It is one of the most important concepts in workplace law – or at least it was.
Since 2008, when the Supreme Court presented Canadian workplaces with the Keays decision, employers have played legal hardball with relative impunity. Trumped-up allegations of employee misconduct, bogus reasons for dismissal, malicious references or frivolous defences may be improper conduct, but without an employee’s actual economic losses, courts have been unable to intervene.
Before Keays, employers had an obligation to play nice and behave well at the time of dismissal, or face paying additional “bad faith” damages to a former employee. But, following that case employers went from strength to strength. A recent Alberta Court of Appeal decision illustrates why.
When Calgary stockbroker Kurt Soost was fired from Merrill Lynch for allegedly breaking the brokerage’s rules, he didn’t go quietly. Believing his dismissal was deliberately timed in order to seize his clientele, Soost sued claiming wrongful dismissal and additional damages based on a loss of goodwill, stemming from the fact that the manner of his dismissal cost him most of his book of business.
In 2009, a trial judge awarded Soost a year’s salary plus an additional $1.6 million because the manner of his dismissal affected his ability to retain clients and cost him his book of business.
However, the Court of Appeal recently struck part of that award down in a decision that has many employees shaking their heads. The ruling pointed out that Merrill Lynch was allowed to terminate Soost and that its only mistake was failing to provide him with a fair warning. Since the loss of his clients stemmed from the loss of his job, in awarding Soost a year’s pay, he was fairly compensated, according to the Court.
What does this decision mean for Canadian workplaces? Employees, and their lawyers, should not add zeros to their lawsuits based on the fact they were fired. Rather, evidence of some extraordinary harm caused by the manner of dismissal must be present.
Further, employers, who had feared financial sanction for mishandling terminations, need no longer be so deterred. According to Alberta’s Court of Appeal, this would create a “slacker’s charter,” whether right or wrong.
Daniel A. Lublin is an employment lawyer Whitten & Lublin LLP. He can be contacted at email@example.com.