Dismissal damages: Dealing with distress

Mental distress experienced by fired employees can be caused by different factors. How do you distinguish what warrants damages?

By Jeffrey R. Smith

When an employee is fired, it’s usually a stressful situation. It’s often not just a loss of income, but also a loss of identity to certain extent. Courts have recognized work is part of people’s identity and how they see themselves, and having this come to an end can be emotionally traumatic.

However, courts have also recognized there is a difference between the emotional and mental stress that can be expected to arise from being fired and that caused if an employer is particularly mean about it. Wrongfully dismissed employees can win larger damage awards for stress or suffering caused by bad-faith behaviour by the employer, but not normal stress that comes from dismissal or any other type of pain and suffering that comes from separate issues. But how do you make that distinction?

Snow plows brush snow off the tarmac at Pearson International airport in Toronto on Feb. 2, 2011. A recent course case involving the Greater Toronto Airports Authority raises questions about the type of conduct that warrants additional damages in terminations. (Photo: Mike Cassese/Reuters)

There have been cases where employees have claimed damages for mental stress caused by an employer’s behaviour in the course of dismissal, but have been denied because the court or arbitrator found the suffering was normal for someone who was fired. But there was an interesting Ontario case where damages for both physical pain and suffering from a wrongful dismissal were originally awarded and then set aside.

An employee with the Greater Toronto Airports Authority (GTAA) was fired in 2004 for abusing sick leave after a knee operation. The GTAA put her under surveillance and felt she was better than she let on. The employee won several years’ salary in a wrongful dismissal suit, as well as $50,000 for mental distress she suffered because the GTAA didn’t seek out proper medical evidence and didn’t have a legitimate reason for firing her. The employee’s distress was aggravated by the fact the firing caused her to require psychotherapy, which she had to take instead of physiotherapy for her knee. As a result, her knee took longer to heal.

However, the Ontario Division Court set aside the mental distress damages. It agreed the GTAA caused the employee mental distress, but not enough to warrant $50,000 in damages. Part of the employee’s suffering was caused by her knee injury, not the employer’s actions and the arbitrator should have distinguished between them, said the court. The employee might be entitled to some mental distress damages, but not for all of her suffering.

So if an employer acts in bad faith during dismissal, there is obviously potential for bad-faith damages. But where is the line if the employee is emotionally, mentally or physically affected? What if the employee in the above situation had her knee pain aggravated because of her mental state from the GTAA’s conduct?

Everyone is different and some people get more stressed than others in bad situations. If someone’s reaction to a dismissal is more extreme than normal, does that person deserve more? What if her reaction leads to physical maladies? Conversely, if someone is strong and unemotional and can shrug off a bad dismissal situation, does she deserve less in damages?

Jeffrey R. Smith is the editor of Canadian Employment Law Today, a publication that looks at workplace law from a business perspective. For more information, visit www.employmentlawtoday.com.

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