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A long-term employee was awarded wrongful dismissal, aggravated, and punitive damages where the employer was found to have intentionally manufactured reasons to terminate employment for cause.
- The employer breached its duty of good faith and fair dealing by engaging in bad-faith and abusive conduct in the manner of the employee's dismissal.
- training was provided to enable the employee to meet the standard, the employee was given a reasonable time to meet the standard, and warned that failure to meet it would result in dismissal; and
- the employee was incapable of meeting the standard.
In Chu v
Background
From 2011 to 2018, the employee worked as the Marketing and Business Development Manager. He worked closely and harmoniously with the general manager (GM).
In 2018, the
The marketing department was eliminated and GM2 attempted to manufacture cause for the employee's dismissal. The employee was demoted twice with a 25% salary reduction.
The employee alleged that the employer engaged in a pattern of bad-faith abusive conduct (e.g., unfair discipline, insincere warnings, manufactured cause, and public embarrassment).
The employee was 68 years old when his employment was terminated.. In his termination letter, the employer alleged that the employee was incompetent, and made unspecified allegations of "time theft."
Decision
The court reviewed the applicable legal principles, noting it is difficult to establish just cause based on incompetence, especially in the case of a long-term employee with a good performance record. In the absence of "a flagrant dereliction of duty clearly inconsistent with the proper discharge of the employee's duties," an employer must demonstrate that:
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the employer established an objectively reasonable, attainable standard of performance that was communicated to the employee;
The court noted that an employer memo expressed concern about the job's requirement to sometimes work overnight, and the risk that the employee could fall and get injured.
Just Cause for Dismissal
The court found that the employer "singularly failed" to establish just cause for dismissal without notice; the employer's allegations were either entirely unsupported by evidence or without merit, and the employee was entitled to damages for wrongful dismissal.
Reasonable Notice Period
In determining that the employee's reasonable notice period should be 20 months, less income earned in 2020, the court took into account: the nature of the employee's employment and level of responsibility; the employee's length of service (8+ years); the employee's age (68) and that older employees often find it difficult to find reasonable alternative employment; and that the employee's work experience was in a niche area and there was no comparable employment available to him.
Aggravated Damages
The court awarded the employee
The court found that as a result of the employer's breach of good faith and fair dealing, the employee suffered compensable psychological injuries/mental distress well before he was terminated, and for approximately one year post-termination; this mental distress was caused by the degrading demotions and public discipline.
Punitive Damages
The court noted that the caselaw provides that an employer's breach of its contractual duty of good faith and fair dealing in the manner of dismissal can ground an award for punitive damages in exceptional cases where the employer engages in wrongful acts that are so harsh, vindictive, reprehensible and malicious, outrageous, and extreme in nature, that they are deserving of punishment on their own.
The court determined that the employer's conduct in relation to the breach of its duty of good faith and fair dealing in the manner of the employee's dismissal could be comfortably described as planned and deliberate "hardball tactics" that were "harsh, vindictive, reprehensible and malicious" and "extreme"; this conduct extended over five years, including through the litigation, and by any reasonable standard deserved "full condemnation and punishment." Accordingly, the court awarded the employee
Bottom Line for Employers
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Ms
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ON M5J 2T3
URL: www.littler.com
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