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Bad faith damages in wrongful dismissal cases: Post Wallace jurisprudence

This post is an excerpt from Shafik’s article  published by Vancouver Bar Association’s The Advocate

Since the Supreme Court of Canada’s landmark decision in Wallace v. United Grain Growers Ltd., trial and appellate courts in Canada have followed, distinguished, explained, mentioned and cited the decision in over 650 cases.

The breadth of employer conduct that attracts bad faith dismissal damages can be substantial.

It is arguable that in some wrongful dismissal cases, the courts are opting for a more expedient solution of awarding Wallace damages than going through the exercise of determining whether there is actually a basis for mental distress, aggravated or punitive damages. It would seem that because the concept of bad faith dismissal is more flexible and expansive in scope than the remedies of mental distress, aggravated and punitive damages and because of the much lower threshold for claiming Wallace damages, the courts are more inclined to award the Wallace damages and summarily dismiss claims for mental distress, aggravated and punitive damages. Moreover, once the courts award Wallace damages they appear to be content in not awarding other damages such as mental distress, aggravated or punitive damages. Since in most cases the same evidence is proffered by employees to advance claims for mental distress, aggravated and punitive damages and the theory of the courts is that awarding under any one of the latter heads of damages amounts to double recovery.

After reviewing the judicial history of Wallace as well as the jurisprudential developments post Wallace, the following principles can be extracted to govern claims for Wallace damages:
♦ Employers are held to an obligation of good faith and fair dealing in the manner of dismissal of an employee;
♦ Where an employee can establish that an employer breached this obligation by engaging in bad faith conduct or unfair dealing leading up to or in the course of dismissal, injuries to an employee such as humiliation, embarrassment and damage to one’s self worth and self
esteem may be compensated by the Court by adding to the length of the notice period;
♦ In advancing a claim for Wallace damages, the employee must have “hard” evidence of the actions of the employer that constitute bad faith dismissal, “soft” evidence will not be enough to prove a case of Wallace damages.
♦ Conduct of the employer that may be characterized as clearly untruthful, misleading or unduly insensitive will qualify for Wallace damages.
♦ Common in all of the examples of bad faith conduct on the part of the employer provided by the Supreme Court in Wallace and subsequently evidenced in other decisions is the presence
of something similar to “intent, malice, or blatant disregard for the employee”. It is the type of conduct that may be described as “callous and insensitive treatment” or “playing hardball”.

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