In a wrongful termination, employers must provide reasonable notice or pay in lieu of notice. In addition, employers may be liable for aggravated or punitive damages, depending on the manner of dismissal. In other words, the employment relationship can end on poor terms, so employers need to consider how they are terminating the employee, as it could result in additional damages beyond the reasonable notice period. The aggravated or punitive damages can also be as significant as several thousands of dollars. In particular, bullying and harassment at the time of termination could mean that the employer needs to pay aggravated or punitive damages. However, it can be difficult to pinpoint exactly what kind of behaviour by the employer would warrant punitive damages.

In this post, we will discuss when harassment of an employee may result in aggravated or punitive damages. In particular, we will examine the test for when aggravated or punitive damages may arise in a wrongful dismissal, including its relationship to the manner of dismissal during a termination. We will also discuss what evidence needs to be provided for punitive damages based on harassment or bullying at termination. To illustrate these principles, we will discuss a case example, Chin v Beauty Express Canada Inc., 2022 ONSC 6178, in which the court found that insensitive comments at the time of termination did not rise to the level required to find that aggravated or punitive damages were necessary. This post will provide important takeaways for employers seeking to understand their obligations during the time of termination and for employees seeking to understand their rights for wrongful dismissal.

Manner of Dismissal in Wrongful Termination

Aggravated or punitive damages can arise when an employer breaches their duty of good faith when terminating an employee. These types of damages are often raised in wrongful dismissal cases. The court will examine the way that the employer dismissed the employee. In particular, if the manner of dismissal caused injury to the employee, the employee can be compensated with aggravated or punitive damages on top of the reasonable notice period or amount that they are entitled to upon termination.

This also raises the question of what period of conduct is included in assessing the manner of dismissal in a wrongful termination. In particular, the court can consider conduct beyond the exact moment of termination for aggravated or punitive damages. In other words, pre-termination and post-termination conduct may be relevant for assessing whether the manner of dismissal warrants aggravated or punitive damages.

Mental Distress Required for Punitive Damages Based on Harassment or Bullying

Employers have a duty of good faith to protect employees from bullying, intimidation, and harassment from managers. The employee is responsible for showing that they suffered a loss to be compensated for aggravated damages. Some evidence must demonstrate that they suffered from compensable injuries to prove this. Injuries can include humiliation, embarrassment, and damage to the employee’s self-esteem and sense of self-worth. Providing medical evidence of negative psychiatric impacts is not required to find that aggravated or punitive damages are appropriate.

To find that aggravated or punitive damages are necessary, there must be something more than hurt feelings arising from the termination. This is because hurt feelings are commonly associated with termination, and these are considered to have always been contemplated by the parties at the time that they entered into the contract.

Some examples of when aggravated or punitive damages may be available include situations where:

a)    the employer is attacking the employee’s reputation;

b)    there is misrepresentation over the reason for the dismissal;

c)     the dismissal is meant to deprive the employee of a benefit such as a pension benefit, immigration status, etc.

Punitive Damages for Wrongful Dismissal Generally Rare

Generally, aggravated or punitive damages in wrongful dismissal cases are rare. In particular, punitive damages exist to punish harsh, reprehensible, and malicious conduct. They are also meant to prevent employers from conducting similar acts in the future, as significant costs are associated. The court has recognized that punitive damages are only available in exceptional cases, and the award of punitive damages is to be treated with restraint. Punitive damages are reserved for wrongful acts that are particularly malicious or outrageous, such that they deserve their own punishment.

Also, for punitive damages, which can be seen as being one level of damages above aggravated damages, the focus shifts so that the employee doesn’t need to prove that there was a compensable loss.

Court Finds No Punitive Damages for Insensitive Comments During Wrongful Dismissal

In the Chin case, the employee claimed wrongful dismissal. She worked as an esthetician for 6 years with her current employer. Before the business was sold to the current employer, she worked for the company for 14 years. The employee argued that she was singled out to be harassed during her termination. As a result of the change, her hours shifted from full-time to part-time, and she expressed dissatisfaction with her supervisor. She claimed she was terminated in retaliation for her negative comments about her reduced hours.

At the time of termination, the employee claimed that the employer breached their duty of good faith by failing to ensure that the employee was protected from bullying, harassment, and intimidation in the workplace.

The court found no evidence that the employee was targeted, as her termination was part of a restructuring that also affected 49 other employees at the time.

The employee also claimed that she should receive aggravated or punitive damages due to a post-termination meeting that occurred. She claimed she was mistreated and faced oppressive conduct at this meeting.

While the court found that the meeting was ill-conceived and involved crude language, this did not rise to the level of requiring aggravated or punitive damages. The court also found that while the employer should not have dissuaded employees from seeking legal advice, this did not warrant aggravated or punitive damages. These actions did not involve more than hurt feelings common in terminations.

No aggravated or punitive damages were awarded in this case. The court reiterated that punitive damages are meant to punish exceptional behaviour and not to police words, which would be more associated with etiquette rather than oppressive conduct.

Contact The Toronto Employment Lawyers for Advice on Termination and Wrongful Dismissal Claims

Employers may be subject to moral damages for bad faith conduct during a termination. Our experienced employment law legal team at Haynes Law Firm in Toronto can assist you with issues that arise from termination. Our goal for employees is to ensure that they understand their rights and receive maximum compensation in wrongful dismissal cases. Haynes Law Firm also assists employers in avoiding liabilities that may arise from terminations that are not permitted by the legislation. We are dedicated to finding the best resolution for you.
To book a consultation, please contact us online or by phone at 416-593-2731.