Appeal court revises punitive damage award (Legal view)

Treatment of wrongfully dismissed airport worker didn’t justify additional damages
By Jeffrey R. Smith
|Canadian HR Reporter|Last Updated: 03/14/2011

An Ontario court has reduced wrongful dismissal damages against an employer that wrongfully fired an employee for abusing sick leave, finding $100,000 of the $500,000 award was unreasonable.

In 2003, the Greater Toronto Airports Authority (GTAA) was experiencing excessive absenteeism and abuse of sick leave by employees. One of the measures it adopted was to put employees suspected of abusing sick leave under surveillance. If it was able to determine an employee was abusing sick leave, the worker would be terminated.

On Oct. 31, 2003, a 47-year-old fleet co-ordinator with 23 years of service injured her knee while climbing out of a utility vehicle. She took a couple of days off and returned to work while planning to have physiotherapy. She didn’t need any significant modifications but did some small ones on her own, such as moving around when her knee became sore. However, the therapy didn’t help and, since her job involved a significant amount of walking and driving, she had arthroscopic surgery on her knee on Feb. 19, 2004. Her orthopedic surgeon gave her a medical note instructing her to take four weeks off work for recovery.

The employee happened to be living with another GTAA worker the employer suspected was abusing his sick leave. He was under surveillance by the GTAA and the injured employee was also observed when they were together. During the surveillance, the injured employee was seen running errands and driving around, activities that were supposedly against her medical restrictions.

The GTAA felt the employee was being dishonest about the severity of her injury and the surveillance videos proved she had improved enough to work. Additional surveillance revealed her doing things beyond the restrictions of the doctor’s note so the GTAA wanted her to “come clean.” The employee was told if she apologized, she would be given another chance but the employee refused to admit she did anything wrong. GTAA investigators concluded the employee was being dishonest and, on March 24, 2004, the employee was terminated for violating the GTAA’s code of conduct, which listed dishonesty, falsifying attendance and making false statements as grounds for termination on a first offence.

An arbitrator from the Ontario Arbitration Board found the GTAA had a preconceived notion the employee was being dishonest and it didn’t properly investigate by obtaining and following legitimate medical opinions on the difference between her everyday restrictions and her work restrictions.

$500,000 in damages for dismissal

The arbitrator also found the GTAA acted in bad faith and its treatment of a 23-year employee with no previous disciplinary issues was unacceptable. It was likely her association with the other worker under suspicion coloured the GTAA’s dealings with her and the situation was not assessed on its own merits, said the arbitrator.

The GTAA was ordered to pay her $50,000 for mental distress, $50,000 in punitive damages and compensation for six years’ lost wages worth more than $300,000. In addition, the arbitrator felt it was likely she would have worked for the GTAA until her retirement at age 55 so it ordered about $100,000 in compensation for an additional two years of future economic loss.

The GTAA appealed to the Ontario Divisional Court, arguing the damages were excessive. It also argued the amount for lost wages was unreasonable because the employee was only seeking damages and did not choose to return to work by seeking reinstatement.

Damages overturned

The award of punitive damages was unfair, found the court, as the GTAA was not informed before the hearing of any specific evidence upon which the union was basing its claim for punitive damages and, therefore, it was not able to respond. This was of particular concern to the court since it noted punitive damages in a dismissal case such as this were rare.

The $50,000 for mental distress was also unreasonable because the arbitrator didn’t differentiate between the pain and suffering the employee suffered from her knee injury and the distress caused by the manner of dismissal, found the court. The employee’s knee injury had been aggravated because she had to choose psychotherapy for a period instead of physiotherapy, but this should not have been included in damages for a breach of the collective agreement, said the court.

“To the extent that damages for mental distress are based on the manner of dismissal, this does not encompass damages from a physical injury that was aggravated because of delays in physiotherapy,” said the court. “Moreover, there is no mention of any medical evidence to support the conclusion that the (employee’s) knee injury was aggravated because of the dismissal and the few weeks without physiotherapy.”

The reinstatement was also not a reasonable solution due to the GTAA’s accusation of dishonesty and poor treatment of the employee, found the court. This undermined the chance of resuming a viable employment relationship.

The GTAA acted in bad faith in the manner of dismissal, which caused the breakdown of the employment relationship, agreed the court. Since it was reasonable to assume an employee with 23 years’ service and associated benefits in a unionized environment would stay in her job until “at least early retirement,” the award for past and future lost wages was reasonable, found the court.

The court upheld the $300,000 award for lost wages but set aside the $50,000 in punitive damages. It remanded the matter of the $50,000 in damages for mental distress back to the arbitrator to determine a lower amount based only on the manner of dismissal.

For more information see:

Greater Toronto Airports Authority v. P.S.A.C., Local 0004, 2011 CarswellOnt 449 (Ont. Div. Ct.).

Jeffrey R. Smith is the editor of Canadian Employment Law Today, a publication that looks at workplace law from a business perspective. For more information, see

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