When an employee sues their former employer for wrongful termination, their claim is usually for what is known as ‘common law notice.’ This amount is roughly a judge’s estimation, given that person’s circumstances, of how long it will take them to find comparable new work.
Determining this amount is an art, not a science. While there is a common misconception of a ‘1 month per year of service’ rule, that has never been the law. A court will review an employee’s age, how long they were with the employer, the nature of the work they were doing, the current job market, and other factors to make their determination.
Employees can claim other amounts in their Statement of Claim as well, such as damages for breach of the Human Rights Code if there was human rights discrimination present. In extreme circumstances of employer bad behaviour, employees may also be able to claim additional funds in the form of aggravated or punitive damages.
What kinds of situations would give rise to aggravated or punitive damages? Well, how about falsely accusing an employee of murder…
The Case
In Koshman v. Controlex Corporation, 2023 ONSC 7045, Mr. Koshman was employed by the Corporation for 18 years and was a Vice President when he was dismissed, originally without cause, in the Fall of 2020. He had a close working relationship with the Corporation’s founder, Mr. Dent, and was instrumental in growing the company. He testified that he had initially planned to retire when he reached age 75.
Sadly, Mr. Dent unexpectedly passed away in July 2020. His widow, Mrs. Dent, who was not previously involved in the business, announced that she would be taking it over. Mr. Koshman was terminated without warning 8 weeks later, without the opportunity to ever meet with Mrs. Dent. Yet the circumstances of those 8 weeks may be the most bizarre of all.
Mr. Koshman learned that Mrs. Dent had been visiting clients and saying slanderous things about his character and instructing clients of the business to deal only with her. She also suggested without basis that not only had Mr. Koshman been taking kickbacks, but that he may
have been responsible for her husband’s death. She also notified clients before his termination that he had been fired and offered his position to one of his subordinates.
Mr. Koshman did not have a written employment agreement, and the lack thereof would have entitled him to common law notice (as outlined above). However, the Corporation paid him only his minimum 8 weeks’ termination pay plus benefits owed under the Employment Standards Act, and Mr. Koshman filed a claim for wrongful termination plus additional damages.
The Decision
Mr. Koshman’s entitlement to reasonable notice was fairly straightforward. He had not found comparable work in the three years since his dismissal, and his advanced age and the slander put forth by Mrs. Dent made re-employment difficult. The Court awarded him 24 months’ pay in lieu of notice, minus the 8 weeks’ pay, plus his benefits and car allowance through that period. The total of notice pay alone was just over $470,000.
Aggravated Damages
The Court addressed Mr. Koshman’s claim for aggravated damages, which it wrote “can be awarded in wrongful dismissal cases where an employer engages in conduct that is unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive.” In this case, not only had Mr. Koshman been relieved of his signing authority without notice, but Mrs. Dent had baselessly accused him of financial impropriety, and even that he was (incorrectly) involved in her husband’s death.
The Court noted that not only did Mrs. Dent up the ante by adding onto her baseless allegations, but she retained and then dismissed four separate law firms before abandoning any defence of the proceedings. The Court awarded Mr. Koshman $50,000 in aggravated damages.
Punitive Damages
Punitive damages are intended not simply to reward the plaintiff for their pain and suffering, but to punish a defendant’s particularly bad behaviour. The Court cited earlier case law, noting that “their purpose is to punish a defendant for conduct that is reprehensible, and a “marked departure from ordinary standards of decent behaviour”. … punitive damages are “restricted to advertent wrongful acts that are so malicious and outrageous that they are deserving of punishment on their own”
In this case, the Court categorized Mrs. Dent’s behaviour as ‘malicious’ and ‘bizarre.’ Her smear campaign against Mr. Koshman aside, she later amended her pleading to claim that Mr. Koshman was terminated for cause, and sought to have him repay the paltry 8 weeks’ pay he had received. She then abandoned the proceedings entirely, which ultimately served to punish the Corporation.
Mr. Koshman was awarded an additional $50,000 in punitive damages for his past employer’s conduct. All told, Mr. Koshman was awarded over $570,000 in damages, with an additional $192,000+ in costs.
Final Thoughts
It is difficult to determine the reasons for Mrs. Dent’s behaviour. While likely grieving her husband’s sudden and tragic passing, she chose to take her emotions out on penalizing one of his employees, for reasons that remain known only to her.
From a legal perspective, Mrs. Dent had options. If she wanted to terminate Mr. Koshman’s employment for whatever reason, she could have done so by providing him either reasonable notice of termination or pay in lieu of notice. Given that Mr. Koshman had no written employment contract, a lawyer might have advised her to offer him upwards of 18-24 months’ pay along with continuation of any benefits, bonuses, or other compensation that he may have received during that time.
Instead, she set out to destroy his reputation callously, even going so far as to accuse him of criminal activity, which completely ruined his chances of re-employment. Even if completely untrue, Mr. Koshman’s name was now affixed to rumours that would have clouded any future opportunities within his industry.
For employers, always seek legal advice before proceeding with a termination. It may not be advice that you want to hear, but a well-structured offer to Mr. Koshman could have at least saved the Corporation the additional damages and legal costs.
For employees, if you feel that you’re getting less than you deserve, a lawyer can help assess the situation and advise you on how to proceed.
Contact our office today to set up a consultation.
