On July 7, 2014, the majority of the Court of Appeal allowed an
appeal from a judgment of the Superior Court that had ordered the
employer to pay an amount of $1,086,767 due to a constructive
dismissal, to reduce the amount of the damages awarded to
In analyzing the evidence, the Superior Court concluded that the
employee, a senior manager, had been constructively dismissed when
he was demoted, without cause and concomitantly with his return
from sick leave.
Establishing that the employee was entitled to a notice period
of 24 months, the Superior Court ordered the employer to pay
$786,767 as compensation, including $35,000 as non-pecuniary
damages, given the actions of the employer during dismissal.
Moreover, the Court concluded that a sum of $300,000 was owed to
the employee as punitive damages, due to the intentional
interference with his dignity, who refused to offer him an
alternative position because of his illness.
The Court of Appeal
Firstly, the Court of Appeal confirms that the notice period of
24 months was reasonable under the circumstances, given the
seniority of the employee (12 years), his responsibilities, his age
and the inability to find comparable conditions elsewhere.
As for the claim for amounts due under a bonus plan, the court
reduces the amount initially awarded, given the fact that the
employee would not have acquired a right to claim these amounts,
even at the end of the granted notice period.
As for the exercise of vested options, the Court confirms the
conclusion of the inferior court to the effect that the employee
suffered no damages, except for a loss of opportunity, which is not
compensable under Quebec law. With respect to the options to be
vested during the notice period, the Court concludes that no
compensation is due, as it was an incentive benefit that was
dependent on the unilateral will of the employer to encourage or
not his employees to remain at his service.
Regarding moral damages, the majority of the Court confirms that
the employee had suffered harassment, denigration and humiliation
in the months preceding his dismissal and subsequently, giving rise
to an additional compensation for moral damages in the order of
$35,000, as ordered by the Superior Court.
Finally, with regard to punitive damages, the majority of the
Court stresses that the actions of the employer were based on the
employee's illness, which constitutes unlawful and intentional
discrimination, prohibited by the Charter of
Human Rights and Freedoms. However, the Court
decides to considerably reduce the amount awarded by the Superior
Court, stating it was clearly exaggerated. The Court stresses that
despite the high financial capacity of the employer, a condemnation
of $25,000 equally achieves the goal of prevention, while
maintaining a proportional connection between the severity of the
violation and the amount of compensation. Finally, the Court
reiterates that in the context of labor relations, an order to pay
punitive damages constitutes in itself a deterrent effect.
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