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An overview of damages within the context of employment law

A wrongful dismissal lawsuit can be a potential nightmare for companies no matter what size. Lawsuits carry with them complex claims that are often convoluted and difficult to understand for the non-legal specialist. This blog post will offer a brief overview of the parameters of some of the damages which can be claimed within the context of a wrongful dismissal lawsuit.

Reasonable notice

Normally when an employee sues his or her ex-employer it’s because he or she was not paid enough money within the context of a separation payment, or in our world, “payment in lieu of notice.” It’s quite uncommon for companies to not provide minimum notice under the employment standards legislation, but it is certainly not unusual for companies to try and minimize payouts to employees with respect to payment of reasonable notice. I counsel employers to do this and I represent employees who argue this.

It’s long been determined that reasonable notice to which an employee may be entitled is not a science (I don’t think it’s an art either) and there is no mathematical formula to assist with it’s calculation. Rather, in each case, a court must weigh the factual matrix presented to it and such an award, if any, will always depend on the particular facts and specifics in question. The major factors that give varying degrees of weight to how a court will decide the quantum of reasonable notice are the length of service of the employee, the employee’s age, the character of employment and the availability of similar employment, taking into account the employee’s experience training and qualifications.

There are other factors that obviously come into play depending on the case, such as shorter service, longer service, a break in service, the lack of employment opportunities, whether the employee was a specialist, the fluctuation of the economy, and so on. In fact, issues such as English language fluency and the limited formal education and skills of an employee have been found to be factors affecting employability and hence affecting the quantum of reasonable notice. The actual factors are quite endless.

Often grid systems are used to determine the ballpark amount of payment in lieu of notice, but I do not agree with this in my practice. Although we can’t over-emphasize a single factor in the evaluation process of a wrongful dismissal claim, I do not believe in any “rule of thumb” in order to calculate appropriate notice. The Supreme Court of Canada told us in the Honda vs. Keays case that no one factor should be given disproportionate weight. Sometimes it’s quite difficult to avoid this, but an individual detailed analysis of each factual should always be made in every case on every factor set out above.

Bad faith
Even more complex for employers are the claims that “accompany” reasonable notice lawsuits.

Bad faith is quite the prominent term, which anyone in human resources or in the world of employment law has heard or dealt with at one time or another. In the Keays case (which revised the assessment of Wallace damages), the Supreme Court affirmed that in the employment law context, damages resulting from the manner of dismissal will be available if they result from “Wallace” circumstances, in particular, that employers must be candid, reasonable, honest and forthright with employees and should refrain from engaging in conduct that is unfair, untruthful, misleading or unduly insensitive during termination. Damages for bad faith are not to be awarded as an extension of the wrongful dismissal, but rather, a dollar amount must be quantified to the effect of damages suffered by the employee. In other words, the compensatory damages of bad faith are not to be awarded as a bump-up to some “indeterminate” amount.

Aggravated damages

Aggravated damages are also often claimed within the context of wrongful dismissal lawsuits. Aggravated damages may be appropriate when an employer’s conduct, at the time of dismissal, is so egregious as to constitute an independent actionable wrong.

Oftentimes the conduct underlying an award of aggravated damages will be somehow tied into the tort of intentional infliction of mental distress or mental suffering. The flip side is when an employer causes mental distress to an employee but that mental distress falls short of an independently actionable wrong, the employee’s recourse would be limited to asserting a claim for moral damages for bad faith.

It is worth noting that aggravated damages are not the same as punitive damages, which are intended to be punish the employer for wrongdoing. Aggravated damages are compensatory, meaning they are to compensate an employee for his or her suffering. They must reflect the actual harm suffered by the employee. When aggravated damages are claimed within the context of mental distress, the Supreme Court has confirmed that the wrong must be separate from the breach of contract for failure to give reasonable notice of termination, and the damages must arise from the dismissal itself, rather than the employer’s conduct before or after the dismissal.

Mental distress

Damages for mental distress are often claimed within the context of wrongful dismissal claims. Damages for mental distress are compensatory to the employee and not to punish an employer.

Like aggravated damages, the employer’s conduct must constitute an actionable wrong.  In order for an employee to succeed with a claim for mental distress, the Court of Appeal has affirmed that the employee must prove flagrant and outrageous conduct that is calculated to produce harm and that results in a visible and provable illness. Mental distress is the same as mental suffering in the Court’s eyes. In the seminal case of Prinzo vs. Baycrest Centre for Geriatric Care (2002), the Ontario Court of Appeal upheld the trial judge’s finding that the harassing conduct of an employer was extreme and insensitive and constituted a disregard for the employee’s health. The Court also confirmed that the difference between this and aggravated damage was that this conduct occurred prior to dismissal itself.

Punitive damages

Punitive damages are normally awarded in the case of wrongful acts to punish behaviour that is outrageous and malicious in nature, and to deter others from similar behaviour, as opposed to compensating for a plaintiff’s loss. It is normally awarded only in exceptional case and tends to be awarded in circumstances extreme enough to be deserving of the court’s censure. There must be an actionable wrong that goes beyond an employer’s failure to give reasonable notice of termination and are awarded in cases as a deterrent.

You can read Matt’s blog which focuses on personal injury and employment law issues.

Matt Lalande
Haber & Associates

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Matt Lalande, Lalande & Company Lawyers

Hamilton Personal Injury Lawyer at Lalande & Company Lawyers
Matt Lalande is a Hamilton lawyer and founder of Lalande & Company Lawyers. Lalande & Company is a Hamilton law firm that specializes in representing victims who have suffered life changing injuries, claimants denied long term disability, families of wrongful death victims and employment law litigation. Read more
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2 thoughts on “An overview of damages within the context of employment law
  • Great overview, Matt. Attention employers: this article provides an excellent basis of a training program for employers, managers, HR pro’s in your organizations!! Remember the mantra–learn don’t litigate.

  • Alison Maas says:

    All of the above brings up a rather bad taste in my mouth! On several occasions as employers we have endeavoured to act in good faith and been very reasonable when employees have behaved in a variety of extremely bad ways that have affected our business and the morale of other employees. The law as it stands all seems to favour employees and not the well being of the business! There is little we can seemingly do to defend ourselves without redress.