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CCCA_V3No1_Decisions-FIN.qxd:CCCA_V1No1_DriversSeat-FIN.qxd 1/21/09 3:04 PM Page 32 Feature Employment law in Canada received a major overhaul in 2008, as the Supreme Court of Canada released no fewer than four major employment law rulings. Corporate counsel likely will find most of them to their liking. W hen the Supreme Court of Canada hands down an employment law decision, corporate counsel usually take note of how the ruling will affect company policies. So when Canada’s top court released no fewer than four employment law rulings in 2008, in-house lawyers sat up straight and pored over a watershed year of cases that will have a lasting impact on business. The Supreme Court released several important cases last year: Honda v. Keays on wrongful dismissal, Hydro-Québec v. Syndicat des employé(e)s on reasonable accommodation, RBC v. Merrill Lynch regarding damages for breach of employees’good faith duties,and Evans v.Teamsters Local Union No. 31 on the duty to mitigate. Each ruling has the potential to directly affect a corporate employ- er’s dealings with its employees on a range of matters, and in-house counsel need to be fully aware of their findings and implications. Honda v. Keays Peter Wilson Many consider Honda v. Keays the most important employment General Counsel law decision in years. It put the brakes on the widespread practice Unisys Canada of paying Wallace damages to employees, which have been added Toronto to awards against employers since the Supreme Court handed down its decision in Wallace v. United Grain Growers Ltd. in 1997. “From a corporate counsel’s point of view, it’s a breath of fresh wrongful dismissal,” such as the employee’s age, years of service, air,” says Peter Wilson, general counsel and secretary of Unisys position and the availability of alternative employment. But he Canada in Toronto and co-author of the book Corporate Counsel thinks the court in Wallace should have used the classic contrac- Guide to Employment Law. He says the decision “goes a long way tual analysis of what constitutes aggravated damages, and then, if to basically negating the whole Wallace damage industry.” the factors for aggravated damages were present, a lump-sum There has been ongoing confusion in the jurisprudence over the award should be made on that basis. difference between Wallace damages and punitive damages, Wilson But the majority in Wallace “decided that they were going to says.An employer’s conduct must be extremely egregious to meet the tag on the award in addition to the notice period,”he says.“[E]ver test for punitive damages, but many employees who haven’t received since, virtually every plaintiff’s claim or wrongful dismissal claim punitive damages have gotten Wallace damages because of the offen- has had a claim for so-calledWallace damages in extension to the sive or inappropriate manner in which they were terminated. notice period.And the way it’s been interpreted by the courts — Now,he says,a terminated employee will have to prove that he or at least applied by the courts in general — is that it’s simply or she “suffered some kind of material loss or distress as a conse- another form of punitive damages.” quence of having been terminated.” In Honda v. Keays, an 11-year employee was diagnosed with Wilson believes the court’s rationale in Wallace “deviated from chronic fatigue syndrome. After receiving disability benefits he fundamental principles that have always been held with respect to returned to work, but his employer became concerned about his determining what a reasonable notice period should be in a frequent absences and asked him to meet its occupational medical 32 CCCA Canadian Corporate Counsel Association SPRING 2009