Wrongful dismissal update: More kinds of damages being ordered

February 14, 2017 Doug MacLeod, MacLeod Law Firm Employee Relations, Employment/Labour Standards, HR Policies and Procedures, Human Resources, Human Rights, Notice, Damages and Settlements, Payroll, Pensions and Benefits, Source Deductions and Reporting, Union Relations, Wages and Compensation

Once upon a time, employees did not sign employment contracts with termination clauses and employment lawyers fought over the appropriate “reasonable” notice period. In 2017, however, employees now claim in addition to wrongful dismissal damages, human rights damages, moral or Wallace damages, punitive damages, and damages for the intentional infliction of mental stress.

By way of example, this blog discusses a recent case decided by a judge of Ontario’s Superior Court after a 27–day trial.

Doyle v. Zochem Incorporated, 2016 ONSC 3199

In this case, a 44–year–old female supervisor with 9 years’ service was fired without any notice of termination. She earned a salary of about $85,000, worked in a male dominated workplace, and her termination came shortly after filing a harassment complaint. After her termination, the employee spiralled into depression. She applied for short–term disability benefits but even though the employer’s doctor supported the claim the Company denied it.

In an 82–page decision, the judge awarded the terminated employee three different types of damages.

Wrongful dismissal damages

The court concluded the employer should have provided the employee with 10 months notice of termination and ordered the employer to pay her over $80,000 in damages, which was equal to the remuneration she would have received during this period (including pension contributions, and profit share) less the termination pay and severance pay she received after her termination.

Moral damages or Wallace damages

The judge ordered the employer to pay the employee $60,000 because of manner of the termination. The Company’s managers were extremely insensitive at the time of her termination; they were cold and brusque and she was not given a reason for her termination. In addition, the judge concluded, among other things, that the Company’s response to the short–term disability claim was insensitive.

Human rights damages

The judge ordered the employer to pay the employee $25,000 because of how it responded to her harassment claim, including a faulty one–day investigation into it.

Damages for the intentional infliction of mental stress

The judge concluded that even though a manager harassed and demeaned the employee knowing she suffered from depression, she did not intend to cause the employee mental stress and therefore he did not award the employee damages for this claim.

Lessons to be learned

Employers should make a reasonable attempt to settle these kinds of cases before litigation is commenced. In this case, the employer made a six month “take it or leave it” offer which was clearly less than her wrongful dismissal damages. I shudder to think about the legal costs associated with a 27–day trial.
Employers have an obligation to act in good faith, including at the time of termination. There is no reason to be insensitive to an employee at the time of termination. Doing so will only open up the employer to unnecessary additional legal liability.
Employers have an obligation to conduct an adequate investigation into a human rights or harassment complaint. An investigation into a sexual harassment complaint should be conducted by someone who is adequately trained. Failure to do so will only open up the employer to unnecessary additional legal liability.

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Doug MacLeod, MacLeod Law Firm

Employment and labour lawyer at MacLeod Law Firm

For the past 30 years, Doug MacLeod, founder of the MacLeod Law Firm, a Canadian labour and employment law firm, has been advising and representing employers in connection with employee terminations. If you have any questions, you can contact him at 416 317-9894 or at doug@macleodlawfirm.ca. Read more