Dismissal Law Now Favours Employees

Financial Post: November 14, 2012.  All Rights Reserved.

Like gold, housing and the market, wrongful dismissal is cyclical. Just as I’ve been advising employers for the past several years that the law favours them, it has changed yet again.

For a while, smart employers had little to fear from employment litigation, with cause becoming easier to establish, constructive dismissal harder for employees to win and fired employees being required to return to their employers to work out their notice period. However, matters have just reversed.

I recently wrote about the case of Bryan Taylor, for whom I acted against Research in Motion, and the approximately $6,000,000 the court awarded to him earlier this year for lost stock options, on top of his damages for wrongful dismissal.

Now, a series of very recent decisions have upended the historic pattern of lower income employees receiving only minimal severance awards, with the courts awarding massive amounts to those wrongfully dismissed when the employer does not behave.

John Pate, who worked for the Ontario Township of Galway and Cavendish for nine years, was informed discrepancies had been found in monies paid to him for permits that were not remitted to his employer. He was provided no specifics and not allowed to respond. The employer told him if he resigned, the police would not be called. When he refused, charges were laid.

It was later found that the employer failed to forward documents to the police that would have indicated Pate’s innocence. The charging officer, Greg Stokes, said he never would have laid charges if he had been aware of what the employer held back.

The trial judge declared the municipality’s conduct to be reprehensible and concluded that wrongful dismissal damages, by itself, would not redress the destruction of Pate’s career, the ruin of his marriage and the public humiliation he suffered.

However, the judge award a mere $25,000 in punitive damages. In a rare move, the Ontario Court of Appeal sent the matter back to the trial judge to award more. The ultimate punitive damage award was $550,000, in addition to Pate’s wrongful dismissal damages, bad faith damages and $75,000 in aggravated damages.

In another very recent decision, Douglas Tipple was awarded $250,000 in damages to his reputation when false allegations by his employer lead to media coverage alleging plagiarism, unethical behaviour, missed meetings and suggestions he was discharged for misconduct. He pleaded with his employer, federal Public Works and Government Services, to clear up the false information or at least allow him to do so, to no avail.

The court noted this failure and the fact the government terminated him without cause in an atmosphere of scandal bound to damage his reputation further. He was rendered unemployable since any quick Internet search brought up articles impugning his integrity.

But if judges’ awards are skyrocketing, jury decisions have shot over the moon. When Babine Forest Products failed in its attempt to make Larry Higginson’s life so miserable he would quit, it created bogus allegations of cause. Living and working in Burns Lake, B.C., it couldn’t help but ruin his reputation. This past July, a jury awarded him what was then the highest punitive damages award ever ordered in a wrongful dismissal case: $573,000.

However, it didn’t take long to beat that record. Last month, an Ontario jury awarded $1.15-million in punitive damages in favour of a Walmart assistant manager, Meredith Boucher, after finding she was abused over a considerable period by her boss. How many employers would go bankrupt if faced with such an award?

What is the test for employers? How would your conduct appear if you read it in this or another column? The lesson here is when dealing with employees, don’t go “by the book.” The “smell” test, with a good dose of the golden rule, has become as important as traditional labour relations. If your employee relations and line management do not have the right skills, train them — and quickly.