Employment Claims And Aggravated Damages: 'Everybody Hurts Sometimes' – REM

Although not always successful, increasingly, plaintiffs in employment cases are making claims for damages over and above notice damages. This article provides a very brief overview of a selection of successful and unsuccessful claims, and demonstrates that there are increasingly unpredictable (sometimes very large) liabilities to employers who do not successfully and fairly conclude employment relationships.

When an employee is terminated and the termination is "not for cause" (meaning no fault of the employee), an employee can expect to receive (in addition to the notice stipulated in the Employment Standards Act of B.C.) working notice or pay in lieu of working notice or a combination of each in an amount stipulated in by their employment contract, or if there is no employment contract, then commensurate with the alchemy (otherwise known as) "common law".

"Common law" notice is calculated on a sliding scale after assessing certain factors including the age of the employee, the length of service, their seniority with the employer, and their employability. Once a notice period is established, it is multiplied by the monthly compensation (base salary plus certain benefits) the employee received pursuant to their contract while employed.

However, in certain circumstances, there are additional amounts which can be claimed by employees over and above "common law" or contractual notice. These additional amounts, or "heads of damage", include "moral" or "aggravated" damages "for mental distress", "consequential" damages, "punitive" damages, and special costs.

This article will not explore all of the heads of damage which can be claimed in employment cases, but provides a brief overview of how the courts have approached one particular head of damage called "aggravated damages" for "mental distress" by reviewing a selection cases.

From "Wallace Damages" to Honda : The Starting Point

Prior to the case of Honda Canada Inc. V. Keays 2008 SCC 39 (CanLII) [hereinafter Honda] an employee seeking damages over and above contractual damages could seek damages for behaviour by the employer during the dismissal which might have been "...unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive". This additional damage award was referred to as "Wallace damages" from the employment case in which it arose called Wallace v. United Grain Growers Ltd. [1997] 3 SCR 701.

However, Honda, shifted the assessment of any award for bad faith from extending the notice period to assessing a lump sum amount, in addition to any notice period awarded. The court did so relying on the basis of the foreseeability principle in employment contracts.

Justice Bastarache writing for the majority in Honda, supra paragraph 59:

... there is no reason to retain the distinction between "true aggravated damages" resulting from a separate cause of action and moral damages resulting from conduct in the manner of termination. Damages attributable to conduct in the manner of dismissal are always to be awarded under the Hadley v. Baxendale principle. Moreover, in cases where damages are awarded, no extension of the...