Canadian courts show growing sympathy for aggrieved employees

Punitive damages awards are on the rise – employers must be wary not to entice wrongful dismissal cases, now more than ever.

Canadian courts show growing sympathy for aggrieved employees
It seems Canada’s courts are showing a growing sympathy for aggrieved employees as punitive damages, once only awarded in exceptional circumstances, are on the rise.  Now, lawyers are warning employers to be extra vigilant when dismissing staff members or risk facing significant financial penalties.

Employment lawyer David McDonald offers one example from the British Columbia Supreme Court which proves just how costly a claim can be for employers.

In the case, Higginson v. Babine Forest Products, a long-service employee sued after he was terminated with cause. Babine Forest Products was facing an impending mill closure at the time and Higginson’s lawyer suggested the termination was part of a larger plan to eliminate long-service employees in order to avoid the costs of severance.

The jury found the employer did not have just cause to terminate the employee and Higginson was awarded pay in lieu of $286,000 – equivalent to 24 months’ pay. “What’s really surprising,” says McDonald, “is the punitive damages awarded by the jury: $573,000 or 46 months’ pay.”
Back in 2008, the Supreme Court of Canada said punitive damages would only be awarded if an employer’s conduct in the course of termination was proven to be “harsh, vindictive, reprehensible, and malicious,” but it seems attitudes are certainly changing.

“These types of awards and decisions will continue to happen,” says McDonald. “Employers need to factor them into account while striving for best practices in the difficult circumstances of terminating an employee.

Lorenzo Lisi, partner at law firm Aird & Berlis, agrees; “Today’s HR professionals are faced with a host of complicated issues, many of which can result in significant risk and liability.”

This February, Lisi is hosting a workshop for employers looking to navigate complex employment issues and get practical advice on the dos and don’ts of terminations.

Lisi’s workshop will take place on February 26th at the HRM Masterclass event in Toronto, Ontario. Find out more here

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