Should an employer terminate an employee based on serious allegations of wrongdoing, absent a neutral and unbiased investigation, it will find itself facing the potential of a significant sum for incremental damages over and above the usual wrongful dismissal claim.

Trial decisions have shown a general theme of significant damage awards against the employer when the investigative technique used has been unfair, or there has been no investigation undertaken at all.

Each case, however, does reflect a universal theme, that the allegations of misconduct are of a grave nature, a flawed or no investigation has taken place and serious harm has been suffered by the innocent party.

Significant sums have been awarded for punitive damages such as $450,000[1], $100,000[2], $50,000[3] [4].Handsome sums have been awarded for aggravated damages such as $200,000[5], $125,000[6], $85,000[7] $75,000[8], $50,000[9], $30,000[10], and $20,000[11].

The accused offender may well have been terminated based on allegations of serious wrongdoing such as sexual harassment or fraud, which are unproven at trial. He or she may win a wrongful dismissal claim but will fail in a claim for additional damages when a proper investigation has been been used to support the cause allegations. This is a very important issue to the employer and indeed to overall fairness to all parties concerned.

Indeed a proper investigation may influence the employer decision maker not to terminate or consider other alternatives.

Employers’ View

Companies are well advised to conduct a neutral, preferably external, investigation prior to terminating any employee based on allegations of serious misconduct. This will avoid any claim for such incremental damages.

Employees’ Take Away

When confronted by apparent unfair allegations of wrongdoing, get advice before you act. There may well be claims for additional damages at your disposal.

Get Advice, Then Act

Contact the offices of Toronto employment and labour lawyers Mallins Law. We regularly advise employees and employers on legal workplace issues. Contact us online or by phone at 647 792 0310 to schedule a consultation.

[1] Pate v Galway, Ontario Court of Appeal 2013

[2] Boucher v Walmart Ontario Court of Appeal 2014, Downham v County of Lennox and Addington 2005, Ontario SC trial;  Tl’azt’en First Nation v Joseph 2013, Federal Court upholding the adjudicator’s award under the Canada Labour Code

[3] Elgert v Home Hardware Alberta Court of Appeal 2011

[4] An early case to award punitive damages due to the lack of a fair process was that of the 1992 decision of the Ontario Court of Appeal in Francis v CIBC. The Court of Appeal did set aside the award of aggravated damages made at trial as no medical evidence was introduced to support this claim. It did, however, double the punitive damage award to $40,000 and maintained the trial award of solicitor-client costs.

[5] Boucher v Walmart above

[6] City of Calgary v CUPE 2013 The damages in this case were described as general damages but are to the same effect.

[7] Tl’azt’en First Nation v Joseph, above

[8] Pate v Galway Ontario Supreme Court, trial level 2009 on first instance

[9] Downham above

[10] Lau v Royal Bank of Canada 2015 S.C.B.C. (reversed on appeal)

[11] Chapell v CPR June 2010