The British Columbia Court of Appeal recently affirmed the difference between aggravated and punitive damages in an employment law case.

In 2023 BCCA 354, the employer – a cafe – appealed from a decision finding that the employee was wrongfully dismissed, in which the trial judge awarded the employee five months’ notice along with a global award for aggravated and punitive damages. The respondent employee was dismissed by the appellant employer after he was found to have sexually harassed a subordinate employee. The harassment involved two instances of non-consensual touching.

So what happened in this case?

Facts

The employee was 60 years old at the time of dismissal and he worked as head baker at the cafe from December 1, 2017 to November 30, 2018 and again from April 1, 2019 to November 9, 2020. The subordinate he was found to have harassed worked as an assistant baker from April 1, 2019 to November 9, 2020. She was around 30 years old at the time and reported directly to him.

On November 9, 2020, the respondent employee and his subordinate were assigned to work together. Based in part on CCTV footage of the kitchen, the judge found that the respondent employee touched his subordinate on two occasions without her consent.

The decision below

The judge below concluded that the non-consensual touching constituted sexual harassment:

“[99] … Though the touching was brief, it was intentional, unwarranted, and non-consensual. It was a violation of Ms. Lee’s bodily integrity, and caused her emotional distress.

[100]   I also find that the touching which occurred was sexual in nature…this action on the part of [the employee] reflected a gross error of judgment, rather than an act committed for sexual gratification… Nevertheless, when [he] touched [her] buttocks, the touching took on sexual connotations. Even if it was in the form of a “tap”, the intentional placement of his finger or hand on [her] buttocks was entirely inappropriate and falls within the scope of sexual harassment.” [Emphasis added]

The subordinate reported the events and the employer conducted an investigation. The judge found that the employer terminated the employee’s employment on November 17, 2020 because he refused to sign the Affidavit admitting to his misconduct. The judge accepted the employee’s evidence that he believed he had been let go on November 9, 2020, when the employer told him not to come to work the next day (while the investigation was pending).

Did the judge err in finding insufficient cause for termination?

The employer argued that the judge made an error in finding that there was insufficient cause for termination and in making a global award for aggravated and punitive damages. In particular, the employer’s position was that the judge failed to consider the employee’s misconduct on the whole in assessing whether there was cause for dismissal. The Court of Appeal found that there was no material error in the judge’s reasons for concluding there was insufficient cause for termination. The judge had found that the employee was not dishonest prior to his dismissal, and this was supported by the evidence. The Court of Appeal found that it was not an error for the judge below to consider whether the sexual harassment alone justified termination, as the other alleged grounds for dismissal were not made out.

Did the judge err in making a global award for aggravated and punitive damages?

That said, the Court of Appeal found that the judge erred in making a global award for aggravated and punitive damages, since they are distinct remedies.

The judge found the following circumstances supported an award for aggravated and punitive damages: a) the employer refused to issue a Record of Employment (ROE) until the employee had “signed a self-incriminating affidavit”; the employer knew the affidavit would place the employee in “legal jeopardy but tried to exert pressure on him to sign it to [his] detriment”; and c) the employer’s offer for the employee to retain his employment if he signed the affidavit was “disingenuous”. In addition, the employee testified that the affidavit that the employer required him to sign “made him out to be a sexual offender”. He testified that “this destroyed his self respect, made him feel betrayed, and caused him depression and insomnia”. The Court of Appeal agreed.

The judge found the employer’s conduct to be “highly blameworthy” because it refused to provide the employee with a ROE unless he signed the Affidavit, which the employer knew would place him in “legal jeopardy in criminal proceedings”, since the subordinate wanted “an apology in writing to report the incident to the police.”

The employer argued that the judge erred in making a global award rather than discrete awards for each of the aggravated and punitive heads of damages. The Court of Appeal agreed that aggravated and punitive damages are distinct remedies with different objects requiring distinct analyses: while aggravated damages are compensatory, punitive damages are intended to punish the employer for its egregious conduct.

The Court of Appeal found that the $25,000 awarded by the judge was warranted for aggravated damages alone to compensate the employee “for the mental distress he experienced over the form of his dismissal” and an award for punitive damages was not made out as “nothing more” was “needed to achieve the goals of denunciation, deterrence and retribution”.

Key takeaways

Employers should understand the difference between aggravated and punitive damages, and the purpose behind each, especially when navigating wrongful dismissal and workplace harassment. Employers would be wise to carry out both investigations and terminations with the utmost care so as to limit any unnecessary liability. Seeking legal advice from an Employment Lawyer at the right time – prior to carrying out the investigation or termination – is critical. Otherwise, the employer could be on the hook for not only wrongful dismissal damages but also additional damages such as aggravated and/or punitive damages.

By Nadia Zaman