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No Mental Distress in Termination

By December 16, 2018November 5th, 2019Employment Law

An interesting case from BC involved a Court of Appeal overrulling a lower-judge’s decision that an employee is entitled to a 5-figure payout for mental distress as a result of a termination.

In the case of Cottrill v. Utopia Day Spas and Salons Ltd., the British Columbia Court of Appeal set aside an award of $15,000 in aggravated damages to a wrongfully dismissed employee because “there was no evidence that the manner of dismissal caused the respondent mental distress beyond that caused by the dismissal itself.” This is a significant finding and helpful for employers across the country.

The Lower Court’s Decision

At trial, the employee sued for wrongful dismissal against her employer where she had worked for over 10 years. When the employer had become concerned with her job performance, the employee was met by two members of management and they gave her a letter stating that she had three months to improve her performance or she would be fired. Three months later, the employee in fact terminated for that reason.

The lower court sided with the employee and said that the employer did not have just cause to terminate, and termination was not the right response to the performance issues. The judge said the employer had unreasonably sought to hold the employee to performance standards which it had not previously required her to meet, failed to provide her with a fair and reasonable assessment of her performance, and then gave no meaningful attention to the improvement they said they were looking for.

The employee received 8 weeks of termination pay she was entitled to receive under her employment contract, and the judge added $15,000 in aggravated damages for “bad faith in the manner of dismissal.” In giving the employee the extra $15K, the trial judge said “the events clearly had a profound effect” on the employee because, among other things, she cried, went “numb,” and had to leave work early on one occasion because she was so upset.

The Court of Appeal Decision

The employer appealed the ruling and argued the judge gave the employee mental distress damages “in the absence of any evidence of actual harm” and that the degree of mental suffering caused by the dismissal was not sufficient to warrant compensation.

The BC Court of Appeal agreed with the company and overturned the $15,000 mental distress payment.

The Court of Appeal stated there was no evidence from anyone (the plaintiff, her family members, friends, physicians, or other experts) regarding the employee’s mental state following the termination. As there was a lack of evidence, the employee could not show a “serious and prolonged disruption that transcends ordinary emotional upset or distress” and thus was not entitled to aggravated damages (for mental distress) in this case.

Takeaways for Dentists

This recent case (from BC) reaffirms for employer that simple unfairness and hurt feelings during a termination shouldn’t really attract mental distress damages in a wrongful dismissal lawsuit. While employers across Canada can take some comfort in the decision of the Court of Appeal, it is important to keep in mind the liability that can arise from high-handed, unreasonable, bad faith, and/or unduly insensitive conduct in the manner of dismissal (even where there are documented performance issues, or issues involving accommodation and human rights for that matter). If a employee you terminated can show they had mental distress as a result of your actions, a trial judge can still order you to pay extra damages to that employee.

If you have any questions about a poor performing employee or termination documents, contact DMC.

The Content of this post is provided for informational purposes only. It is not intended to be legal, financial, tax, or other professional advice of any kind. You are advised to contact DMC (or other counsel) to seek specific legal advice concerning your individual situation.