A closer look at punitive damages in recent court decision
Exclusive to Canadian HR Reporter from Rudner Law.
What happens when a company fires an employee and refuses to pay even the minimum entitlements required by law? Can the employer be punished for this?
The short answer: sometimes—but not always.
The courts have repeatedly held employers accountable for failing to meet their obligations under the Employment Standards Act, 2000 (ESA). In many cases, this has included awarding punitive damages on top of wrongful dismissal damages. However, a recent court decision shows that a breach of the ESA alone isn’t always enough to justify punitive damages.
Let’s take a closer look.
When courts punish employers
In past decisions, courts have been clear: ignoring statutory entitlements can lead to serious consequences.
For example, in Fogelman v. IFG, the court awarded an additional $25,000 in punitive damages because the employer failed to pay the employee his ESA minimums. The judge didn't mince words:
“It is also my view that the failure to comply with the ESA is an independent wrong that is outrageous and reprehensible behaviour deserving of punitive sanction.”
The court found that the employer’s refusal to pay anything was a deliberate attempt to "play hardball" with the employee—behaviour deserving of punishment.
Similarly, in Teljeur v. Aurora Hotel Group, the court awarded elevated legal costs against the employer for breaching the ESA, as well as moral damages of $15,000 for its bad faith conduct, emphasizing that this kind of conduct is unacceptable and will be penalized.
When courts show restraint: Williamson v. Brandt Tractor Inc.
Contrast this with the recent decision in William Williamson v. Brandt Tractor Inc. - a case that went in the opposite direction.
William Williamson had worked with the company for 18 years and was dismissed at age 56, allegedly for cause. The employer didn’t pay him any severance—not even the statutory minimums under the ESA. Yet, the court declined to award punitive damages.
Why?
Although the court agreed the company had breached the ESA, it found that this breach alone wasn't enough. The judge emphasized that punitive damages require more than just a breach of the ESA — there must be some other conduct of the employer that justified an award of punitive damages.
In this case, Williamson’s own credibility was called into question. The court found he was not a reliable witness and noted several past work-related incidents and discipline, as a refusal to accept that he deserved to be disciplined or that he needed additional training. While the employer failed to prove just cause for dismissal, the court’s negative view of Williamson may have influenced its decision not to punish the employer further.
The court explained: “There must be more, such as the egregious conduct requirement described in the case law, to justify punitive damages beyond the remedy enacted by the legislature.”
Employers that purposely breach the ESA in an effort to play hardball with an employee are likely to be punished by the court. On the other hand, an employer that reasonably believes they have just cause to dismiss an employee, and does not pay the employee their ESA entitlements as a result, may receive more leniency from the court.
Ultimately, Williamson was awarded damages for wrongful dismissal based on a notice period of 17 months, but no punitive damages.
Key takeaways for employers
- Statutory entitlements under the ESA are non-negotiable: Employers are legally required to pay them—regardless of any disputes over common law notice or signed releases.
- Failure to comply can lead to punitive damages, but only if the court finds additional misconduct beyond the ESA breach itself.
- Every case is fact-specific. An unsympathetic plaintiff or complex employment history may influence whether the court decides to impose further penalties.
While the law provides strong protections for employees, courts exercise discretion when deciding how harshly to penalize employers. The lesson for companies is clear: don't gamble with ESA obligations. Failing to meet these minimum standards can open the door to costly litigation—and, in some cases, significant liability well beyond what they would otherwise have had to pay.
If you're navigating a termination or have questions about your obligations, it's wise to speak with an employment lawyer early. A bit of proactive advice can save significant time, money, and legal exposure.
Alex Minkin is an associate lawyer at Rudner Law in Toronto. He can be reached at (416) 864-8500 or [email protected].
