Simplifying employment law

HERB SILBER

In Canada, it used to be that when an employee was improperly fired from his or her job, damages were limited only to the money the employee lost during a period of "reasonable notice."

Reasonable notice, in a very general sense, is the employee's entitlement to notice of the termination of his or her employment or severance in lieu thereof, and is based on a combination of factors, such as how long one has been employed with a company. That reasonable notice award was the only money available to a worker. No damages were given if an employee, for example, suffered hurt feelings or was fired in a malicious manner or had trouble finding a new job. But all that changed when the Supreme Court of Canada decided in a landmark case, Wallace v. United Grain Growers, Ltd., that, for the first time, an employee could be compensated in the context of reasonable notice award by the manner in which that employee was dismissed.

Jack Wallace, the employee who brought the lawsuit, was supposedly fired for good reason, but the facts showed that he had been praised for good work by two of his managers just days before he was fired. Until just before the trial began, the employer insisted Wallace had been let go because of two years of poor performance.

Because of the employer's false insistence that the worker was fired with good reason, Wallace was awarded 24 months of salary in lieu of notice of his firing. To paraphrase the court, because the employer had acted wrongfully, a large award was merited. That is, the employer fired Wallace in bad faith, which caused injuries such as humiliation, embarrassment and damage to one's sense of self-worth and self-esteem. Of course, the court was careful to point out that whether or not an employer did act in bad faith or in an unfair manner would have to be determined on a case-by-case basis, but that if bad faith was found, then the employee might well be entitled to an additional award of money from the employer.

The court went on to say that often, when an employer acts in bad faith, the employee ends up with "intangible injuries," able to be measured in terms of money damages. The court pointed out such injuries could include damage to an employee's reputation or embarrassment. Further, if the damage caused by the intangible injuries has an effect on the employee's chances of getting other work, then a court could award even more damages to him or her.

The Wallace case has since been followed as an example of what is called, in legal terms, the "obligation of good faith and fair dealing." In more simple terms, it means that an employer must not act in an unfair, malicious or otherwise conniving manner when firing or letting go of an employee. For example, courts have found an employer violated the obligation of good faith and fair dealing in the following scenarios, where an employer:

• Made false allegations against an employee during negotiations for a severance package;

• Publicly told the employee to quit or be fired, then insisted that the employee left voluntarily;

• Spread negative rumors about the employee, making it difficult for him to find a new job;

• Made false accusations that the employee was an alcoholic, among other things, harming his reputation and making it difficult for him to be approved for employment insurance benefits;

• Refused to give the employee the severance package he was owed until he signed papers that would protect the employer from a future lawsuit.

What both employees and employers should know is that an employer will be held to a certain standard during the process of dismissing or firing a worker. If the worker can show that their employer fell short of this standard by using improper tactics leading up to and including the dismissal, then the worker may be entitled to monetary damages for so called "intangible injuries," such as embarrassment, harm to reputation, or humiliation. If, on top of that, a worker can show that the actions causing the "intangible injuries" also affected the worker's employment prospects, then the courts could award even more damages.

Herb Silber is a partner in the Vancouver law firm Kornfeld Mackoff Silber.

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