Canadian HR Reporter

CANADIAN HR REPORTER September 18, 2017 EMPLOYMENT LAW 5 Ronald Minken Legal VieW LeNoury Law Proactive Advice to Management Employment Lawyer of The Year James LeNoury B.A. (Hons) M.A. LL.B 416-926-1107 • Toll Free 1-877-926-1107 • lenourylaw.com Being upset about losing your job not enough for aggravated damages Unfairness or bad faith in manner of dismissal required to receive award Aggravated damages from the termination of employment do not arise just because the employee is upset about the dismissal — there needs to be unfairness or bad faith in the manner of the dismissal. is was the notion that was upheld in the recent British Columbia Court of Appeal case Lau v. Royal Bank of Canada. Marco Lau worked as an account manager at RBC and was spon- sored by Royal Mutual Funds Inc. (RMFI) to sell mutual funds. Af- ter a client complained about Lau not following instructions, RBC launched an internal investiga- tion. It found Lau had been incor- rectly tracking his sales to increase his sales numbers. In addition, the bank decided he had lied about the details of his meeting with the client who complained. After an investigation, RBC terminated Lau's employment for cause. He was dismissed during a meeting with his branch manager and the regional vice-president, in which he was provided with a ter- mination letter. Lau was off ered an employee assistance program for three months, which he de- clined. He was also given the op- portunity to clear out his desk at a later time but he chose to do so right away. In response, Lau brought a wrongful dismissal action against both RBC and RMFI. e trial judge found Lau was wrongfully dismissed and ordered damages in lieu of notice and ag- gravated damages for mental distress arising out of the man- ner of dismissal. RBC and RMFI appealed the award of aggravated damages. Wallace and Keays as test The Court of Appeal followed the leading Supreme Court of Canada decisions of Wallace v. United Grain Growers Ltd. in 1997 and Keays v. Honda Canada Inc. in 2008 in holding that aggra- vated damages should be awarded when: • the employer breaches its duty of good faith and fair dealing in the manner of dismissal • the employee suff ers damage as a result of that breach. In Keays, the Supreme Court gave examples of unfair or bad- faith dealing in the manner of dismissal as conduct that is "un- truthful, misleading or unduly insensitive." e appeal court remarked that in both Wallace and Keays, " e courts noted that the ordinary psychological impact of termina- tion is not compensable because the contract of employment is, by its very terms, subject to cancella- tion on reasonable notice." Lau claimed he was entitled to an award of mental distress for ag- gravated damages in regards to his manner of termination. However, he presented no evidence from family members, friends, third parties or medical experts relating to the impact of the termination on his mental state. ere was only his own testi- mony, where he stated he expe- rienced a "horrible feeling" and "disappointment," and felt "lost" because of his termination. On its own, Lau's testimony was not enough evidence for the Court of Appeal to fi nd an award for aggravated damages. While expert testimony is not required for a determination of damages for mental distress, it is certainly helpful. In support of this principal, the appeal court applied the 2017 Su- preme Court decision Saadati v. Moorhead, where the top court specifi cally rejected the notion that legally compensable mental injury must rest on the claimant proving a recognized psychiatric illness. Rather, the claimant must prove a "serious and prolonged disrup- tion that transcended ordinary emotional upset or distress." Although Saadati is a tort deci- sion, the appeal court determined it is applicable in contract cases that deal with proving mental injury. Lau also argued he was entitled to aggravated damages for the intangible eff ects of his bad-faith termination. However, he did not present any evidence to demon- strate there were intangible ef- fects or there was a connection to the manner in which he was terminated. In order to get an award for ag- gravated damages for intangible eff ects, an employee must dem- onstrate that not only was there harm — such as the loss of repu- tation — but that the harm was related to the manner of dismissal. e general diffi culty associ- ated with fi nding a new job after a termination is not considered harm for aggravated damages since the diffi culty is compensat- ed through the reasonable notice period, re-employment being one of the factors considered when the courts determine the amount of notice to award. Lau's final argument for an award of aggravated damages was the fact that RMFI fi led a Form 33, Notice of Termination, with the British Columbia Securities Commission, which is a regula- tory requirement. Lau was concerned the notice would prevent him from find- ing a job in the fi nancial sector. However, there was no evidence that RBC or RMFI informed any prospective employer about the notice. Consequently, the ap- peal court did not fi nd anything regarding how the Form 33 was fi led to give rise to an award of ag- gravated damages. As a result, the Court of Appeal set aside the award for aggravated damages. Lessons for employers Employers that wish to terminate the employment of an employee should ensure the termination is done in good faith and the employee is dealt with fairly. In Wallace, the Supreme Court de- fi nes good faith in the manner of termination as: candid and forth- right; honest, truthful and not misleading; fair and reasonable; and sensitive. Some examples of bad-faith dismissal are outlined in Keays where: the employer makes dec- larations that result in an attack on the employee's reputation at the time of the dismissal; the employer misrepresents the em- ployee's reason for leaving; and the dismissal is meant to deprive the employee of a pension benefi t or other right, such as permanent status. For more information see: • Lau v. Royal Bank of Canada, 2017 CarswellBC 1838 (B.C. C.A.). • Wallace v. United Grain Grow- ers Ltd., 1997 CarswellMan 455 (S.C.C.). • Keays v. Honda Canada Inc., 2008 CarswellOnt 3743 (S.C.C.). • Saadati v. Moorhead, 2017 Car- swellBC 1446 (S.C.C.). Ronald S. Minken is a senior lawyer and mediator at Minken Employment Lawyers in Markham, Ont. He can be reached at www.minkenemployment- lawyers.ca. Ron gratefully acknowl- edges Aneesha Lewis for her assistance in preparation of this article. Credit: Google Street View An RBC branch in downtown Vancouver.

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