Alberta court reduces big damage award in wrongful dismissal case

Employer incorrectly assumed employee was guilty of sexual harassment accusations from co-workers, but appeal court found $500,000 was too much to give him

An Alberta employer can rest a little easier after the province’s Court of Appeal reduced an award of $500,000 in aggravated and punitive damages for wrongful dismissal of a fired employee to $75,000.

Daniel Elgert, 57, worked for a Home Hardware Supply Centre in Wetaskawin, Alta., for more than 16 years, starting in 1986. In 2002, two female employees accused Elgert of sexual harassment. Home Hardware began an investigation under the assumption Elgert was guilty of harassing the employees — though Elgert insisted he was innocent and obtained a petition with the names of several employees who supported him — and soon after fired him.

Elgert sued Home Hardware for wrongful dismissal and a jury found the sexual harassment claims were unfounded. As a result, Elgert was awarded 24 months’ salary in lieu of notice plus defamation damages of $60,000 from the female employees. In addition, the jury found his dismissal was unfair and in bad faith, ordering Home Hardware to pay $200,000 in aggravated damages and $300,000 in punitive damages.

The Alberta Court of Appeal upheld the award of two years’ pay in lieu of notice, but not the other damage awards. In a 2-1 decision, the court found $300,000 was too high for punitive damages in employment cases. A more reasonable ceiling in these circumstances was $100,000 and most employment cases with such damages were lower, said the court. In this case it set the punitive damages at $75,000.

“The jury award (of punitive damages) was inordinately high and unnecessary to convey the message intended,” said the court.

The court also struck down the aggravated damages entirely, finding Elgert didn’t suffer any harm as a result of the manner of his dismissal. It acknowledged Home Hardware’s investigation was not conducted fairly, but any harm over and above the loss of his job was unclear. Elgert failed to distinguish between the harm he suffered from the dismissal itself — such as emotional trauma — and any suffered as a result of the manner of dismissal, of which the latter he only offered “a scintilla of evidence.”

For more information see:

Elgert v. Home Hardware Stores Ltd., 2011 ABCA 112 (Alta. C.A.).

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