Did abusive treatment warrant additional damages?

Read the facts of this case and decide for yourself: Was the worker entitled to Wallace damages?

In 1997, the Supreme Court of Canada opened the door for Wallace damages which, essentially, are additional damages that can be awarded if a court thinks the employer behaved in a particularly bad manner in how it handled the dismissal of a worker.

Wallace damages take the form of an extension of the reasonable notice period. If, for example, a worker who was wrongfully dismissed is entitled to six months’ pay in lieu of notice, a court could tack on additional months for the way the termination was handled.

But what justifies Wallace damages isn’t always clear-cut. Being fired will have a negative impact on anyone. Courts have been careful to follow the Supreme Court’s thinking in not awarding Wallace damages for hurt feelings. In order to justify such an extension of the notice period, the employer has to behave in a cavalier matter. Have a look at the case below and see if you think the employer’s conduct justified additional damages.

Pauline Morland was hired by Kenmara Inc. on July 15, 2003, as sales representative. She quit her job on March 29, 2004, following an incident at work and claimed constructive dismissal, including a claim for Wallace damages due to the verbal abuse she suffered at work.

The court said there was no doubt the work environment at Kenmara was tense. There was a personality clash between Morland and the owner. And there was a constant battle over commissions. The court said it could understand Morland’s frustration over commissions because it was unable to sort out on what basis commissions were actually paid.

According to Morland, the owner was always using foul language. She testified that the owner called her a “bitch” at least 50 times. On March 29, things reached a breaking point. Morland said she was called into an office by the owner to discuss commissions. Morland said she didn’t want to discuss commissions with her, and left the office to return to her desk. The owner allegedly followed her out and said, “I own this company. You do what I say.” The owner kicked Morland’s trash can and said, “Who do you think you are?” Morland got up and went into the office to get her coat. She wanted to leave, let the situation cool down and come back the next day, she said. But the owner followed her in and shut the door. Morland said she started screaming “let me out.” The owner blocked the door and began a tirade, Morland said. After asking three times to let her out, the owner eventually did.

The court said there was no doubt the work environment was poor and it called the owner a “dishonest person.”

You make the call

Were Wallace damages warranted?
Did the employer do nothing wrong?

If you said Wallace damages were warranted, you’re correct. The court was very critical of the owner’s conduct in this case. It pointed out the the company was no longer in business, something it attributed to the owner’s inability to create a positive work environment.

“If an employer wishes to have a successful business, it is incumbent upon the employer to foster congeniality amongst the employees by providing a good work environment which will result in good employee productivity,” the court said. “Unfortunately, Kenmara ... failed to foster a good working environment for employees and in fact the opposite was the case. It is likely this failure has contributed to a once successful business no longer doing any business.”

It said the owner created a hostile work environment by continually using foul language and abusive conduct towards Morland, which culminated in a “very unpleasant confrontation” on March 29. That was the straw the broke the camel’s back, the court said. It ruled Morland, 58, had been constructively dismissed.

It awarded three months’ notice, tacking on an additional month for the way the owner behaved, for total damages of four months’ notice or $11,666.64.

For more information see:

Morland v. Kenmara Inc., 2006 CarswellOnt 989 (Ont. S.C.J.).

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