Over $800,000.00 awarded British Columbia Wrongful Dismissal

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.

Frequently Asked Questions

Are temporary layoffs permitted?

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.

Short-Term Disability Insurance: What should you do when a claim is denied?

I have been off work since May 2016 and have been trying to obtain short-term disability insurance since then. My doctor has provided me with three sick notes since then and at our last appointment she told me not to work. However, my application for short-term disability insurance has been denied. I’ve given the disability insurer the notes from my doctor and I’ve gone through the appeal process but have been denied again. My employer is now asking when I will return and I’ve booked an appointment with my doctor to see what she thinks. What should I do?

‍It is not uncommon for disability insurers to deny an initial application for short-term disability benefits. Often the reason cited for the denial is a lack of medical evidence of a disability. If the only documentation you have provided to the insurer are sick notes from your doctor it is usually of assistance to obtain further medical records from your doctor including something documenting your diagnosis. Often, after receiving such additional documentation an insurer will approve an application for disability benefits. If you continue to be denied benefits, it is likely time to consult with legal counsel. Also short-term disability benefits typically end within 6 months even if you are approved. Ensure you know when these benefits end and decide with your doctor whether you should be applying for long-term disability benefits if they are available to you.

With respect to returning to work you are entitled to rely on your doctor’s advice. If your doctor tells you not to work this should be documented in a doctor’s note and provided to your employer. Forcing you to return to work when your doctor says you’re sick is in breach of human rights legislation and it’s unlikely that your employer will insist on your return to work in the face of your doctor’s advice.

Are paid and unpaid internships illegal in Ontario?

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.