On June 29, 2009, the Ontario Court of Appeal released its most
recent pronouncement dealing with the issue of "Wallace
In 1997, Justice Iacobucci of the Supreme Court of Canada wrote
the majority decision in Wallace v United Growers Ltd.,
pursuant to which employers became subject to an obligation of good
faith and fair dealing in the manner of employment dismissals. The
court in Wallace held that damages resulting from the
manner of dismissal would be available where the employer engages
in conduct during the course of dismissal that is unfair, or is in
bad faith by being, for example, untruthful, misleading or unduly
insensitive. The court in Wallace held further that such
damages would be awarded by adding to the length of the reasonable
notice period. As a result, in cases over the last decade where
employers have breached the obligation of good faith and fair
dealing in the manner of dismissal, there has been a lengthening of
the reasonable notice periods.
In the summer of 2008, the Supreme Court of Canada revisited
this issue. Justice Bastarache's decision on behalf of the
majority in Honda v. Keays severely curtailed the
availability of Wallace damages. The court held that while normal
distress and hurt feelings resulting from dismissal are not
compensable, if the employee can show that the manner of dismissal
caused mental distress that was in the contemplation of the
parties, then additional damages can be awarded. The court stated
that such damages would not be awarded through an arbitrary
extension of the notice period, but rather through an award that
reflects the actual damages. Justice Bastarache gave as examples of
such conduct, the attacking of the employee's reputation
"by declarations made at the time of dismissal,
misrepresentation regarding the reason for the decision, or
dismissal meant to deprive the employee of a pension benefit or
other right, permanent status for instance".
In the wake of Honda v. Keays, it was thought that
Wallace damages would not often be awarded, since employees would
have to prove that the manner of dismissal, as distinct from the
termination itself, caused actual mental distress.
In Slepenkova v. Ivanov, the Ontario Court of Appeal
refused to set aside the Wallace damages awarded by the trial
judge, notwithstanding the Supreme Court of Canada's decision
in Honda v. Keays. While the court did set aside the
Wallace damages award in favour of the plaintiff Nikolova, the
award in favour of Slepenkova was sustained on the basis that the
employer had sent a pager message to the employee's co-workers
saying, "We are sorry to inform you that Ilona has been
terminated from our team for non-production and refusal to accept
the new contract terms - Vess". The trial judge found
that the employer's communication to the employee's
co-workers amounted to conduct that was unfair and in bad faith for
two reasons: 1) the allegation that she failed to adequately
perform her duties was unfounded and damaging to her reputation;
and 2) the employer was attempting to use the termination of
Slepenkova as a tool to ensure that the other employees would sign
the amended agreement that Slepenkova had refused to sign. The
trial judge awarded Wallace damages to Slepenkova equivalent to two
additional months' notice ($10,000). The Court of Appeal found
that the trial judge's finding of fact that the pager message
was damaging to her reputation, was sufficient to sustain the
Wallace award, even in light of the Supreme Court of Canada's
decision in Honda v. Keays, which was rendered after the
trial judge's decision in this case. The Court of Appeal in
this case refused to intervene with respect to either the quantum
or the approach to the Wallace damages.
It would appear that the final nails have yet to be hammered
into the Wallace damages coffin.
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 Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The prospect of an internal investigation raises many thorny issues. This presentation will canvass some of the potential triggering events, and discuss how to structure an investigation, retain forensic assistance and manage the inevitable ethical issues that will arise.
From the boardroom to the shop floor, effective organizations recognize the value of having a diverse workplace. This presentation will explore effective strategies to promote diversity, defeat bias and encourage a broader community outlook.
Staying local but going global presents its challenges. Gowling WLG lawyers offer an international roundtable on doing business in the U.K., France, Germany, China and Russia. This three-hour session will videoconference in lawyers from around the world to discuss business and intellectual property hurdles.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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).