Canada: Firing An Employee? Be Nice.

Can bad faith employer conduct during the course of dismissal lead to both aggravated damages and a longer notice period? On July 7, 2017, the British Columbia Court of Appeal revisited those issues in Lau v. Royal Bank of Canada, 2017 BCCA 253.

The Facts

The plaintiff, Mr. Lau, was employed by RBC as a customer service representative. Following a customer complaint about Mr. Lau, RBC commenced an investigation. The investigation revealed that Mr. Lau had incorrectly recorded sales as "new money" instead of renewed investments, which improperly improved his sales figures. RBC terminated Mr. Lau for cause.

Lau wins big at trial

Mr. Lau sued for wrongful dismissal, as well as aggravated damages for the manner in which he was dismissed. He was successful on both fronts.

The trial judge found that RBC did not have cause to terminate Mr. Lau and awarded him nine months' reasonable notice. This was a generous award given Mr. Lau's age (30 years) and his five years of service in a relatively junior role. In the trial judge's view, Mr. Lau's prospects for reemployment were poor, given the damage to his reputation as a result of the employer's grounds for termination:

[208]     With respect to the availability of equivalent alternate employment, there is little doubt, that given the grounds upon which Mr. Lau has been terminated, none has been available.

The judge used that finding to inflate Mr. Lau's notice entitlement.

The trial judge also awarded Mr. Lau $30,000 in aggravated damages for the manner of dismissal. The trial judge found that RBC acted in bad faith because it:

  1. Conducted a flawed investigation;
  2. Lost key evidence;
  3. Failed to confront Mr. Lau with key evidence; and
  4. Filed a form with the applicable regulator, which brought the foregoing errors into the public domain.

Court of Appeal reverses aggravated damages award

RBC successfully appealed the aggravated damages award. It did not challenge the notice period.

Aggravated damages are intended to compensate for employer bad faith conduct in the course of termination, where that conduct causes the terminated employee to suffer damages, usually in the form of mental distress.

The Court first looked at RBC's conduct, and compared it to circumstances where courts have found employer bad faith. In doing so, the Court synthesized a (non-exhaustive) list of the type of employer conduct that has resulted in findings of bad faith:

  • Maintaining a wrongful allegation of involvement in theft and communicating that allegation to potential employers;
  • Making unfounded allegations of theft and refusing to give a letter of reference;
  • Terminating an employee who was promised a transfer to a new position and who was already in the process of moving to the new position;
  • Firing an employee on disability leave;
  • Dismissing a laid-off employee and hiring a replacement without notice or advice;
  • Attacking an employee's reputation by declarations made at the time of dismissal;
  • Misrepresenting the reasons for the termination decision; and
  • Terminating an employee in a way meant to deprive the employee of a pension benefit or other right.

The appeal did not turn on whether RBC acted in bad faith. Instead, the Court allowed the appeal because there was no evidentiary basis upon which the trial judge could have concluded that Mr. Lau had suffered mental distress as a result of the employer's conduct. As the Court said, "...damages cannot be assumed."

Expert evidence of a recognized psychiatric illness is not required to prove mental distress – a court can find mental distress based on the evidence of family, friends, or from the plaintiff directly. However, in the Lau case, the trial judge based her finding of mental distress largely on the plaintiff's demeanour during his testimony. A morose witness is not enough to prove mental distress:

[70]         In awarding damages for mental distress, the trial judge erred by relying on her observations of Mr. Lau's demeanour while testifying, in the absence of any evidence or testimony other than Mr. Lau's own. Even Mr. Lau's testimony did not provide a sound basis for finding he suffered injury beyond the hurt feelings and distress that accompany any termination.

On appeal, counsel for Mr. Lau argued also argued that he was entitled to damages because of the "intangible effects" he suffered. The Court rejected that argument.

Nine months' notice?

The Court of Appeal was not asked to deal with the nine months of notice that was awarded to Mr. Lau. The main factor driving that relatively lengthy notice period was the "public" reasons RBC gave for Mr. Lau's termination, which made it more difficult for Mr. Lau to find replacement employment. Unlike aggravated damages, increased reasonable notice does not require corresponding mental distress.

Key Employer Takeaways

Lau offers three key takeaways for employers in the course of terminating an employee. Employers should:

  1. Avoid engaging in the list of bad faith conduct identified by the Court of Appeal;
  2. Know that aggravated damages for the manner of dismissal require both bad faith employer conduct and for that conduct to actually cause the employee to suffer damages; and
  3. Remember that even if an employee does not suffer mental distress, a trial judge might extend the period of reasonable notice if an employer advances grounds for termination that reduce the availability of alternate equivalent employment – a step taken by the trial judge which was undisturbed by the Court of Appeal.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Mike Hamata
Events from this Firm
25 Oct 2018, Seminar, Vancouver, Canada

New privacy requirements come into force on November 1, 2018. Organizations that are subject to the federal Personal Information and Protection of Privacy Act will be required to comply with a new mandatory breach reporting regime.

6 Nov 2018, Webinar, Vancouver, Canada

This always-popular webinar is our annual update of some of the key arbitration decisions issued in the previous year.

8 Nov 2018, Seminar, Vancouver, Canada

This always-popular breakfast seminar is our annual update of some of the key arbitration decisions issued in the previous year.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions