismissal claims.

In our view, Slepenkova simply demonstrates that the Honda decision merely moderated, rather than eliminated Wallace claims.

Wallace damages are now likely reserved for the out-of-the ordinary cases where an employer's excessive, inflammatory or detrimental actions at the time of termination cause observable distress or damage to an employee that is beyond the norm.

Perhaps they always were.

Wallace claims may no longer be "boilerplate," but they remain as a significant response where an employee has suffered demonstrated harm due to excessiveness or callousness at the time employment is actually being terminated.

- Garry J. Wise, Toronto

Visit our Toronto Law Firm website: www.wiselaw.net

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