In a recent decision, the British Columbia Supreme Court awarded significant aggravated and punitive damages to an employee who was wrongfully dismissed “for cause.”
In Vernon v. British Columbia (Liquor Distribution Branch)1, the manager of a liquor store in Richmond, B.C. was dismissed for cause on the basis of a written complaint by one of her staff. The employer concluded that the manager had bullied, harassed and intimidated her subordinates. The manager had 30 years of service, a clean disciplinary record, and a number of positive performance appraisals and awards.
After conducting an investigation that the trial judge found to be flawed in several respects (its conclusion was inaccurate and it was conducted by a labour relations advisor who had been giving advice to the manager about the complainant), the employer informed the manager that it would terminate her for cause unless she agreed to resign. The employer offered to provide her with a positive reference if she resigned. The manager refused. The employer suspended her without pay and, more than six weeks later, finally terminated her employment.
The trial judge concluded that the employer had not proven just cause for dismissal. Although some of the manager’s language was “problematic”, her conduct was not serious enough to warrant a dismissal for cause. The trial judge awarded a notice period of only 18 months because of a statutory cap for public-sector employees such as the manager.
The trial judge went on to award $35,000 in aggravated damages on the basis of bad faith in the manner of dismissal. He concluded that he could not award aggravated damages arising from the flawed investigation, but that he would award aggravated damages because of the way the termination meeting had been handled and the delay in informing the manager of her dismissal, both of which contributed to her mental distress “over and above the normal distress and hurt feelings resulting from the dismissal itself”.
The trial judge also awarded $50,000 in punitive damages. In his view, offering a letter of reference in exchange for a resignation was “reprehensible and departed to a marked degree from ordinary standards of decent behaviour.” He noted that if the manager’s conduct had been sufficiently serious that the employer had the right to summarily dismiss her without notice, it would have been improper for the employer to give her a reference letter. Offering a reference letter as a “carrot” to get the manager to resign was “conduct which is properly the subject matter of retribution, deterrence and denunciation.”
The trial judge made this award despite acknowledging that an employer is under no legal obligation to provide a letter of reference. Also, the trial judge did not set out the “independent actionable wrong” that is typically a precondition to an award of punitive damages in a wrongful dismissal case.
In light of this case, employers should re-think the practice of offering an employee an opportunity to resign with a letter of reference in circumstances where the employer would otherwise dismiss for cause.
1[2012 BCSC 133]