Sep 28

Alberta Court Awards Aggravated Damages in Constructive Dismissal Case, Toronto Employment Lawyer


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In the normal course when an employee is terminated and makes a claim for wrongful dismissal the damages will seek to make the Plaintiff whole by providing them all compensation and benefits during their notice of termination period. However, sometimes when an employer behaves badly in the events leading up to, during, or after a termination, the damages owed to the employees could greatly exceed those that seek to compensate the employee during the notice period in the form of punitive and aggravated damages.

Punitive damages are, as the name implies, intended to punish the party who has done wrong. While punitive damage are paid to the benefit of the employee they are not for the purpose of compensating the employee but rather to denounce egregious conduct. In contrast, aggravated damages are appropriate when the employer breached their duty to act in good faith and engage in fair dealing. The purpose is to compensate the employee for this breach. Most instances where these damages are awarded see that both punitive and aggravated damages are awarded.

In Holm v Agat Laboratories Ltd, 2018 ABQB 415, the plaintiff brought an action for constructive dismissal and sought both punitive damages and aggravated damages. While the Court agreed with the Plaintiff that the Defendant had behaved badly, it declined to award punitive damages, noting that “in employment law, punitive damages are restricted to situations where the employer’s conduct has been so malicious and outrageous that it is deserving of sanction.” The Court did however find aggravated damages appropriate, holding that the employer had “breached its duty of good faith and fair dealing.” In particular, the employer had told the Plaintiff that other employees regularly complained about the Plaintiff, which was a complete fabrication. The Court accepted the Plaintiff’s contention that these lies, among others, had been calculated to harm the Plaintiff’s mental state.

In Holm, the distinction between punitive damages and aggravated damages was very clear. In order to receive aggravated damages, the Plaintiff must establish that the Defendant breached their duty of good faith and fair dealing, which seems to be a lower threshold than punitive damages. On the other hand, its difficult to imagine a scenario where punitive damages would be awarded to an employee, without aggravated damages.

Wrongful dismissal claims are claims alleging breach of the employment contract. Importantly, it is possible to wrong an employee by breaching their contract without breaching one’s duty of good faith and fair dealing. However when a clear breach of the implied duty of good faith and fair dealing occurs, aggravated damages are appropriate. In order to receive punitive damages, the Plaintiff must establish that the Defendant’s conduct was egregious enough to demand punishment, in order to deter others from doing the same.

If you believe that your employer has breached your employment contract, you should contact Monkhouse Law today for a free consultation.

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