Courts continue to award punitive damages for bad faith conduct

B.C. worker awarded $100,000 due to employer's bad faith conduct in the course of dismissal

Stuart Rudner
By Stuart Rudner

In Keays v. Honda Canada Inc., the Supreme Court of Canada dramatically changed the way in which courts are to award "The Damages Formerly Known as Wallace."

Previously, an employee found to have been treated  in bad faith in the course of dismissal would receive an arbitrary extension of the applicable notice period. In Honda, the court ruled such damages are to be compensatory and only awarded where the employee can prove actual loss or damage.

Since the decision in Honda, several courts have found that employers acted in bad faith but declined to award damages because the employee could not produce evidence of damages arising out of it, as opposed to the "usual" damages that arise when one loses their job.

More recently, however, several courts seem to be confusing bad faith damages ("The Damages Formerly Known as Wallace"), punitive damages, aggravated damages and damages for mental distress.

In Kelly v. Norsemont Mining Inc., the court found the employer had engaged in bad faith conduct in the course of dismissal, and the employee testified he suffered emotion distress as a result. He did not produce any medical evidence in support of this claim, however. Nevertheless, the court deemed the employer's conduct to have been "vindictive, reprehensible and malicious" and thereby justified awarding punitive damages in the amount of $100,000.

In recent months, we have seen several six and seven figure awards of punitive damages in wrongful dismissal claims. While Honda may have signaled a reprieve from claims for "Wallace bumps," recent case law suggests extraordinary damages in employment law cases are on the rise.

Stuart Rudner is a leading HR Lawyer and a founding partner of Rudner MacDonald LLP, a firm specializing in Canadian Employment Law. He provides clients with strategic advice regarding all aspects of the employment relationship, and represents them before courts, mediators and tribunals. He is the author of You’re Fired: Just Cause for Dismissal in Canada, published by Carswell. He can be reached at [email protected]. You can also follow him on Twitter @CanadianHRLaw and join his Canadian HR Law Group on LinkedIn.

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