Difference between revisions of "Employment Law Issues (9:V)"

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Employment Law Issues (9:V) (view source)

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Prior to the ''Honda v Keays'' decision, damages awarded where the employer had acted in bad faith were assessed by simply extending the notice period to  which the employee would otherwise be entitled. This practice was based on the Supreme Court of Canada’s decision in ''Wallace v United Grain Growers Ltd'', [1997] 3 SCR 701, and the awards were informally known as “Wallace Damages”. Following the ''Honda v Keays'' decision, the practice of assessing damages by extending the notice period is no longer to be used. Now, one must prove what actual losses or mental harm the employee incurred, and the employee is then compensated for those actual losses or mental distress.
Prior to the ''Honda v Keays'' decision, damages awarded where the employer had acted in bad faith were assessed by simply extending the notice period to  which the employee would otherwise be entitled. This practice was based on the Supreme Court of Canada’s decision in ''Wallace v United Grain Growers Ltd'', [1997] 3 SCR 701, and the awards were informally known as “Wallace Damages”. Following the ''Honda v Keays'' decision, the practice of assessing damages by extending the notice period is no longer to be used. Now, one must prove what actual losses or mental harm the employee incurred, and the employee is then compensated for those actual losses or mental distress.


What constitutes “bad faith” is for the courts to decide, and has in the past centred on deception and dishonesty. Mere “peremptory” treatment is not sufficient: see, for example, ''Bureau v KPMG Quality Registrar Inc'', [1999] NSJ No. 261 (NSCA). Sexual harassment has been held not to give rise to additional damages (''Chiang v Kejo Holdings Ltd'', 2005 BCSC 414). See, however, ''Sulz v Minister of Public Safety and Solicitor General'', 2006 BCCA 582 where punitive damages were awarded for sexually harassing conduct in the employment context. “Bad faith” has been found in cases the  following cases: i) where the employer lied to the employee about the reason for dismissal (see Duprey v Seanix Technology (Canada) Inc, 2002 BCSC 1335, where an employer told a commissioned employee he was being released due to financial hardship,  when it was found he was being released so the employer would not have to pay owed commission); ii) where an employer has deceived the employee  about representations of job security (Gillies v Goldman Sachs Canada, 2001 BCCA 683); iii) where a senior employee was induced to leave  his position under the promise of job leading to retirement; and iv) where an employer promised an employee he would keep his job after a  merger, although he knew differently (Bryde v Liberty Mutual, 2002 BCSC 606). In one case, a response by employer’s counsel to an  employee’s counsel containing an allegation of just cause where none existed was held not to constitute bad faith (Nahnychuk v Elite Retail Solutions Inc, 2004 BCSC 746). However, in another province, a letter threatening to allege just cause where none existed, for the purpose of  forcing a settlement, even though just cause was not plead in court, was held to give rise to additionaldamages (Squires v Corner Brook Pulp and Paper Ltd,[1999] NJ No 146 (Nfld CA)).  
What constitutes “bad faith” is for the courts to decide, and has in the past centred on deception and dishonesty. Mere “peremptory” treatment is not sufficient: see, for example, ''Bureau v KPMG Quality Registrar Inc'', [1999] NSJ No. 261 (NSCA). Sexual harassment has been held not to give rise to additional damages (''Chiang v Kejo Holdings Ltd'', 2005 BCSC 414). See, however, ''Sulz v Minister of Public Safety and Solicitor General'', 2006 BCCA 582 where punitive damages were awarded for sexually harassing conduct in the employment context. “Bad faith” has been found in cases the  following cases: i) where the employer lied to the employee about the reason for dismissal (see ''Duprey v Seanix Technology (Canada) Inc'', 2002 BCSC 1335, where an employer told a commissioned employee he was being released due to financial hardship,  when it was found he was being released so the employer would not have to pay owed commission); ii) where an employer has deceived the employee  about representations of job security (''Gillies v Goldman Sachs Canada'', 2001 BCCA 683); iii) where a senior employee was induced to leave  his position under the promise of job leading to retirement; and iv) where an employer promised an employee he would keep his job after a  merger, although he knew differently (''Bryde v Liberty Mutual'', 2002 BCSC 606). In one case, a response by employer’s counsel to an  employee’s counsel containing an allegation of just cause where none existed was held not to constitute bad faith (''Nahnychuk v Elite Retail Solutions Inc'', 2004 BCSC 746). However, in another province, a letter threatening to allege just cause where none existed, for the purpose of  forcing a settlement, even though just cause was not plead in court, was held to give rise to additional damages (''Squires v Corner Brook Pulp and Paper Ltd'', [1999] NJ No 146 (Nfld CA)).  
 
If one suspects the employer acted in bad faith in the manner of dismissal, one should do further research to determine whether the employee has a strong case. For a table of cases in which aggravated or punitive damages were sought, and a list of the damages awarded, see “Aggravated and Punitive Damages and Related Legal Issues”, Employment Law Conference 2013, Paper 8.1, CLE BC.
 
==== b) Punitive Damages ====
 
If the conduct of the employer was especially outrageous, harsh, vindictive, reprehensible, or malicious, then the court may award punitive  damages (see ''Honda Canada Inc v Keays''). The focus will be on the employer’s misconduct, and not on the employee’s loss; the damages are not designed to compensate, but rather to punish and deter. Generally, the discretion to award punitive damages has been cautiously exercised and  used only in extreme cases. Courts are wary of the risk of double-compensation where punitive damages and aggravated damages are considered in the same case. 
 
Punitive damages are, however, currently on an upward trend in B.C. Since the Honda decision, courts have generally required medical evidence showing that an employee suffered mental harm in order to award aggravated damages, and this has left certain employees, who are less susceptible to suffering mental harm, without that recourse. The courts are tending to award punitive damages more often now than in the past  in order to make up for this discrepancy. If an employee was treated particularly harshly, but did not suffer documented medical harm, consider claiming punitive damages. See the paper entitled “Aggravated and Punitive Damages and Related Legal Issues” for a table of cases in which aggravated or punitive damages were sought in order to compare your situation to others and determine an appropriate amount of damages (link  in [[{{PAGENAME}}#13. Aggravated and Punitive Damages | section IV.D.13: Aggravated and Punitive Damages]], above).
 
If the employee has suffered any of the following situations through the employer’s conduct, consider claiming for punitive damages: *Defamation
*Malicious prosecution, if the employer maliciously instigates criminal proceedings against an employee (''Teskey v Toronto Transit Commision'', 2003 OJ No 4547)
*Duress 
*Interference with the employee’s compensation
*Flawed investigation of alleged employee misconduct
*Unproven alleged cause
*Constructive dismissal
*Demotion
*Sexual harassment
*Unsafe or unhealthy work environment
*Oppression (if the employee is also a shareholder of the corporation)
*Inducement to resign, for example by offering a letter of reference only if the employee resigns (''Vernon v British Columbia (Liquor Distribution Branch)'', 2012 BCSC 133).
*Misrepresentations by the employer
*Employer’s behaviour before, during, or after the dismissal
*Breach of the employee’s privacy
*Insensitivity to an employee’s pregnancy
*Physical or verbal assault or abuse
*Interference with trade unions
*Any independent causes of action
 
Workplace investigations into misconduct must be carried out in a good faith manner without bias. Unfair process may entitle an employee to aggravated or punitive damages.
 
=== 14. Duty to Mitigate ===
 
==== a) Employment Standards ====
 
There is no duty to mitigate in order to receive statutory compensation for length of service  under the ESA. An employee is entitled to  statutory termination pay regardless of whether the employee finds new work. 
 
==== b) Common Law ====
 
However, claimants in civil court should be aware that an employee has a common law duty to mitigate his or her losses. The employee need only take reasonable steps to do so; searching for similar work is sufficient.
 
Because of the requirement to mitigate, the employee may have to take another job the employer offers, as long as the new job is not at a lower level than the previous one, and the change does not amount to constructive dismissal. Similarly, a dismissed employee may have to accept an employer’s offer to work through the notice period (''Evans v Teamsters Local Union'', 2008 SCC 20). Retraining may be considered part of mitigation if it is to enter a job field with better prospects. This applies where an employee tries and fails to obtain alternate suitable employment (''Cimpan v Kolumbia Inn Daycare Society'', [2006] BCJ No 3191).
 
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