The largest wrongful dismissal award in Canadian history was recently awarded by a jury in Prince George, British Columbia in the case of Higginson v. Babine Forest Products Ltd. The case was reported by the Prince George Citizen newspaper on July 27, 2012. The Plaintiff, Larry Higginson, had been employed by Babine Forest Products for 34 years and at the time of his dismissal worked as a manager in the electrical department of Babine's sawmill. At trial the jury awarded $809,000.00, the majority of this award was in punitive damages.
Punitive damages are not typically awarded in wrongful dismissal cases but in Higginson's case he alleged that the company management had deliberately attempted to create an unpleasant work environment at the sawmill in the hope that he would decide to leave on his own. When he didn't quit the company created false grounds to dismiss him for cause in order to avoid paying severance. In its decision the jury appeared to accept most, if not all, of Higginson's arguments in awarding approximately $236,000 in wrongful dismissal damages and $573,000 in punitive damages.
Following the trial, the company appealed the jury's decision but the parties settled the matter before the case reached the B.C. Court of Appeal. The company's appeal would likely have focused on the substantial punitive damages award. The Supreme Court of Canada has said that punitive damages should only be awarded when normal compensatory damages do not achieve the purposes of punishment, deterrence, and denunciation required by the circumstances of the case.
The case of Honda v. Keays decided by the Supreme Court in 2008 has been interpreted as restricting the availability of punitive damages in employment law cases.
In follow up interviews regarding the case the Lawyers for Higginson noted that prior to his dismissal the company asked Higginson to sign a document relinquishing his rights to severance and excluded him from meetings that he was normally required to attend as part of his duties. Because Higginson asked for a trial with a jury, there is no detailed decision from the trial judge explaining the precise reasons for the substantial judgement. However, the size of the total award should provide caution to any employer trying to use pressure tactics to get an employee to quit in order to avoid their severance obligations.
I was fired without cause. My employer has given me an offer. Should I take it?
Answer: Employers aren’t handcuffed to their employees. If they act in accordance with their statutory and common law obligations, employers are free to part ways with employees without cause. Typically, the employer is obliged to provide statutory or common law reasonable notice or payment in lieu of notice. Costs, benefits, risks and reward of bringing legal action, should all be considered, prior to starting a claim.
Needlessly pursuing litigation could potentially prejudice the employee. You could delay the settlement and run the risk of losing a fair offer. You may find another job in the weeks following termination. If this happens, then the employer’s settlement may be subject to mitigation which means that they are credited the wages you obtain from that new job. You may also pay more in legal fees then the additional notice you should have received.
There are cases where employees are grossly underpaid when it comes to severance, so I do advocate that everyone who faces termination seek counsel to go over any severance offer. Do not sign it blindly. Speak to a Lawyer and make sure the offer is fair. Employers will often expect and, if prudent, will insist that their past employees reach out to counsel when deciding to sign a severance offer. You should do so as soon as possible after receiving the offer.
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Work at my business has slowed down quite a bit this year. I currently have 11 employees but there is not enough work to go around. I should be getting a set of new contracts that will keep everyone busy this spring, but I’d like to make some temporary layoffs in the meantime to avoid having to let anyone go for good. I’ve discussed this with business colleagues who told me that temporary layoffs are not permitted for non-unionized employees. What are my options?
The law applicable to temporary layoffs in Ontario can be confusing. The Employment Standards Act does allow temporary layoffs of up to 13 weeks in a 20 week period. In certain seasonal industries, such as construction, temporary layoffs over the winter months are fairly common. However, in other workplaces courts in Ontario have treated temporary layoffs as constructive dismissals and have ordered employers to provide termination and severance pay.
In recent years, some Ontario court decisions have allowed temporary layoffs provided employers comply with both the Employment Standards Act and the terms of the employee’s contract. Depending on the nature of the work, such layoffs may even be permitted when an employee is working with an unwritten contract. A temporary layoff is also more likely to be permitted if an employee remains entitled to benefits and can access Employment Insurance during their time off. During any such layoff it is important to inform the employee that the layoff is temporary and to provide them with a return to work date. Finally, a temporary layoff should not be used as a form of discipline to punish an employee for misconduct – that will most certainly result in a claim for constructive dismissal.
I own a small events and promotions business. Every so often I get emails from students asking if they could volunteer to learn about the business. I’ve never hired a student because they’re inexperienced but I’m considering hiring one as an intern this summer. I don’t have the budget for a full time employee but I would be willing to pay them a modest stipend. I’ve heard both paid and unpaid internships are illegal in Ontario. Is this true?
In Ontario, the rules around internships are strict and in recent years some employers have been required to change their internship programs as a result. If someone is receiving on the job training from a business they are considered to be an employee of the business under Ontario law. As an employee they are entitled to a minimum wage under the Employment Standards Act so paying them a stipend that does not meet the minimum wage is against the law.
There are two exceptions to this general rule which recognize the educational value of internships. The first is internship programs approved by a college or university which are permitted.
The second exception is internships that meet criteria set by the Ministry of Labour. These requirements include that the intern is receiving valuable training, is not taking someone else’s job, and has not been promised a job after their training. The most important feature is the educational component: the primary purpose of internships is to teach valuable skills, not to provide cheap labour to businesses.
The safest way to ensure compliance with the law is to have an internship approved as part of a college or university program. Alternatively, you should design the internship ahead of time to focus it around training and skills development.