The Court of Appeal for Ontario has recently issued a decision that should serve as a stark reminder to employers to treat employees respectfully and in good faith throughout the termination process. Where an employer's behaviour dips below a threshold level of decency during the course of a termination, the employer may find itself exposed to "moral damages." This was the case in Doyle v Zochem, in which the Court of Appeal for Ontario awarded $60,000 to a former employee for moral damages, in addition to wrongful dismissal damages, human rights damages, and legal costs.

According to the Supreme Court of Canada, moral damages are available whenever an employer engages in conduct that is "unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive." Importantly, the time frame for the impugned conduct is not limited to the moment of dismissal – conduct both before and after the termination may be considered in an award for moral damages, so long as it is "a component of the manner of dismissal".

In Doyle v Zochem, both the trial judge and a unanimous Court of Appeal agreed that the employer's conduct clearly warranted moral damages. Among other things, Zochem's inappropriate pre- and post- termination conduct included:

  • instructing other employees to "dig up dirt" on Ms. Doyle;
  • pressuring her to sign a release without advice from counsel; and
  • taking Doyle's car keys from her purse and moving her car without even asking her permission on the day of her termination.
  • failing to respond appropriately to the plaintiff's sexual harassment complaints and instead responding in a way that the Court of Appeal described as "insensitive to the point of verging on cruel".

Indeed, as the Court noted, the trial judge found that Doyle's gender and sexual harassment complaint were likely the most significant reasons for why she was terminated.

Admittedly, the egregious behaviour of the employer made this an easy case to justify moral damages. In fact, even the employer did not dispute the propriety of moral damages on appeal, instead requesting that the quantum be reduced to $20,000.

Of note, the Court of Appeal rejected Zochem's submission that awarding both moral damages that took into consideration sexual harassment and Human Rights Code damages for infringing Doyle's right to freedom from harassment was double recovery. As the Court explained, moral damages are awarded as a result of the manner of dismissal, where the employer engages in conduct during the course of dismissal that is unfair or is in bad faith that caused mental distress. By contrast, Human Rights Code damages are remedial, not punitive in nature. They provide compensate for the intrinsic value of the infringement of rights under the Code; in Ms. Doyle's case, the right to be free from sexual harassment in the workplace.

As the Court of Appeal stated, "Where, as here, the awards in question vindicate different interests in law, there will be no overlap in the damages awarded although the same conduct is considered."

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