The year has kicked off with an award of significant enhanced damages in a wrongful dismissal claim. While it is not uncommon for dismissed employees to seek aggravated and punitive damages following their termination, these are damages that are not commonly awarded and when they are, they tend to be in modest amounts. That trend may be changing and employers and employers’ counsel should take this as a warning to be careful in the manner in which they are carrying out their terminations. Aggravated damages are generally awarded for the increased harm that a dismissed employee suffers as a result of the manner in which the termination is carried out. Punitive damages are awarded to punish the employer for their conduct.
In Chu v. China Southern Airlines (2023 BCSC 21) the dismissed Marketing and Business Manager who had worked for the airline for approximately 8 years was awarded 20 months notice. Additionally they were awarded $50,000 in aggravated damages for breach of the duty of good faith in the manner of termination and a further $100,000 in punitive damages for the conduct of the employer in the course of the litigation. Examination of the basis for the awards of punitive and aggravated damages provide employers with a road map of what not to do in terminations and any litigation that follows:
Justice Verhoeven summarized the factors that led to the award of aggravated damages which included demoting the plaintiff rather than terminating them when their position became redundant and taking steps to either create a circumstance which would justify a with cause termination or induce the plaintiff to resign. The steps taken included unfairly disciplining the plaintiff and threatening them with termination on a number of occasions. The discipline was conducted in a manner which was seen as humiliating and embarrassing. The employer forced the plaintiff to sign letters of reprimand that they did not agree with and reassigned the plaintiff to a number of positions which were entry level and humiliating for the plaintiff. Justice Verhoeven found that the employers actions were designed to cause the plaintiff to fail and that the treatment was cruel and insensitive. In addition, the employer failed to provide the plaintiff with a record of employment and falsely alleged dishonesty in suggesting that the plaintiff was guilty of “time theft.” Also taken into consideration in the award of aggravated damages was the vulnerability of the plaintiff. Justice Verhoeven found that the plaintiff was an exceptionally vulnerable employee being 68 years of age with limited work opportunities.
The facts were relied upon to support the significant punitive damages award related to the manner in which the employer conducted the litigation. In the Response to Civil Claim the employer made numerous serious and false allegations about the plaintiff. They denied that the plaintiff was a management employee or that he held the title of Marketing and Business Manager. They terminated their legal counsel early on in the proceedings and then represented themselves and in doing so acted in a way that required the plaintiff to bring multiple pre-trial applications to enforce compliance with litigation obligations. The employer failed to list documents in their disclosure and were consistently uncooperative in making arrangements for the plaintiff to exercise its rights to examination for discovery. The employer caused significant delays in the proceedings including by listing a number of witnesses on their witness list, resulting in a trial adjournment and then not calling witnesses when the trial did proceed which had been listed. The employer engaged in other egregious behaviour in the litigation including disregarding an order to pay costs.
While the facts in Chu can be seen to be extreme, the judgment can serve as a lesson to employers and employer’s counsel. Being unfair in the lead up to a termination, taking steps designed to lead to the resignation of an employee and acting in a manner which is insensitive or resulting in humiliation of the employee may very well lead to an award of enhanced damages in a wrongful dismissal claim. Conducting litigation in an aggressive manner may further result in enhanced damages and the decision to do so should be taken carefully, with a full understanding of the potential consequences.