Smithson: The ins and outs of moral damages a challenge for courts

Canadian courts have had something of a love-hate relationship with moral damages in wrongful dismissal cases.

Canadian courts seem to have had something of a love-hate relationship with so-called moral damages in wrongful dismissal cases.

I’d say that’s because the traditional damages for wrongful dismissal, based on the concept of pay in lieu of reasonable notice, don’t take account of the employer’s conduct.

The normal factors considered when awarding damages for wrongful dismissal include things like the individual’s age, tenure of employment, position and salary, level of managerial responsibility, and likely ability to find another job.

These factors are largely objective in nature and don’t account in any way for the employer’s conduct in the course of dismissal.

Yet, it’s an ongoing theme of wrongful dismissal claims that employees seek additional compensation as a result of the manner of dismissal.

Awarding damages in those circumstances seems to have proven to be a challenge for our courts—there has been a noticeable reluctance to embark on assessing employers’ conduct and assigning a dollar value to the resulting impact on fired employees.

A recent case heard in the B.C. Supreme Court laid out some of the factors to be considered in instances when fired employees claim an entitlement to moral damages.

Haftbaradaran was employed as the winemaker at St. Hubertus Estate Winery Ltd.  During a stressful harvest period, Haftbaradaran and his employer had what could be characterized as a workplace blow-up.

The circumstances were heated, Haftbaradaran was emotional and agitated, and the employer instructed him not to blow things out of proportion.  The employer asked Haftbaradaran to leave the office, he refused, and this led to him being called a “pain in the ass” and being told, forcefully, to get out of the office and get back to making wine.

Haftbaradaran broke down emotionally and, after the conversation continued, the employer suggested to him that perhaps he should go look for another job.

Haftbaradaran reacted by putting his keys on the desk, effectively inviting the employer to fire him, and walked out with the parting words, “good luck making wine.”

The employer took the view that Haftbaradaran had resigned and followed up with an email attempting to establish the date on which he would be leaving his employment. Haftbaradaran’s view was that St. Hubertus had terminated his employment.

Haftbaradaran sued for wrongful dismissal and the Court upheld his claim, finding that St. Hubertus effectively terminated the employment relationship with its email.

It awarded Haftbaradaran eight months’ wages in lieu of notice (which is definitely at the high end of the range for an employee with less than two years’ tenure).

The court rejected Haftbaradaran’s claim for “moral damages consequent to the manner by which his employment was terminated.”

It cited the Supreme Court of Canada’s 2008 decision involving Honda Canada Inc, for the premise that moral damages are only available when “the employer engages in conduct during the course of dismissal that is unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive.”

In that 2008 decision, the Supreme Court of Canada stated that behaviour giving rise to moral damages might include “attacking the employee’s reputation by declarations made at the time of dismissal, misrepresentation regarding the reason for the decision, or dismissal meant to deprive the employee of a pension benefit or other right…”

The court could not find the conduct of St. Hubertus towards Haftbaradaran to be unfair or unduly sensitive.

Perhaps most importantly, the court found that moral damages should not flow from the employer’s “honest mistake” in believing that Haftbaradaran had resigned from his employment.

Haftbaradaran was unsuccessful in his claim for moral damages but the court’s comments provided useful guidance for employers in handling terminations in stressful, emotional circumstances.

Robert Smithson is a labour and employment lawyer, and operates Smithson Employment Law in Kelowna. This subject matter is provided for general informational purposes only and is not intended as legal advice.



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