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Awards of Aggravated and Punitive Damages in Wrongful Dismissal Claims

Article by Rose Keith, JD, Vancouver BC Workplace & Employment Law Lawyer & Mediator

Typically a wrongful dismissal case will concern first of all whether there was just cause for the dismissal and if not then the period of reasonable notice. 

Generally a further claim will be made in the pleadings of the dismissed employee for aggravated and/or punitive damages.  These claims are made as a matter of course by many of us, rather than after a careful consideration of whether in fact there is any merit to the claim.  More often than not, the claim is not really pursued or pursued only in a very peripheral manner.  The focus of counsel generally is on what the appropriate period of notice should be.

Development of a theme and the evidence to support it that would result in an award of aggravated or punitive damages is generally not undertaken.  In this article we will consider three decisions in which aggravated and punitive damages were carefully pursued and the lessons that those cases provide in terms of preparing and presenting your case. 

An action for wrongful dismissal is based on an implied obligation in the employment contract to give reasonable notice of an intention to terminate the employment relationship when just cause to do so does not exist.  If the employer fails to provide reasonable notice of the termination, the employee brings an action alleging breach of the implied term.

The general rule is that the damages that are available in such a case are limited to the loss suffered as a result of the employer's failure to give proper notice.  Damages are not awarded for the actual loss of the job and/or the pain and distress that may have been suffered as a consequence of being terminated. 

Either party to an employment contract is free to terminate the contract at any time as long as they provide reasonable notice, and therefore the only damages that generally arise on termination of the contract are related to the failure to provide that reasonable notice.   (Vorvis v. Insurance Corporation of British Columbia, [1989] 1 S.C.R. 1085). 

Damages for wrongful dismissal are not increased because of the employee's wounded feelings following the dismissal or because of the prejudicial effect of the termination on the employee's reputation and his chances of finding other employment. (Peso Silver Mines Ltd. (N.P.L.) v. Cropper, [1966] S.C.R. 673) 

The importance of work in a person's life has long been recognized by our Courts.  This recognition is the foundation for the jurisprudence concerning employer conduct at the time of termination.  In the 1987 decision of Reference Re. Public Service Employee Relations Act (Alta.) [1987] 1 S.C.R. 313, Dickson C. noted at p. 368: 

Work is one of the most fundamental aspects in a person's life, providing the individual with a means of financial support and, as importantly, a contributory role in society.  A person's employment is an essential component of his or her sense of identity, self-worth and emotional well-being. [emphasis added by editor]

The vulnerability of an employee at the time of termination was recognized in Wallace v. United Grain Growers Ltd. [1997] 3 S.C.R. 701, where Iacobucci J. said at para. 95: 

The point at which the employment relationship ruptures is the time when the employee is most vulnerable and hence, most in need of protection.  In recognition of this need, the law ought to encourage conduct that minimizes the damage and dislocation (both economic and personal) that result from dismissal.  In Machtinger, Supra, it was noted that the manner in which employment can be terminated is equally important to an individual's identity as the work itself (at p. 1002). By way of expanding upon this statement, I note that the loss of one's job is always a traumatic event. However, when termination is accompanied by acts of bad faith in the manner of discharge, the results can be especially devastating. In my opinion, to ensure that employees receive adequate protection, employers ought to be held to an obligation of good faith and fair dealing in the manner of dismissal.

Punitive damage awards are meant to punish a wrongdoer for unjustifiable and egregious conduct. There are entirely different than compensatory damages which are designed to compensate the plaintiff for their losses. The leading case on punitive damages is Whiten v. Pilot Insurance 2002 SCC 18.  In that decision, the Supreme Court of Canada outlined the three general objectives of punitive damages:

  1. Punishment (or retribution);
  2. Deterrence to the wrongdoer and others; and
  3. Denunciation, or how the judge or jury expresses their outrage to the conduct.

The foundation for an award of punitive damages was explained in Keays v. Honda 2008 SCC 39.  The factual background behind he Keays decision was that the plaintiff began his employment with Honda in 1986. He began receiving long term disability benefits in 1996 and was diagnosed with Chronic Fatigue Syndrome in 1997.  His disability benefits were discontinued after a work capacity evaluation in 1998.  When he returned to work Keays was required by Honda to provide a medical note for every absence.  This was different than the way that Honda treated other employees who were suffering from "mainstream" illnesses.  Keays continued to be sporadically absent from work so Honda hired a doctor to assess him.  In response Keays hired legal counsel who asked for clarification of the reasons for hiring the doctor and unilaterally cancelled the appointment.  Honda then instituted its absence related discipline policy. When Keays continued to refuse to meet with the hired doctor until Honda had clarified the reasons for the meeting, Honda terminated his employment for insubordination.

At trial, the judge found that Keays' termination was a disproportionate response to his alleged insubordination and was therefore wrongful dismissal. 15 months notice was awarded as well as a 9 month extension of the notice period as a Wallace bump up as a result of Honda's bad faith actions in the manner of dismissal.  In addition, the trial judge awarded $500,000 in punitive damages as a result of what he characterized as being Honda's discriminatory and harassing treatment of Keays in the course of his employment.  This award represented the highest punitive damages award in an employment context at that time in Canada.

The Court of Appeal upheld the 15 month notice period as well as the 9 month Wallace bump up.  They also upheld the principle behind the award of punitive damages but reduced the award to $100,000 on the basis that some of the trial judge's findings of fact were not supported by the evidence and also on the principle of proportionality.


Rose Keith, over 20 years experience in personal injury and employment law, is based in downtown Vancouver, BC

The above article was
Prepared and Presented by:

Rose Keith, Associate Counsel
Harper Grey LLP
3200 - 650 West Georgia Street
Vancouver, British Columbia, V6B 4P7
Tel:  604 895 2911


Go to her webprofile at

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