Ontario Employment Law: Moral Damages in Wrongful Dismissal Claims

In Chrabalowski v. BMO Nesbitt Burns, Lederer J. of the Ontario Divisional Court flatly refused to allow a wrongfully dismissed Plaintiff employee to claim moral damages in his Statement of Claim, upholding the Order of Master Abrams.

In his reasons Lederer J. provides some insight into what must be pleaded in an original Statement of Claim by a Plaintiff to sustain a claim for moral damages in a wrongful dismissal action:

The plaintiff did not plead, in his original Statement of Claim, that the defendant had breached its obligation of good faith and fair dealing towards him at the time of his termination. The Master correctly determined that the plaintiff’s claim for "moral damages" was untenable and should not proceed. It is settled law that moral damages are only available if:

(a) the employer engages in conduct during the course of dismissal that is unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive; and,

(b) actual damages have resulted from the conduct referred to in (a).

(Honda Canada Inc. v. Keays 2008 SCC 39 (CanLII), 2008 SCC 39, [2008] 2 S.C.R. 362 at paras. 57 and 59)

As can be seen, to sustain a claim for moral damages, not only must a plaintiff employee prove bad faith conduct on the part of the employer in the manner of dismissal, but also that such conduct led to clear, identifiable harm (be it psychological or otherwise).

Also of note, in his reasons Lederman J. incisively identifies the kind of conduct by a defendant employer that will not justify an award of "moral damages:"

Moreover, there is simply no basis to suggest that a claim for moral damages can be based on the defendant, subsequent to the termination, determining that the plaintiff had engaged in misconduct on which a termination for cause could have been based. Moral damages are meant to compensate for the harm inflicted by the manner of dismissal. They do not prevent an employer from defending itself on the basis of investigating whether there is "after-acquired cause".

Similarly, there can be no claim for moral damages arising out of the defendant’s alleged failure to provide the plaintiff with the statutory minimums to which he was required under the Employment Standards Act, 2000, S.O. 2000, c. 41. The plaintiff received a letter terminating his employment which offered him eleven weeks’ pay in lieu of notice.

- Robert Tanha, Toronto

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