Bad Employer Conduct – 2023’s Top 3 Most Scathing Canadian Employment Law Decisions

As employment lawyers, we all have times when we wish our employer-side clients had come to us for advice before making certain decisions.  There’s a lot that can be done to protect an employer who seeks assistance early in the process – especially if it involves a termination.  Costs can be reduced, risks can be mitigated, and whole potential areas for future disputes can be eliminated entirely with careful consideration and planning.

The result of failing to get proper employment law advice can be catastrophic.  Not only can it be exceedingly expensive, but the reputational damage for an organization can be profound.  And if you’re an employer who has made some mistakes in the process – do not double down on those errors by adopting unreasonable and ill-supported litigation strategies.  The patience of Canadian courts has worn thin and there appears to be an increased willingness to award moral and punitive damages, as well as substantial cost awards, when finding that employers have behaved badly.  2023 has produced some truly prodigious decisions on this front.  Here are my top three 2023 cases in which employers f***ed around and found out.

#3 – Chalmers v. Airways Transit Service Ltd. and Badder Capital Group Ltd.

In Chalmers v. Airways Transit Service Ltd. and Badder Capital Group Ltd., 2023 ONSC 5725 (CanLII), the plaintiff employee, a 53-year old Vice-President with 28 years of service, argued that he has been constructively dismissed after having been placed on an indefinite layoff in 2020 during the height of the COVID-19 pandemic.  The defendant employer failed in attempting to argue that the plaintiff had acquiesced to the layoff, and also failed in its attempt to rely on the temporary layoff provisions of the Infection Disease Emergency Leave (being by my count now, at least the fourth employer to fail with this argument). The plaintiff was awarded 25 months’ notice (24 months plus a one-month COVID bump).

He was also awarded $30,000.00 in punitive damages.  Justice MacNeil was not impressed with the employer’s conduct and found as follows:

[158] I find that Airways Transit did not satisfy its duty of good faith in its dealing with Mr. Chalmers and recalling him to work. Mr. Badder’s evidence was that he intended to return Mr. Chalmers to work at the end of the COVID-19 Period. I find Mr. Badder’s statement in this regard to be a feeble attempt to justify the inexcusable failure to recall Mr. Chalmers in a timely manner or, in the alternative, to lawfully terminate his employment. Airways Transit knew or ought to have known that stringing Mr. Chalmers along to believe that it could potentially recall him at some unknown point in the future, when things had sufficiently improved for the company, was placing him in an impossible situation. He would have to sit and wait quietly “in the wings”, with no pay or benefits, for an indeterminate duration and rely on the limited communication or feedback offered by Airways Transit. This is completely unreasonable and unacceptable behaviour on the part of an employer. […]

[160] Employees depend on employment not only for their financial survival but also for a sense of self-worth. Conduct of the employer that negatively impacts on those two essential elements warrants condemnation and punishment.

Key takeaway: It’s very clear that any employers left still defending COVID-19 constructive dismissal cases are likely to face strong punitive damages arguments if they allow those matters to get to trial.

#2 – Giacomodonato v. PearTree Securities Inc.

The actual decision in the Giacomodonato v. PearTree Securities Inc., 2023 ONSC 3197 (CanLII) is very interesting, but the costs endorsement is where things get particularly spicy.

The plaintiff employee was successful in his claim and was awarded $718,103.05 in damages.  But the employee was also forced to defend a counterclaim made by his former employer who argued that he had breached restrictive covenants and fiduciary duties owed to the company.  The trial lasted ten days and the defendant employer was entirely unsuccessful in its counterclaim, which the court described as “meritless”.

Justice Centa was clearly unimpressed with the defendant employer and had this to say in closing out his costs endorsement:

[33] Having presided over this ten-day trial, however, certain things are crystal clear to me. PearTree invited this litigation. PearTree conducted this litigation in an unforgiving, scorched earth, and bare-knuckle manner. It missed no opportunity to malign Mr. Donato. PearTree’s decision to pursue a counterclaim and punitive damages of so little merit leaves me to infer that those claims were advanced only for tactical reasons and in an attempt to dissuade Mr. Donato from pursuing the money PearTree owed to him. PearTree’s attempt to now claim that this action “was an unexceptional employment action” is entirely inconsistent with its own approach to this litigation. In my view, and in light of the choices it made in the conduct of this litigation, it should have reasonably expected to face a costs order of this magnitude.

The plaintiff in this matter was awarded costs of the proceeding in the amount of $830,761.75.

Key takeaway: Don’t pursue counterclaims as a matter of tactics.  Trying to scare off an employee with a meritless counterclaim is an abuse of process that will only encourage plaintiff-side counsel who will salivate at the thought of a costs award of this magnitude.

#1 – Chu v. China Southern Airlines Company Limited

In Chu v. China Southern Airlines Company Limited, 2023 BCSC 21 (CanLII), the plaintiff employee (68 years old, with 8 years of full-time employment with the defendant) was awarded a reasonable notice period of 20 months.  More importantly, the plaintiff was awarded moral damages in the amount of $50,000.00 and punitive damages in the amount of $100,000.00.

If ever there were an employment law decision to be held up as the textbook example of all the things not to do as the defendant, this would be it.  Justice Verhoeven’s summary of the employer’s breaches of its duty of good faith and fair dealing is scathing:

1.   The plaintiff’s dismissal on February 1, 2019, was the culmination of a process commencing in January 2018 with the replacement of CSA’s former GM with its new GM, Ms. Zhang. The new GM and the former GM were very hostile to each other. It seems clear that the new GM, Ms. Zhang, associated the plaintiff with the former GM. As of February 2018, the employer, acting through Ms. Zhang, secretly wanted and intended to terminate the plaintiff’s employment. It sought to do so without giving reasonable notice or paying severance in lieu thereof. The employer could have simply informed the plaintiff that changes to its management structure m up TV  eant that his position was redundant. It could have terminated the plaintiff’s employment at that time. Instead, the employer was duplicitous and unfair in its dealings with the plaintiff. It demoted the plaintiff to entry-level, front-line services positions, substantially reduced his pay, and began taking steps to manufacture cause for dismissal or to induce the plaintiff to resign.
2.   To that end, the plaintiff was unfairly disciplined and threatened with termination on multiple occasions. The employer began unfairly criticizing the plaintiff’s work, inventing failings, and creating an unfair, self-serving and inaccurate disciplinary record, in support of eventual allegations of cause for dismissal. The plaintiff previously had an impeccable record of service.
3.   The unfair discipline was carried out in humiliating and embarrassing ways, including public reprimands, yelling at the plaintiff, on one occasion throwing an item at him (the computer mouse), and requiring him to attend meetings where his faults and failures were enumerated.
4.   The plaintiff was compelled to sign letters of reprimand that he did not agree with—specifically, a letter dated February 22, 2018, and another undated letter that followed.
5.   Given his age, experience, and former position as Marketing and Business Development Manager, the plaintiff’s reassignments without consultation to entry-level positions in the customer service and airport station positions were humiliating.
6.   The plaintiff was assigned to work at the airport terminal when the employer knew or ought to have known he could not possibly do the work to its satisfaction. He was set up for failure. The employer’s treatment of the plaintiff in relation to this position was cruel and insensitive.
7.   After unilaterally assigning the plaintiff to work at the airport, the employer purported to impose a probation condition upon his employment in January 2019, based upon the fact that he was in a new position.
8.   The employer concocted a memorandum falsely stating that the plaintiff stated he would voluntarily resign if his performance did not improve.
9.   While the plaintiff was continuing to make sincere efforts to live up to the employer’s unreasonable demands, it terminated his employment. It did so before providing the additional training and further testing it had promised.
10. The plaintiff was an exceptionally vulnerable employee, as the employer must have understood. He was 68 years of age, with limited work opportunities. He accepted humiliating demotions, a substantial loss of pay, and endured multiple episodes of insulting and unfair discipline, in a desperate effort to retain any job with CSA. The plaintiff was made to suffer pointlessly, since CSA wanted to terminate his employment all along.
11. In its termination letter, the employer alleged dishonesty, by falsely stating that the employee was guilty of “time theft”.
12. For no discernible reason, CSA refused to provide the plaintiff with a record of employment (“ROE”), contrary to its legal obligations as an employer and despite numerous requests. The failure to provide the plaintiff with a ROE delayed access to employment insurance by about two-and-a-half months.
13. The employer made numerous, very serious, and false allegations in the RTCC, a publicly available document. The allegations included dishonesty, fraud, theft, conspiracy, sexual harassment, and profound denigration and disparagement of the plaintiff’s work record. These false, insulting allegations constituted a wholesale attack on the plaintiff’s conduct, his character, his years of service, his value as an employee, and his worth as a person. They would have been predictably harmful to the plaintiff.

Key takeaway – Don’t do anything the employer here did.

Don’t be the 2024 case law example, reach out to us today if you require assistance with a difficult termination.