The Emotional Impact of Termination

Losing a job can be one of the most stressful events in a person’s life. Courts recognize that employees are often vulnerable during the termination process. As a result, employers are expected to conduct dismissals honestly, reasonably, and in good faith. When they fail to do so, the consequences can extend beyond ordinary severance obligations.

What Are Aggravated Damages?

Aggravated damages may be awarded where an employer’s conduct during dismissal causes the employee additional harm.

The Supreme Court of Canada confirmed in Wallace v United Grain Growers Ltd. (1997) that employers must act in good faith when dismissing employees. This includes being candid, reasonable, honest, and forthright with employees, refraining from conduct that is unfair or insensitive.

In Honda Canada Inc. v Keays (2008), the Supreme Court of Canada clarified that aggravated damages are not automatic. An employee must prove that the employer’s bad faith conduct caused actual harm, such as mental distress.

What Are Punitive Damages?

Punitive damages are different. They are not intended to compensate the employee for harm suffered. Instead, they are meant to punish conduct that is malicious, oppressive, high-handed, or otherwise deserving of condemnation.

Punitive damages are rare and are generally reserved for exceptional cases where the court finds that compensatory damages are not enough to address the employer’s misconduct.

Common Termination Mistakes

Employers can increase their risk when they:

• make allegations of misconduct without sufficient evidence;
• provide inaccurate or misleading information about an employee’s entitlements;
• humiliate or embarrass an employee during the termination process;
• ignore medical issues or accommodation obligations;
• contract prospective employers or others in a way that damages the employee’s reputation;
• attempt to use the employee’s financial vulnerability as leverage; or
• take an unnecessarily aggressive approach in the hope the employee will simply go away.

Recent Court Cases in British Columbia

BC courts have awarded aggravated or punitive damages in several cases involving mishandled terminations. The following examples show how termination mistakes can become expensive:

1. Zheng v China Southern Airlines (2023) – The employer accused the employee of leaking company documents and placed her on administrative leave before firing her. The employer also damaged her reputation with other potential employers. The court awarded the employee $208,832.75, including $35,000 in aggravated damages and $75,000 in punitive damages.
2. Valle Torres v Vancouver Native Health Society (2019) – After a long-time employee was fired, the employer made unfounded allegations that damages his reputation and interfered with his ability to find new employment. The court awarded $30,000 in aggravated damages.
3. Moffatt v Prospera Credit Union (2021) – An employee received a misleading termination letter that restricted her severance pay and improperly attempted to extend certain post-employment obligations. The court found the employer had taken advantage of the employee’s vulnerable position at the time of termination and awarded punitive damages equivalent to 2.5 months of salary.
4. Bailey v Service Corporation International (Canada) (2018) – When an employee was fired while on medical leave, the court awarded $110,000 in punitive damages because the dismissal was handled improperly.
5. Ram v. The Michael Lacombe Group (2017) – The employer fired an employee for allegedly stealing food. However, it was revealed that the manager had given her permission to take the food. The court awarded the employee $25,000 in aggravated damages in addition to 12 months’ salary as reasonable notice for termination without cause, totalling $46,000.

Why It Matters

Many employers focus primarily on calculating severance obligations. However, the manner of dismissal can significantly increase the cost of a termination.

A poorly handled dismissal may result in aggravated damages, punitive damages, increased legal fees, and a longer, more contentious dispute. It can also affect workplace morale, damage the employer’s reputation, and make it harder to defend the termination if litigation follows.

A respectful and carefully planned termination process protects both the departing employee’s dignity and the employer’s interests.