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The Federal Court recently upheld a Canada Labour Code (CLC) Adjudicator's decision to award $85,000 in aggravated damages and $100,000 in punitive damages to a dismissed employee in Tl’Azt’En First Nation v. Joseph, 2013 FC 767.

The employee had worked for the employer for more than thirty years prior to his dismissal. At the time of his termination, he was the director of the employer's health department. All of his activities were subject to oversight and approval by either Mr. Gregg Drury, the executive director, or the Chief and Council.

After the employee, along with two other senior members of the health department, sent a letter to Mr. Drury criticizing his management style, Mr. Drury began to target him with unsupported accusations of fraud and mismanagement. Aggravated by the relentlessly threatening and harassing conduct of Mr. Drury, the employee's health deteriorated to the point that he was compelled to take medical leave under the care and supervision of his doctor.

While the employee was on medical leave, Mr. Drury continued his vicious campaign of intimidation. For example, he wrote letters to the employee accusing him of insubordination for visiting his doctor, and of intentionally attempting to defraud the employer in his calculation of sick leave benefits.

When the then Chief of the employer terminated Mr. Drury for reasons relating to improprieties in his management and administration of the applicant's affairs, Mr. Drury mounted a political campaign against the Chief, including a memorandum to the Council in which he made fabricated and malicious accusations regarding the employee, including:

  1. criminal wrongdoing in his oversight of expenditures;
  2. insubordination to the "authority chain of command";
  3. forcing an employee to illegally remove files from his office and burning the files;
  4. blackmailing the Chief; and
  5. sexually assaulting another employee.

The accusations were widely distributed within the community and throughout the region. They destroyed the employee’s reputation in the community and his professional standing among government agencies.

The Adjudicator found that the accusations were false, and that the employer knew that the allegations were "completely baseless."

The Federal Court concluded that the case law supports the adjudicator’s decision to award aggravated damages to compensate the respondent for, "consequential damage to his prospect of future employment, to his mental and physical health and well-being, to his integrity and dignity, and to his personal and professional reputation".

The Federal Court also upheld the punitive damage award on the basis of the "reprehensible and bad faith conduct of the [employer]." The Court, oddly, did not set out what the "independent actionable wrong" was that justified punitive damages, despite that point being argued by the employer.

This case echoes the Ontario Divisional Court's 2011 decision in Greater Toronto Airports Authority v. Public Service Alliance Canada Local 004 ("GTAA"), where the Court weighed in on an arbitrator's award of significant damages against an employer who was found to have acted in bad faith in the course of a dismissal. These damages included $50,000 for pain and suffering, and $50,000 in punitive damages.

The Court upheld parts of the arbitrator's award, but also concluded that the arbitrator had made some errors that needed to be corrected in order to calculate the proper amount of the award. Taken together, these cases demonstrate that arbitrators are taking aggravated damage requests more seriously, and highlight the importance of conducting dismissals in good faith.


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This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2021 Nelligan O’Brien Payne LLP.

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