The scope of damages available to employees in wrongful dismissal claims has been steadily widening over the past decade. However, in a decision of the Ontario Court of Appeal, released on May 28, 2010, the Court reversed this trend by rejecting tort liability of an employer for intentional infliction of mental suffering arising from a dismissal.

In this decision, the Ontario Court of Appeal reviewed a trial decision which imposed personal liability on a manager, as well as on the employer, for the torts of battery and intentional and negligent infliction of mental suffering against an employee. The trial judge had also found the employer vicariously liable for the actions of that manager, as well as for constructive dismissal. The judge placed substantial weight on the fact that the supervisor failed to adhere to the employer’s own code of conduct as it applied to discipline. The total damages awarded at trial exceeded half a million dollars in addition to costs of $225,000.

Both the manager and the employer appealed the decision. The Court of Appeal allowed the appeal in part. The Court held that the employer and the supervisor could not be liable for the tort of negligence in the employment context. The Court of Appeal also held that the trial judge erred in imposing liability on the employer for “intentional infliction of mental suffering”.

The supervisor in question was found to be a “critical, demanding, loud and aggressive manager.” Prior to the incident in question, he had become more abusive, particularly with respect to the plaintiff. As a result of certain performance criticisms by the supervisor, a confrontation ensued in which the employee attempted to prove that she had contacted a specific client the supervisor accused her of ignoring, by showing the supervisor her BlackBerry, which she claimed showed the emails she had sent that client. This resulted in the supervisor pushing the employee away and telling her to “get the hell out of his office.” The trial judge found that the supervisor’s conduct failed to conform to the employer’s own code of business conduct, and requirements for the disciplining of employees.

Following this confrontation, the supervisor issued a Performance Improvement Plan (PIP) to the employee in which she was advised that, should her performance not improve to an acceptable level, she faced the possibility of disciplinary action up to and including dismissal.

The employee lodged a formal complaint with the employer’s human resources department. HR responded that it would schedule a meeting with the employee, her supervisor and the HR manager to review the PIP. The employee refused and provided a doctor’s note indicating that she was unable to attend at work “due to anxiety—dealing with work harassment.” She never returned to work and sued the employer for constructive dismissal.

However, the Appeal Court overturned the trial decision imposing liability for the tort of negligent infliction of emotional distress based on the breach of its own code of conduct. The Court held that the code of conduct was part of the employment contract, the breach of which could not support a finding of tort damages. While the Court of Appeal did find that the employer owed the employee a duty of care, which it breached when it failed to follow its own procedures, the Court held that for reasons of public policy, it would not enforce the duty of care in the employment context. It reasoned that to do so would be overly intrusive and inconsistent with the established principles of employment law. In addition, the Court of Appeal found that employees who suffer harm as a result of such behaviour have a remedy available to them under the Supreme Court of Canada ruling in Honda and Keays—i.e., for mental distress arising from the matter of the dismissal.

The Court then turned to the award for intentional infliction of mental suffering. The trial judge had based her finding on the fact that the supervisor had placed the plaintiff on a PIP after the assault. The Court overturned the trial judge’s finding that this conduct was sufficient to support the award of damages on the basis that the trial judge did not find the supervisor intended to cause the damages that he did, or that he showed reckless disregard for whether he did so. The Court of Appeal held that even if the manager showed reckless disregard for the emotional well being of the plaintiff, she still had to prove that the manager intended that she suffer the stress disorder that she did, or that it was substantially certain that such disorder would result from these actions. This was not proven by the evidence. The trial judge’s ruling on this aspect of the case was set aside.

Finally, the Court of Appeal overturned the Judge’s award of $45,000 for Wallace damages. The Court found that, in fact, the employer had taken reasonable steps to criticize the manager’s actions, and required that the manager apologize to the plaintiff for these actions. It found that the plaintiff took an unreasonable position in refusing to return to work until the manager was fired, as this was the first complaint this manager had faced in eight years of service.

In spite of its conclusions with respect to the supervisor’s conduct, the Court of Appeal upheld the trial judge’s conclusion with respect to the separate tort of bad faith in the matter of the dismissal, and the judge’s assessment of the damages at $45,0000 for that breach.

Earl Altman
Garfinkle, Biderman LLP