The Court also held that the reasonable notice period could be extended if the employer engaged in bad faith conduct in the relation to the termination. However, the Supreme Court of Canada overruled the Wallace decision in Keays v. Honda Canada Inc.5 In Keays, the Court held that an employer's bad faith or misconduct should be considered under other heads of damage, such as aggravated or punitive damages and/or mental distress.
Intentional Inflection of Mental Suffering (IIMS)
There are three elements to the tort of intentional infliction of mental distress:
- Flagrant or outrageous conduct;
- Calculated to produce harm; and
- Resulting in a visible and provable illness6
The operative feature of this tort is intent. This tort most commonly arises in cases where there is psychological harassment or bullying in the workplace.
NOTE: Not every allegation of just cause that is not successful at trial will result in a Wallace increment of damages. So long as an employer has a reasonable basis on which to believe it can dismiss an employee for cause, the employer has the right to take that position without fear that failure to succeed on the point will automatically expose it to a finding of bad faith.
Negligent Infliction of Mental Distress
In the recent case of Pieresferreira v. Ayotte, the Court of Appeal concluded that this particular tort is no longer available in the employment context. The decision was based on public policy, and the way in which the continued recognition of this tort allowed a "considerable intrusion by the courts into the workplace."7
Damages for Inducement
Inducement occurs when an employer or its agent, convinces or entices a person employed elsewhere, to leave their secure employment and become an employee of their business; shortly after the employee transitions into the new position, the employee is dismissed.
This tort arises in cases where there is evidence to establish enticement, or that the employee gave up another job, his/her own company and business contacts, or a secure source of remuneration in order to join a new company. The inducement must go beyond an ordinary degree of persuasion. An employee who willingly leaves a secure job in order to pursue a new opportunity is not necessarily induced to do so.8
In the employment law context, contributory negligence may be framed as a consideration of whether or not the terminated employee has mitigated their damages.
A plaintiff claiming wrongful dismissal must take all reasonable steps to mitigate the loss to themself and cannot recover damages for any such losses that could have been avoided, but has failed through unreasonable action or inaction, to avoid. Where the plaintiff does not take steps to mitigate the loss, and these steps are successful, the defendant is entitled to the benefit of accruing from the plaintiff's action, and is liable only for the loss as lessened.
1 1996 CanLII 10543 (AB QB),  A.J. No. 1087 (QL) (Q.B.).
2 Vorvis v. Insurance Corp of British Columbia,  1 S.C.R. 1085 (S.C.C.).
3 CED Employment Law III.9.(d).(ii).P (Ontario)Employment Law (Ontario).
4 Vorvis v. Insurance Corp. of British Columbia (1989), 36 B.C.L.R. (2d) 273 (S.C.C.);
5 2008 CarswllOnt 3743, 2008 CarswellOnt 3744, 66 C.C.E.L. (3d) 159 (S.C.C.) [hereinafter Keays].
6 Prinzo v. Baycrest Centre for Geriatric Care (2002), 60 O.R. (3d) 474 (Ont. C.A.) at 48.
7 Pieresferreira v. Ayotte, 2010 ONCA 607 (CanLII).
8 Dickinson v. Northern Telecom Canada Ltd. (1985), 7 C.C.E.L. 139.