Wallace damages still kicking around

Ontario Court of Appeal upholds notice extension based on bad-faith conduct
By Ronald Minken
|Canadian HR Reporter|Last Updated: 09/04/2009

It has been more than a year since the Supreme Court of Canada ruled on the appeal in Keays v. Honda Canada Inc. It was one of the most highly anticipated decisions in employment law, providing insight and guidance for lower courts in awarding both damages for bad faith in the conduct of dismissal (formerly known as Wallace damages) and punitive damages. More specifically, the ruling essentially removed the ability of courts to award Wallace damages.

Wallace damages first appeared in the Supreme Court’s decision in Wallace v. United Grain Growers Ltd. in 1997. They stemmed from the power imbalance in the relationship between an employer and an employee. In recognition of this dynamic, employers should be held to an obligation of good faith and fair dealing in dismissing employees, determined the court.

“In the course of dismissal employers ought to be candid, reasonable, honest and forthright with their employees and should refrain from engaging in conduct that is unfair or in bad faith by being, for example, untruthful, misleading or unduly insensitive,” said the court.