On June 27, 2008, the Supreme Court of Canada released its long-awaited decision in the landmark wrongful termination case of Honda Canada Inc. v. Keays. The Supreme Court over-ruled the decisions of the Courts below, setting aside the significant punitive and Wallace damages award that had been made against the employer.
Keays had worked for Honda for 11 years until he went on disability leave, due to chronic fatigue syndrome. His disability benefits, however, discontinued in 1998 and Keays returned to work. He was subsequently placed in a disability program, which allowed employees to take time off from work, provided they produced a doctor’s certificate confirming that the absence was related to their disability.
Keays’ absences became more frequent, and Honda was not satisfied with the sufficiency of the medical notes provided. Consequently, Honda requested that Keays meet with another doctor of the company’s choice to determine how his disability could be accommodated. On advice from his legal counsel, Keays refused to meet with the company’s doctor, despite being told by the company that such refusal would result in the termination of his employment. Keays was subsequently terminated.
Upon termination, Keays sued the company for wrongful dismissal, aggravated damages, and punitive damages for what he felt constituted discrimination due to disability under the Ontario Human Rights Code.
The Ontario Superior Court found that just cause for Keays’ termination had not been established and awarded a notice period of 15 months. This notice period was then extended to 24 months, based on what the Court found was an “egregious display of bad faith” in the manner that Honda dismissed Keays. Finally, the Court awarded Keays $500,000 in punitive damages, which is the largest punitive damages award in the history of Canadian employment law. On appeal, the Court of Appeal reduced the punitive damages award to $100,000. On further appeal, however, the Supreme Court of Canada over-turned these decisions, in part.
The majority of the Supreme Court found that, while there was no basis to interfere with the lower Court’s assessment of 15 months’ notice, the lower Court’s decision to extend this period to 24 months for Wallace damages was inappropriate in the circumstances. The Supreme Court found that damages resulting from the manner of dismissal will be available only where the employer engages in conduct during the course of dismissal that is “unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive.” The Supreme Court further noted that such damages should be made through an award of actual damages rather than by extending the notice period through Wallace damages . Such damages, however, were found to be inappropriate in this case, since Honda’s conduct was found in no way to be an “egregious display of bad faith.”
Further, with respect to punitive damages, the Supreme Court unanimously found that such damages should not have been awarded. The Supreme Court noted that punitive damages should only be awarded in “exceptional cases” and, in this case, Honda’s conduct was not so egregious or outrageous as to justify such an award. In fact, the the Supreme Court concluded that Honda had not discriminated against Keays but had sought to accommodate his disability.
For the full decision, please visit the link, below: