Scheming to get rid of a worker costs employer nearly $1 million

9 août 2012

( Disponible en anglais seulement )

Author: Stuart Rudner

A recent decision arising out of a case in Prince George, B.C. has made headlines as the case, decided by a jury, resulted in a damages award of about $809,000.

Notably, $573,000 of that award were punitive damages — this is the largest award of punitive damages in an employment law matter in Canadian history. 

Readers will recall the Keays v. Honda Canada Inc. case of a few years ago in which the trial judge awarded $500,000 in punitive damages as a result of his finding that Honda engaged in conduct worthy of punishment. That award dwarfed previous awards of punitive damages. But it was reduced to $100,000 by the Ontario Court of Appeal and then wiped out altogether by the Supreme Court of Canada.

In Higginson v. Babine Forest Products Ltd., the evidence showed the company had made a decision to try to get rid of an employee who had been on the job for 34 years. Initially, the company engaged in efforts to make Higginson’s job so miserable he would have no choice but to resign.

When this failed, the company concocted allegations of misconduct and alleged it had just cause for dismissal. The jury did not buy it, and found in favour of Higginson.  In addition to damages arising out of wrongful dismissal, he was awarded almost $600,000 in punitive damages. When one factors in damages, interest and legal costs, the matter is likely to have cost the company about $1 million.

The case provides a good example of how not to get rid of an employee. There are some employers that attempt, or at least consider, avoiding dismissal obligations by making an employee’s life miserable so they will quit, or by attempting to build a case for summary dismissal.

The employer in this case attempted both, and went even further by trying to create just cause for dismissal where none existed. Clearly, this strategy cost the company far more than simply dismissing the employee by providing notice or payment in lieu thereof would have.

As an aside, another mistake on the part of employers is the decision to offer an employee the opportunity to resign, rather than be dismissed for cause. Often, this is done based upon the mistaken belief doing so will allow the employee to obtain employment insurance benefits. However, an employee that resigns will generally be ineligible for such benefits, as they will be if they are found to have engaged in wilful misconduct. 

This occurred in the Vernon v. British Columbia (Ministry of Housing and Social Development – Liquor Distribution Branch) case which was reviewed in my Feb. 14, 2012, post. In addition to a multitude of other mistakes, after determining there was just cause for dismissal the company offered Vernon the opportunity to resign, at which point she would be provided with a letter of reference.  As the court stated,

« If Ms. Vernon’s conduct was sufficiently serious that the Liquor Distribution Branch had the right to summarily dismiss her without notice, it would have been improper for the Liquor Distribution Branch to give her a reference letter.  To offer a reference letter as a carrot to resign is, in my opinion, conduct which is properly the subject matter of retribution, deterrence and denunciation. »

The bottom line is that as an employer, if you want to dismiss an employee but do not have just cause, you should abide by your obligations with respect to notice or payment in lieu thereof.  And if you do have just cause, don’t offer to accept the employee’s resignation in exchange for a positive letter of reference.

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