This article explores the most significant employment law cases in 2022, and their related implications.
BAD FAITH DAMAGES
Awards of bad faith damages (as a subset of the broader category of “moral” damages) in wrongful termination litigation in Ontario have been rare. Such awards only arise in exceptional cases where the conduct of the employer is particularly egregious and the employee can show they have suffered mental distress as a result of such conduct. However, there has recently been an uptick in the awards of such damages, as illustrated by two cases of note in 2022.
Pohl v Hudson’s Bay Company, 2022 ONSC 5230
Mr. Pohl, a 50-year-old sales manager with 28 years of tenure at Hudson’s Bay was offered a demotion to a “sales associate lead” with less hours, no guarantee of hours, less pay and a contract that would allow the company to terminate his employment by providing him with only minimum statutory entitlements, all on the condition that he “voluntarily resign” from his managerial position. Mr. Pohl refused the offer and was subsequently walked off the premises. He successfully sued Hudson’s Bay for wrongful dismissal, and was awarded $45,000 in moral damages and $10,000 in punitive damages.
The Court’s reasoning for awarding moral damages included:
- The employer’s highly insensitive decision to walk Mr. Pohl out the door on termination and needlessly embarrass him;
- The “misleading” way in which the employer attempted to lock Mr. Pohl into a new, less beneficial, contract;
- Failure to pay Mr. Pohl’s outstanding wages in a lump sum post termination, despite repeated demands that they do so; and
- Failure to issue a timely and correct Record of Employment, thereby increasing Mr. Pohl’s “sense of exploitation, humiliation, and depression”.
The Court found that the employer’s conduct was effectively an attempt to take advantage of a loyal, long-term employee during a vulnerable moment, which was a breach of the employer’s duty of good faith and fair dealing which warranted an award of moral damages.
Rutledge v Markhaven Inc., 2022 ONSC 3183
Ms. Rutledge, a 43-year-old Executive Director at a long term health facility with 21 years of service, was awarded wrongful dismissal damages of 22 months’ pay in lieu of reasonable notice, as well as $50,000 for bad faith and moral damages resulting from the egregious manner in which Markhaven conducted an investigation into an alleged workplace relationship between Ms. Rutledge and another employee, and litigation conduct of Markhaven’s defence counsel.
Specifically, in awarding bad faith and moral damages, the Court found that:
- Ms. Rutledge was informed that the investigation would be conducted by an independent third party, but it was actually conducted by a business associated with Markhaven’s defence counsel;
- The investigation was undertaken surreptitiously before Ms. Rutledge was informed that the investigation would be taking place, and the investigator secured information from her without her prior knowledge;
- Part of the interviews connected with the investigation took place at a local Tim Hortons where some of the 150 employees of Markhaven frequented, thereby failing to conduct the investigation in a confidential manner; and
- During ensuing litigation, Ms. Rutledge walked into an examination for discovery where she was comforted with photographs of her home, and comments by Markhaven’s lawyer regarding a pending motion for “security for costs”, which was never brought.