Written on behalf of Peter McSherry

In the context of employment law, damages are often assessed in terms of reasonable notice for wrongful or constructive termination, which may involve contract interpretation and determination of reasonable notice damages (i.e., assessment of how many months’ notice are owed to the wrongfully terminated employee). Less commonly, a plaintiff in an employee law matter may also seek recovery of punitive damages.

Punitive damages are awarded by the court to address particularly reprehensible behaviour engaged in by the opposing party. An award of such damages is intended to punish a party for behaving in an unacceptably high-handed manner such that punishment is warranted. Unlike damages such as reasonable notice damages, which are compensable in nature and are intended to restore the wronged party to the position they would have occupied had their rights never been violated, the purpose of punitive damages is solely to punish the offending behaviour and deter them from ever again engaging in such reprehensible behaviour.

Employer Terminates Employee, then Refuses to Pay Termination Monies or Provide ROE

The case of Wilds v 1959612 Ontario Inc. involved a claim of wrongful termination. The plaintiff in the case had been hired by the defendant roofing company as an executive assistant. A written employment agreement dictated the terms of employment, including provisions with respect to termination of employment.

The employer terminated the employee’s employment, without cause, after only 4.5 months of employment, at which time the employee was 52 years old. In the aftermath of her termination, the employee repeatedly sought reimbursement of expenses she had incurred on behalf of the employer during her tenure working for them as well as payment of appropriate benefits, termination and severance pay. Despite hiring a lawyer who sought payment of these monies on behalf of the employee, the employer had steadfastly refused to even respond to these requests, must less actually pay any of the monies legally owed to her. The employer also refused to provide the Record of Employment necessary for the plaintiff to move forward from her work with the employer and either avail herself of benefits to which she was entitled or seek alternative employment.

The employee claimed that she had been wrongfully terminated and consequently commenced a lawsuit seeking damages for same, including punitive damages for the reprehensible manner in which the employer had behaved in persistently refusing to pay the employee the monies it is legally bound to pay her under Ontario’s Employment Standards Act, 2000 and in refusing to provide any communication or clarification as to why it had taken this stance.

What is the Purpose of Wrongful Dismissal Damages?

As noted above, the primary purpose of wrongful dismissal damages is to place a terminated employee in the same financial position they would have occupied had their employer provided them sufficient adequate notice of termination and the employee had worked to the end of that period of reasonable notice.

What is Included in Wrongful Dismissal Damages?

Typically, damages intended to compensate a party for the wrongful termination of their employment include all compensation, such as base pay and bonuses, and benefits to which the employee would have been entitled had they worked through the reasonable notice period.

How Do Punitive Damages Come into Play in a Claim for Wrongful Dismissal?

As noted above, the purpose of punitive damage awards is to punish offenders for their unacceptable behaviour, rather than compensate a victim for any wrongdoing to which they have been subjected. As such, awards of punitive damages are the exception as opposed to the rule and will be awarded only in circumstances wherein specific legal criteria can be proven to be satisfied.

How to Prove Entitlement to Punitive Damages

Generally speaking, a party who seeks an award of punitive damages in relation to a claim for breach of contract, including a breach of an employment agreement, must satisfy three basic requirements:

1. Demonstrate that the defendant’s conduct was malicious, oppressive, reprehensible or high-handed such that it constitutes “a marked departure from ordinary standards of decent behaviour”.
2. Demonstrate that it is necessary to award punitive damages in addition to any compensatory award in order to punish the defendant and to thereby satisfy the court’s objectives of retribution, denunciation and deterrence in respect of such conduct.
3. Demonstrate that the defendant “committed an actionable wrong independent of the underlying claim for damages for breach of contract”.

Importantly, the courts have established that any failure to comply with the provisions of the Employment Standards Act, 2000 does in fact constitute “an independently actionable wrong for the purpose of the test for punitive damages”.

Did the Employer’s Behaviour in This Case Warrant an Award of Punitive Damages?

In this case, the court was satisfied that indeed the employer’s behaviour warranted an award of punitive damages. In particular, the court cited the employer’s repeated failure to pay the employee the entitlements she was due under the Employment Standards Act, 2000, its late issuance of the employee’s Record of Employment (which hindered her ability to pursue benefits in lieu of alternative employment) and its failure to reimburse the employee for business-related expenses she had properly incurred during her tenure with the employer, as justification for a finding that the employer had “committed flagrant breaches of the minimum statutory employment standards in Ontario”.

Moreover, the court noted that the employer had failed to take any steps to correct its failures even though they had been brought to their attention both before and after litigation had been commenced by the employee. The court found it particularly egregious that a representative for the employer, who had appeared before the court for cross-examination in relation to his affidavit, had appeared to have no knowledge of whether the employee in question had been paid her minimum ESA entitlements or been reimbursed for business expenses incurred by her on behalf of the employer. This information was readily accessible and available to the employer representative and it would have taken very little time or effort to ascertain that in fact she had never received such amounts, and to correct any error in relation to this failure.

The court was satisfied that, in these circumstances, a modest award of punitive damages was warranted in order to punish the employer and satisfy the court’s objectives of retribution, denunciation and deterrence in respect of such behaviour. In the result, it awarded the employee $10,000 in punitive damages, which is significant given that the wrongful dismissal damages awarded totalled $9,923.85, making the awards nearly equivalent in amount.

Contact the Law Office of Peter McSherry Today for Assistance with Your Wrongful Termination Claim

If you have been wrongfully or constructively dismissed from your employment, then you may be entitled to damages for same, including potentially punitive damages. Fortunately, the Law Office of Peter McSherry has the knowledge, experience and expertise necessary to confidently and capably handle your claim and pursue all benefits and compensation to which you are entitled.

From our offices in Guelph, Ontario, the Law Office of Peter McSherry is pleased to provide legal services with respect to employment and labour law to Canadians from all over Southern Ontario. Contact the Law Office of Peter McSherry today, either online or via telephone at (519) 821-5465, and one of our friendly staff will be pleased to schedule a confidential consultation.