Monday, December 20, 2010

Ontario Employment Law: Aggravated Damages in Wrongful Dismissal Cases

Aggravated damages may be awarded in wrongful dismissal actions on rare occasions to compensate an employee whose damages have been worsened or exacerbated by the employer's misconduct or bad faith upon termination.

Aggravated damages are compensatory in nature, and must reflect actual harm. They should not be confused with punitive damages, which are intended to punish or or admonish a defendant for a particularly reprehensible act that justifies public censure.

Both aggravated damages and punitive damages, however, have largely fallen out of favour in the nation's courts in employment law actions.

In a June, 2010 Ontario ruling, Branch v. CIBC, the court, referring to the seminal case in this area Honda v. Keays, stated as follows:
In order to be entitled to aggravated damages, Ms. Branch [the employee] must prove that the Bank’s [the employer] conduct during the course of dismissal constituted a display of unfair dealing or bad faith: Honda v. Keays, 2008 SCC 39 (CanLII), [2008] 2 S.C.R. 362 at paras. 56-58; Wallace v. United Grain Growers Ltd., 1997 CanLII 332 (S.C.C.), [1997] 3 S.C.R. 701 at para. 98. Since aggravated damages are compensatory in nature, the employee must also prove the actual damages suffered: Honda v. Keays at para. 59.
In other words, an employee must prove actual, quantifiable injury. The Plaintiff employee in Branch was unable to do so.

While the employer might have lacked candour in the manner in which it terminated her, and terminated her for objectionable reasons, that was not enough to justify an aggravated damages award where actual damages could not be shown by the employee.

What kind of "actual damages" must a plaintiff employee prove to justify an award of aggravated damages?

While an exhaustive answer to this question is beyond the scope of this article, if an employee can prove that he or she has suffered documented psychological injury beyond the typical emotional upheaval of a termination, for example, then an award of aggravated damages might be warranted if the injury was rooted in an employer's exceptional misconduct.

It must underlined that the court in Branch stressed that even where "aggravated damages" are warranted, the Plaintiff will be not be entitled to an extension of the period of reasonable notice. This was the approach previously taken with Wallace damages, prior to the Honda ruling.

Instead an employee is entitled to a monetary award that reflects actual damages suffered.

For an example of a post-Honda ruling where aggravated damages were in fact awarded, see our November 2009 article on the Ontario Court of Appeal's ruling in Slepenkova v. Ivanov: The Future of Wallace Damages in Ontario Employment Law

If you have been wrongfully dismissed, contact a lawyer for advice as to your rights and entitlements.
- Robert Tanha and Garry J. Wise, Toronto

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