Canadian Employment Law Damages: “Other” Amounts Need Proper Justification

Counsel for dismissed Canadian employees often seek, through strategic or creative pleadings, to turn cases into more than they really are. What this often means in practice is that a claim will not be confined to seeking compensation at common law from the employer for the employee’s reasonable notice period. Instead, claims and related court processes can all to frequently be “junked up” with claims for other damages, including claims for aggravated, punitive and moral damages.

A recent decision from the British Columbia Court of Appeal provides some refreshing clarity about damages in employment law cases. In its ruling in Café La Foret Ltd. v. Cho, 2023 BCCA 354, the Court confirmed the important distinctions between aggravated and punitive damages in employment law, and the need to actually prove damages before they will be awarded.

Mr. Song Cho worked as head baker at Café La Foret from December 2017 to November 2020. During the course of his employment, Mr. Cho was accused of sexual harassment by an assistant baker who worked under his direction. The evidence in the court proceedings included security camera footage which showed Mr. Cho touching his co-worker without consent. The trial judge found that this constituted harassment on the basis that the conduct was intentional, unwarranted and non-consensual.

In response to the co-worker’s complaint, the employer investigated. Mr. Cho was advised not to attend work the next day. Then, days later, his employment was terminated, allegedly for just cause.

In his lawsuit, Mr. Cho claimed damages for wrongful dismissal, together with a further $100,000 in punitive and aggravated damages. The trial judge found that there was insufficient cause for termination, and this finding was upheld by the Court of Appeal. The reasoning at trial and upon appeal was based on the principle that not all misconduct justifies summary dismissal, especially given that Mr. Cho was found to have been honest about his actions, and the employer had seemed prepared to remediate the employment relationship. This finding on the cause issue is based on what are now relatively settled principles of Canadian employment law.

The portion of the decision which is perhaps most interesting is how the Court of Appeal address the issue of “other” damages, meaning those which go beyond compensation during the notice period.

The trial judge had awarded a global (combined) award for both aggravated and punitive damages in the amount of $25,000. This was despite the fact that these two heads of damages (punitive and aggravated) are distinct legal remedies based on different principles.

The Court of Appeal was highly critical of the damages award being expressed as a global amount, since this does not allow a reviewing court to examine the precise reasoning for specific damages being awarded. This is problematic because the two different heads of damages involve distinct considerations. Aggravated damages are compensatory, intended to address the mental distress experienced by an employee resulting from the manner of the termination. By contrast, punitive damages are intended to punish the employer for its egregious or outrageous behaviour and serve only the objectives of retribution, denunciation and deterrence.

Each of the categories of damages must, said the Court of Appeal, be assessed through separate analysis. It is not appropriate to lump these items together in order to arrive and a discretionary amount considered to be a reasonable bump to the wrongful dismissal damages. On the specific facts of Mr. Cho’s case, the Court upheld an award of $25,000 for aggravated damages, then found that punitive damages were not required in the case.

Takeaways for Employers

Even in a case where the outcome on “other” damages remained the same after the appeal, this decision is a refreshing development for employers. Simply saying a person has suffered distress or has been mistreated is not enough to be awarded damages. The same goes for a bald assertion that the employer should be punished. The Canadian courts can award aggravated and punitive damages, but any such awards need to be based on the actual evidence in the case, and the analysis needs to involve looking at each specific head of damages claimed. It is a welcome development that one of the country’s leading appellate courts has now confirmed this so clearly.