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Bad Faith Damages in Wrongful Dismissal Cases: Post Wallace Jurisprudence

Prior to the Supreme Court of Canada’s landmark decision in Wallace v. United Grain Growers Ltd.,1 in a case of wrongful dismissal, damages were limited to the earnings lost during the period of reasonable notice to which the employee was entitled and did not include damages for the manner of dismissal, for injured feelings, or for loss sustained from the fact that the dismissal made it more difficult for the employee to obtain other employment. However, in the Wallace decision, the Supreme Court chose to recognize the relevance of the manner of an employee’s dismissal in the determination of the appropriate period of reasonable notice stating that employers have an obligation of good faith and fair dealing in the manner of dismissal and where such obligation is breached the employee should be compensated for by an extension of the employee’s notice period.

Since the Supreme Court’s decision in Wallace eight years ago, trial and appellate courts in Canada have followed, distinguished, explained, mentioned and cited the decision in over 650 cases. The purpose of this article is to examine the jurisprudential development, post-Wallace, in the law governing  the obligation of employers to treat their employees in good faith in the manner of dismissal. Accordingly, in the first part of the article, by way of background, a brief review will be undertaken of the judicial history of the Wallace case at the trial and appellate court levels, including the Supreme Court of Canada. In the second part, a summary review will be undertaken of the subsequent trial and appellate court decisions interpreting the scope of the employer’s obligation of good faith and fair dealing in the manner of dismissal. In the third and final part, an examination will be undertaken of a recent trial court decision condemning employees who advance unmeritorious claims for bad faith dismissal damages and waste the court’s valuable time.

To read the full article, click here.

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