$50,000.00 in Punitive Damages Awarded to Dismissed Employee for Breach of the Duty of Good Faith

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In Morison v. Ergo-Industrial Seating Systems Inc., the Ontario Superior Court found not only that the Plaintiff was wrongfully dismissed, but that the employer had made allegations of just cause with no reasonable support in order to improve its negotiation position.

The Plaintiff was a 58-year old regional manager of who had been in the employ of the Defendant, a furniture manufacturer, for just over 8 years. In October 2012, he was called into the owner’s office and dismissed from employment. He was offered five months’ notice of termination, of which one month was working notice. The dismissal letter presented to Mr. Morison contained allegations of just cause for termination. Following the termination, the employer delayed in providing the Plaintiff with his record of employment and paying him amounts owing under the Employment Standards Act, 2000. The Defendant paid these amounts in June, 2015; some 2.5 years later. Mr. Morison brought a suit against the employer claiming not only damages for wrongful dismissal, but aggravated and punitive damages for the employer’s conduct.

The Court found that given the Plaintiff’s age, position, and length of service at the time of dismissal, the Plaintiff was entitled to 12 months’ notice of termination. In assessing whether aggravated damages were available, the Court commented that in order to grant aggravated damages, the Plaintiff had to prove actual damages resulting from the manner of dismissal. On this point, the Court found that the Plaintiff’s evidence was limited to ordinary pain, distress and financial stress associated with job loss, which are not compensable by way of aggravated damages.

The Court had little difficulty in finding that punitive damages were warranted. In assessing punitive damages, the Court considered the employer’s conduct and made the following findings:

  • Although the employer initially alleged just cause, its conduct was wholly inconsistent with such allegations, which generally involve conduct egregious enough to cause a breakdown in the employment relationship;
  • The inconsistency was incompatible with the Employer’s handbook, which stated that dismissal for cause involves a situation where continuing the employment relationship is untenable;
  • The employer alleged poor performance, failing to meet sales targets and not addressing concerns about a particular account; however, it was essentially admitted by the Defendant at trial at the Plaintiff was one of the Defendant’s top performers;
  • Alleging cause was an integral part of the Defendant’s negotiation strategy;
  • The employer intentionally delayed in paying the Plaintiff amounts owing under the Employment Standard Act, 2000 in order to put financial strain on the Plaintiff.

The Court found that the employer’s allegations of cause, in the absence of supporting evidence, were “a classic example of bad faith” and that its conduct was malicious, oppressive and highhanded. The Court awarded Mr. Morison $50,000 in punitive damages in order to punish the Defendant and serve as retribution, deterrence and denunciation.

An employer will expose itself to punitive damages where it makes just cause allegations without clear and cogent supporting evidence. Further, the intentional delay or failure to pay the minimum entitlements pursuant to the Employment Standards Act, 2000 is also a tactic which can lead to a significant penalty for the Employer. These types of damages may be easily avoided by obtaining legal advice prior to effecting the termination to ensure that there is sufficient evidence to support a termination for cause.