Apart from receiving damages for wrongful dismissal, a dismissed employee also stands to benefit where aggravated and punitive damages are awarded against the employer. This is relatively rare, but it does happen.
In a recent decision by the British Columbia Court of Appeal, Acumen Law Corp. v. Ojanen, we saw an employer attempt the argument that punitive damages should not be awarded because they would be based on the same conduct that had already been compensated for through an award of aggravated damages. The Court of Appeal held otherwise. Aggravated and punitive damages are discrete sets of damages in wrongful dismissal proceedings and can indeed be awarded based on the same exact conduct. The fact that aggravated damages had already been awarded did not preclude the court from awarding punitive damages based on the same conduct. This is because aggravated and punitive damages are not the same – they serve different purposes.
So, what are those purposes? What is the difference between aggravated and punitive damages?
Aggravated damages (sometimes referred to as “moral damages”) are compensatory. This means that aggravated damages are awarded to compensate a dismissed employee for a loss they have suffered. This must be a loss that extends beyond the feelings of disappointment, shock or anger that would be typical following an unexpected and without cause dismissal. For an award of aggravated damages, there must be actual loss or damage flowing from the unfair or bad faith conduct of the employer in the manner of dismissal. If an employee is dismissed in a manner that is abusive or unfair, they might have a claim for aggravated damages as compensation in addition to damages for wrongful dismissal.
In Acumen Law Corp v. Ojanen, aggravated damages were awarded to the employee due to the manner of dismissal. The employer’s actions were unfair, unduly insensitive and in bad faith. The employer had, among other things:
- Dismissed the employee without allowing her to explain her actions and without telling her that her actions were prohibited;
- Publicly dismissed her in front of her classmates and lied about the reasons for doing so; and
- Accused the employee of deceit and dishonesty based on nothing but unfounded suspicions.
Based on these actions, the dismissed employee was awarded $50,000 in aggravated damages.
In Acumen Law Corp v. Ojanen, the employer attempted to argue that punitive damages should not be awarded because they would be based on the same conduct that led to the award of aggravated damages. However, punitive damages, in contrast to aggravated damages, are not compensatory. They serve an entirely different purpose. The focus of punitive damages is retribution, deterrence and denunciation. Punitive damages are intended to punish the employer, the deter the employer and others like them from engaging in similar behavior in the future, and to demonstrate the community’s collective condemnation of what the employer has done. The Supreme Court of Canada has said that punitive damages are only to be imposed where “there has been high-handed, malicious, arbitrary or highly reprehensible misconduct that departs to a marked degree from ordinary standards of decent behaviour” (Whiten v. Pilot Insurance Co.,  1 S.C.R. 595). It is not about compensating the employee – rather, it is about punishing the employer.
Where, as is the case here, there have already been aggravated damages awarded to the employee, the question becomes whether those damages are sufficient to meet the objectives of punitive damages. Where they are insufficient, punitive damages can be awarded even on the same conduct.
In Acumen Law Corp v. Ojanen, the British Columbia Court of Appeal felt that the $50,000 award of aggravated damages was insufficient to punish the employer, to deter the employer, and to reflect society’s condemnation of the employer’s behavior. As a result, the Court of Appeal awarded a further $25,000 in punitive damages.
Employees who have been treated unfairly in the manner of their dismissal may therefore be able to recover greater damages than what wrongful dismissal alone could provide. Employers must therefore be mindful of how they treat their employees, even at the point of termination.