Failure to comply with legal obligations in dismissing employee was ‘reprehensible misconduct’ that warranted extra damages
In Nelson v. 977372 Ontario Inc., an employer who refused to issue a record of employment (ROE) to a terminated employee and also withheld that employee’s vacation pay and final wages was ordered to pay punitive damages to the employee in addition to damages for wrongful dismissal.
It was discovered at trial that even though the employer was aware it was obligated to provide the employee with his unused vacation pay, final wages and an ROE, the employer refused to comply. The court determined the employer’s refusal to provide the employee with his vacation pay, wages and ROE constituted an “independent actionable wrong,” which is necessary for the awarding of punitive damages — damages meant to punish the wrongdoer rather than compensate the victim. In Whiten v. Pilot Insurance Co., the Supreme Court of Canada stated that punitive damages are only to be awarded in situations where there is “high-handed, malicious, arbitrary or highly reprehensible misconduct that departs to a marked degree from ordinary standards of decent behaviour.” The court in Nelson determined that the employer’s conduct in knowingly withholding the employee’s final wages, vacation pay and ROE met this stringent test and awarded punitive damages as a result.
Impact of decision on employers
Although the awarding of punitive damages is not the norm, employers must ensure they comply with their statutory and common law obligations to their employees, as the refusal to comply with these obligations may result in the awarding of punitive damages. Employers must provide departing employees with unpaid wages up to the date of departure and vacation pay for unused but accrued vacation time, along with an ROE within certain timeframes established by provincial and federal legislation. Items owing to an employee should not be withheld by an employer as a form of leverage, as there is potential risk and liability to an employer who engages in such behaviour. An ROE is necessary for employees to apply for employment insurance benefits in certain situations, including where the employee has been terminated without cause or due to a shortage of work.
Impact of decision on employees
Employees should be aware they have certain statutory entitlements both during the employment relationship and at the time of departure, with corresponding obligations by their employers. An employer’s failure to comply with its obligations, including the timely provision of vacation pay, unpaid wages and an ROE, can result in undue hardship for an employee and may entitle her to compensation, including punitive damages.
For more information see:
• Nelson v. 977372 Ontario Inc. (July 9, 2013), File No. SC-12-286 (Ont. S.C.J.).
• Whiten v. Pilot Insurance Co., 2002 CarswellOnt 537 (S.C.C.).
