Exploring Influential Employment Law Cases in Canada

Throughout history, certain legal cases have stood out as pivotal moments in the way employment law has evolved over time. Today, we will explore some of the most iconic cases in history and shine a light on how they have changed the landscape of rights for both employer and employee. 

“Bad Faith Damages”

Awards of bad faith damages, also known as “moral” damages, are typically rare to see in cases in Ontario. Usually, these only occur in extraordinary circumstances where an employer exhibits exceptionally egregious conduct that results in demonstrable mental distress to the employee. However, there has been an increase in awards demonstrated in two cases that occurred in 2022. 

Pohl v Hudson’s Bay Company, 2022 ONSC 5230

In this case, one Mr. Pohl, who was a 50-year-old sales manager with 28 years of experience under his belt at Hudson’s Bay, was faced with a demotion to the title of “sales associate lead” role that offered fewer hours that were not guaranteed, reduced pay, and a contract that would enable his employer to terminate him with only minimum statutory entities. A truly egregious case. The conditions that applied included that he voluntarily resign from his current position. However, Mr. Pohl, feeling this devotion was unjustified, refused the offer and was then forced to leave the premises. Rather than letting his employer go unchallenged, he pursued legal action against Hudson’s Bay for wrongful dismissal and received a total of $45,000 in moral damages and $10,000 in punitive damages. 

Stephen Gleave is a Canadian lawyer based out of Ancaster, Ontario, and has been recognized as a prominent authority in the area of Canadian employment law. With a longstanding career spanning since 1990, he has been at the helm of several pivotal cases in the country. When examining the case, he determined that the Court’s decision to rule in favour of Pohl follows several guidelines:

Exploring this case, we can see that the Court’s rationale for granting moral damages here encompasses a few factors, such as the employer’s frankly insensitive approach, the deceptive nature of the contract, failure to promptly settle any outstanding wages, and the mishandling of Mr. Pohl’s Record of Employment – all of which exacerbated his feelings of exploitation, humiliation, and following depression. It’s clear that this experience had a severely negative impact on Mr. Pohl.

The Court saw the employer’s manipulation as an attempt to exploit a loyal, long-term employee during a vulnerable time, constituting a breach of the duty of good faith and fair dealing, which resulted in the award of moral damages.

Rutledge v Markhaven Inc., 2022 ONSC 3183

In this particular case, Ms. Rutledge, a 43-year-old Executive Director with 21 years of service at a long-term health facility, received a wrongful dismissal damages that was the equivalent of up to 22 months’ pay in lieu of reasonable notice. On top of that, she also received $50,00 for bad faith and moral damages stemming from her employer’s investigation into an alleged relationship with Ms. Futledge and another employee, as well as the conduct of his employer’s defense counsel during litigation. 

The Court found, among other things, that this investigation wasn’t conducted independently as promised, but rather by a business that was affiliated with her employer’s defense counsel. It was carried out surreptitiously, deceptively gathering information from Ms. Rutledge without her knowing it. Even still, certain interviews were conducted at a local Tim Horton’s coffee shop, which means they failed to maintain confidentiality. During the following litigation, Ms. Rutledge was confronted with several photographs of her home and faced scrutiny from her employer’s lawyer regarding an impending “security for costs” motion, which he never filed. This subsequently led to the aforementioned payout. 

Ms. Chin worked at a beauty counter at The Bay franchise for 14 years while it was owned by Premier Salons Ltd. After the company went bankrupt, Beauty Express Canada Inc. took over operations in their stead. Ms. Chin continued to work for Beauty Express under the same management and at the same location for another six years until she was terminated in 2019, at the age of 69.

Ms. Chin had previously signed an employment agreement with Beauty Express, however, the agreement was found to be invalid for want of consideration. Subsequently, Ms. Chin was entitled to common law reasonable notice of termination. 

It was agreed by every party that the bankruptcy constituted a constructive dismissal and that Ms. Chin was technically only employed by Beauty Express for six years. Regardless, Ms. Chin received 10 months of pay in lieu of notice on the basis that the experience with the previous employer was important, because it allowed her to bring it to Beauty Express, who benefited from it. In other words, if Ms. Chin had brought technical skills and experience into the role beyond what she was able to demonstrate at trial, she would have been awarded an even greater reasonable notice period, which would have been considered in her final compensation. 

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