Aggravated Damages

Employers are held to an obligation of good faith and fair dealing when dismissing an employee. Essentially, this means that workers are entitled to a level of respectful treatment when their employment is terminated. If an employer falsely accused the employee of theft, or launched oppressive investigations into the employee, these acts, among other things, could demonstrate a breach of good faith and fair dealing in the manner of dismissal. Breach of this obligation can justify an award of extended damages, particularly aggravated damages. Recently, the British Columbia Court of Appeal in Café La Foret Ltd. v. Cho reaffirmed that aggravated damages are meant to be compensatory. They are established to provide workers with compensation specifically for the mental distress aggravated by an employer’s misconduct in the manner of dismissal. Aggravated damages also operate on a particular standard of review, namely, a reasonableness standard of review. If aggravated damages are awarded, an appellate court may review those damages only on the basis of whether the award was reasonable in the circumstances. In Cho, the Court of Appeal upheld the award of aggravated damages because the employer attempted to withhold a record of employment unless the worker admitted to misconduct. The manner of dismissal “destroyed” the worker’s self-respect, made him feel betrayed, and caused him depression and insomnia. Altogether, the court held the employer’s mistreatment breached the obligation of good faith and fair dealing in the manner of dismissal, hence aggravated damages were awarded.

Punitive Damages

Punitive damages are another head of damages that can be awarded to workers for mistreatment in the manner of dismissal. As with aggravated damages, punitive damages can be awarded for the breach of the obligation of good faith and fair dealing in the manner of dismissal, but unlike aggravated damages, they are not intended as compensatory damages. Instead, as their name suggests, punitive damages are awarded with the intention to punish the employer for egregious misconduct and are awarded only after all other damages have been provided. As outlined in Cho, pay in lieu of notice and aggravated damages themselves are both relevant to whether punitive damages should be awarded in the first place. Because punitive damages are meant to punish employers for misconduct, they are only awarded if all other penalties and damages awarded are insufficient for retribution, denunciation, and deterrence with respect to the employer’s behaviour. Furthermore, punitive damages are reviewed on a rationality standard, which is less deferential than the reasonableness standard for aggravated damages. Punitive damages are damages over and above all other forms of damages and compensation and should be treated as such.

Global Award of Aggravated and Punitive Damages

The issue before the court in Cho focused on the globalization of aggravated and punitive damages. The trial judge grouped both damage types together, whereas the court of appeal acknowledged that aggravated and punitive damages are separate, are awarded for distinct reasons and have distinct standards of review. In providing its analysis, the court ruled that the damages awarded should be separated and specified rather than generalized and globalized. Instead of a global award for aggravated and punitive damages, the court amended the award to specify aggravated damages alone. The court held that aggravated damages on their own were sufficient to compensate the employee for the breach of the obligation in good faith and fair dealing in the manner of dismissal. Consequently, the court held that the trial judge erred in awarding aggravated and punitive damages in a globalized form instead of specifying the award for each head of damages separately. The court thus removed the award of punitive damages as there was no justification for punishing the employer any further when considering the punishing effect of awarding aggravated damages. Since punitive damages are only awarded after considering all other heads of damages, the court ruled that it was unnecessary to award them given the award of aggravated damages in addition to pay in lieu of notice. The court stated that “nothing more is needed to achieve goals of denunciation, deterrence and retribution”, hence there was no basis to award punitive damages. Nevertheless, the court’s separation of aggravated and punitive damages did not reduce the actual value of damages awarded to the worker. Cho reaffirms that punitive damages are awarded only after other heads of damages are provided, and that there is an important distinction between aggravated and punitive damages.