Wallace v. United Grain Growers Ltd. (c.o.b. Public Press)
Facts: Wallace, a 59-year-old employee of United Grain Growers Ltd., was dismissed after 14 years with the company. Despite being successful in his job, Wallace was discharged without reasons. Prior to joining the employer, Wallace had been employed with a competing company for 25 years and had only left that job after being induced by the employer. Before joining United, Wallace was assured that if he performed as expected, he would be able to continue working for the company until retirement. Wallace issued a Statement of Claim alleging wrongful dismissal and the employer countered in its Statement of Defence that Wallace had been dismissed for cause. Wallace was required to seek psychiatric help to deal with the emotional difficulties he experienced arising from the termination of employment, the employer's bad faith in dismissal and allegations of cause. Due to his advanced age and emotional fragility, Wallace was unable to secure alternative employment.
Issues: (1) Can an employee sue in contract or tort for a "bad faith discharge"?; (2) Is Wallace entitled to punitive damages for the mental distress he endured arising from United's bad faith in the course of dismissal?
Result: Although an award of damages beyond compensation for breach of contract for failure to give reasonable notice of termination must be founded on a separately actionable course of conduct [Vorvis], employers should be held to a duty of good faith and fair dealing in the manner of dismissing employees. If an employer breaches this obligation, the Court will compensate the employee by adding to the length of the notice period the employer is required to provide to the employee. If an employee can establish that an employer engaged in bad faith conduct or unfair dealing in the course of dismissal, the resulting injuries, such as humiliation, embarrassment and damage to the employee's self-worth and self-esteem, may be compensated by the Court. When dismissing employees, employers should be candid, reasonable, honest and forthright. Employers must avoid engaging in unfair behaviours that are indicative of bad faith, such as being untruthful, misleading or unduly insensitive. The fact that a dismissed employee was induced to leave their prior secure employment is a consideration that may lengthen the amount of notice an employer is required to give. However, the Court will not imply into the employment contract a term that the employee cannot be fired except for cause or legitimate business reasons. Canadian courts have not yet recognized a tort for an employer's breach of good faith and fair dealing obligations in the course of dismissal.
Position: Salesman
Age: 59 years of age
Salary: $78,859.13
Length of Service: 14 years
Result (award): 24 months salary in lieu of notice for wrongful dismissal; $15,000.00 in aggravated damages for mental distress and loss of reputation.