Tuesday, 19 November 2013

Wrongful Dismissal Damages Carry Punitive Elements: ONCA

Ask most Ontario employment lawyers what the purpose behind reasonable notice is and the answer that you are likely to receive is that it is intended to afford a dismissed employee the opportunity to go from one job to another. Indeed, the calculation of reasonable notice, at least as I always understood it, is the period of time it should take an employee to find new work following dismissal.

So with those comments in mind, I was somewhat shocked when I read the Court of Appeal for Ontario writing that wrongful dismissal damages have a "punitive element" to them.

The question for readers of this blog is: did the Court of Appeal get it right?

The decision about which I write is Pate Estate v. Galway-Cavendish and Harvey (Township), 2013 ONCA 669. In that case Justice Cronk, writing for herself and Justice Doherty, held that:
The general damages agreed upon by the parties, as pay in lieu of notice, clearly recognized the wrongful nature of the Township’s termination of Mr. Pate’s employment. While the purpose of those damages was to put Mr. Pate back into the position he would have been in, but for the Township’s breach of his employment contract, these compensatory damages also had a punitive element.
What is interesting about Justice Cronk's decision is that the case under review was a case concerning punitive damages. Indeed, the ostensible purpose behind Justice Cronk's decision was to clarify when punitive damages are to be awarded in employment cases and how the quantum of them is to be calculated.

While the decision itself is simply too long to review in this post, and really does not do a great deal to advance the state of the law, what struck me was the comment about pay in lieu of notice carrying a "punitive element."

So, in one of my shortest posts in a while, I want to pose the question: do you believe the Court of Appeal got it right when they said that compensatory damages for pay in lieu of notice carry a punitive element? Comments below are appreciated.

For the record, while I appreciate what the Court of Appeal was attempting to say with respect to punitive damages, that the entire damage award must be assessed before determining the quantum of punitive damages necessary, I am not sure it was necessary to go so far as to say that compensatory damages are also punitive. In my humble opinion such a statement could lead to confusion as to which damages are truly compensatory and which are not.

~Sean Bawden

Sean Bawden, publisher of the law blog for the suddenly unemployed, can be reached by email at sbawden@kellysantini.com or by phone at 613.238.6321.

Sean P. Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer practicing with Kelly Santini LLP, and part-time professor at Algonquin College teaching Trial Advocacy for Paralegals. He is a trustee of the County of Carleton Law Association for 2013.


  1. I prefer Lauwers J.A. reasons... hopefully leave is sought, granted and the SCC can resolve this.....

    1. I also preferred his reasons. Seemed to be a lot more principled.

      What also really struck me about the decision is the length to which Justice Cronk went to point out the Trial Judge's miscalculation and then applies a $100,000 deduction without really explaining how she came to that figure - the irony really struck me.

  2. Good analysis, Sean. I agree that it's troubling to say that compensatory damages have a 'punitive element'. True to say that a punitive damage award has to bear in mind the other damages being awarded, in light of the objectives of the punitive damage award, but to call wrongful dismissal damages 'punitive' concerns me.

    Pay in lieu of reasonable notice is rooted in contract, and it's a central part of contract law that there is nothing inherently blameworthy about a breach of contract.

    I've often felt that "wrongful dismissal" is a bit of a misnomer for exactly that reason. It's about a failure to give the notice to which the employee is contractually entitled, and absolutely *not* a recognition that the dismissal itself was 'wrong', in the sense of the employer being wrong to dismiss the employee at all.

    An assertion that a recognition of the "wrongful nature" of a dismissal somehow means that the employer is being punished...well, it's something I might expect to hear from some of my employee clients, but not from an experienced appellate court judge.