Highest ever damages for bad faith dismissal overturned

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|Canadian HR Reporter|Last Updated: 09/04/2003

British Columbia's top court has toppled the largest “extended notice period” damages ever awarded in Canada.

Two years ago the province's supreme court awarded Colette Clendenning six months' remuneration in lieu of notice plus a whopping 36 months of extra pay for bad-faith dismissal. Such “extended notice damages” are sometimes called “Wallace damages,” after a case in which the Supreme Court of Canada extended the notice period of an employee (Wallace) after his employer was particularly thoughtless in the way it dismissed him. Clendenning’s 36-month “Wallace damages” stood as the “high-water mark” for such awards until now.

Clendenning’s employer, the insurance company Lowndes Lambert, had wrongly accused her of forgery, fraud and drug abuse. Finding that the accusations had made her a leper in the industry, the trial judge excoriated Lowndes Lambert for, in his view, over-reacting.