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Employment & Labour

Award for moral damages without medical evidence good news for workers

A judge’s decision to award a fired executive moral damages without requiring medical evidence is a boost for employees, Toronto employment lawyer Sean O’Donnell tells AdvocateDaily.com.

The case, which has not been appealed, involved a woman regarded as a rising star in the boardroom of a major retailer before her unceremonious firing from a senior management position in 2010.

After an eight-year legal battle, an Ontario Superior Court judge ordered her former employer to pay her $750,000, which included $250,000 in moral damages, covering aggravated damages and damages for mental distress, and $500,000 in punitive damages "for the employer's malicious conduct," says O'Donnell.

After a review of related case law, Ontario Superior Court Justice Michael Emery concluded that “the state of the law in Ontario does not require a plaintiff to lead medical evidence to make out a case for damages for mental distress in an employment context.”

Instead, a claim for aggravated or moral damages “should be available to a claimant on all of the evidence given, including the subjective evidence of the plaintiff,” so long as other required elements of the claim are present.

“There have been conflicting decisions on this issue, so it's very encouraging for employees to see a decision that did not rely on medical evidence to find that the employee was impacted by the employer's misconduct and therefore entitled to additional compensation,” says O’Donnell, principal of SJO Legal Professional Corporation.

The woman in the case won a string of promotions at the Canadian arm of an international retailer after it recruited her in 2002, including recognition from the firm’s global head office in the U.S.

Her fortunes changed in early 2010 when the president and CEO of the Canadian division told her she was being removed from her position while promising to find her a new role. The president also downgraded her performance rating without telling her, the decision says.

She wasn’t formally terminated until November 2010 after being left to “twist in the wind” for 10 months, prompting the judge to label the company’s conduct “callous, high-handed, insensitive and reprehensible.”

Justice Emery also condemned the company’s post-termination conduct which included cutting off the woman’s salary and benefits after less than a year following her departure, despite previously agreeing to pay her for a full two years as part of a non-compete agreement to keep her out of work in the same industry.  

In addition, the judge expressed his displeasure with the way the company dragged out the litigation by its repeated failure to meet its disclosure obligations.

O’Donnell explains that the case could have the greatest impact in situations where vulnerable employees allege sexual harassment or assault by a former employer.

“The problem with requiring medical evidence to show that a person suffered from anxiety or depression as the result of misconduct by an employer is that people will not always go to the doctor because they are anxious or depressed,” he says.

“One of the key  issues with mental health is that people can be reluctant to report it because of the stigma associated with it.”

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