Employers must be very careful when dealing with ill or disabled employees. In Keays v. Honda Canada the trial court concluded that the employer dismissed and failed to accommodate an employee suffering from Chronic Fatigue Syndrome (CFS). After some 10 years employment Keays was diagnosed with CFS and went on long term disability. Eventually, his benefits were cut off and he returned to work. Keays’ doctor’s opinion was that his CFS would cause approximately four absences per month. Company doctors were of the view that he was capable of regular attendance. Keays was dismissed for insubordination after objecting to attending a medical assessment by a company specialist.
Keays sued his employer for wrongful dismissal. In the trial of that action, he was awarded 15 months’ salary based on, among others, his position and 14 years of service, and 9 months’ salary because of the employer’s bad faith conduct in the manner of the termination. In addition, however, the court considered the violation of Keays’ human rights a separate actionable wrong, of sufficiently egregious nature, and awarded $500,000 in punitive damages. In a separate decision, the trial court also awarded Keays more than $600,000 in legal costs, including a 25% premium, a very expensive outcome for Honda Canada. The employer appealed.
The Ontario Court of Appeal recently released its long awaited decision. The Employer appealed the conclusion that it did not have“just cause, bad faith conduct in the termination, punitive damages and the costs award. All three appeal judges upheld the trial decision on just cause, bad faith and cost. Those decisions were heavily fact based and the employer failed to show that the trial judge had committed a palpable and overriding error. They agreed that the decision to have Keays see the company doctor, who practiced a “hardball” approach to work place absences, was unreasonable in the circumstances without clarifying the purpose of the meeting. At that time, the company had made up its mind that Keays was malingering and was not suffering from CFS. It was not unreasonable for him to decline to attend the meeting with the employer’s doctor. The appeals court also accepted that Honda Canada’s dismissal was “totally disproportionate” with the alleged insubordination and upheld the 15 months’ notice. The facts also justified the award of an additional 9 months extended notice under the Supreme Court of Canada’s decision in Wallace v. United Grain Growers.In the matter of costs, the appeal court cut the 25% premium in half, from about $160,00 to $80,000, leaving the total cost award at approximately $460,000, still a very substantial award.
On the issue of punitive damages, the court accepted that acts of discrimination contrary to human rights legislation is an actionable wrong giving rise to punitive damages in a wrongful dismissal action. The majority agreed to reduce the award from $500,000 to $100,000 and did not accept the trial judges findings that employer’s misconduct was planned and deliberate and a corporate conspiracy. In the circumstances, punitive damages was appropriate because the employer intended to intimidate and terminate Keays to deprive him of the accommodation he was entitled to. While the employer knew of his vulnerable position and his dependency on his employment for health benefits, the majority did not agree that the employer’s conduct was “malicious”. The amount of punitive damages awarded had to be proportional with the conduct, considering the totality of the award against the defendant employer.