What are aggravated damages in wrongful dismissal?

Aggravated damages compensate an employee for mental distress or other intangible harm caused by an employer’s bad-faith or unfair manner of dismissal (e.g., humiliation, loss of dignity). They are compensatory—not a punishment—and must be grounded in evidence that the employer’s conduct caused the harm.

What are punitive damages and when are they awarded?

Punitive damages are exceptional and are awarded to denounce and deter wrongful, malicious, or high-handed conduct that is an independent wrong deserving punishment. They are not to compensate the employee and are only awarded where compensatory and aggravated damages are insufficient to achieve denunciation and deterrence.

How do aggravated damages differ from punitive damages?

Aggravated damages are compensatory and tied to proven injury (such as mental distress) resulting from bad-faith dismissal conduct. Punitive damages are non-compensatory and are reserved for reprehensible conduct that warrants punishment and deterrence. Both may be awarded in the same case, but on distinct rationales.

What did Honda v. Keays change about the old 'Wallace bump'?

The Supreme Court in Honda v. Keays replaced the automatic 'Wallace bump' extension of notice with a proper damages analysis. Bad-faith dismissal can lead to aggravated (moral) damages, but these must be proven as compensatory loss rather than added months of notice by default.

How does Bhasin v. Hrynew affect employment damages?

Bhasin confirmed an organizing principle of good faith in contract law and a duty of honest performance. In employment, dishonesty or misleading conduct around dismissal can support compensatory aggravated damages and, in rare cases, punitive damages where the conduct is sufficiently egregious.

What evidence helps establish aggravated (moral) damages?

Courts look for credible evidence linking the employer’s conduct to the harm: detailed testimony, contemporaneous records, medical or therapeutic notes where available, and corroboration. Medical evidence is helpful but not strictly required if the harm and causation are otherwise proven.

Can an employee receive both aggravated and punitive damages?

Yes, but only where criteria for each are met. Aggravated damages address proven injury caused by bad-faith dismissal; punitive damages are reserved for separate, reprehensible conduct requiring punishment and deterrence. Courts ensure the overall award is proportionate and not duplicative.

What ranges do Ontario courts often award for aggravated damages?

Amounts vary with the facts and proof of harm. Awards have commonly ranged from modest sums to the low-to-mid five figures where evidence supports meaningful distress tied to the dismissal conduct. Larger awards may be possible and turn on the severity and impact of the employer’s behaviour.

Contents

Damages Hub: Aggravated, Punitive, Bhasin & Wallace Part 2

Damages Hub: Aggravated, Punitive, Bhasin & Wallace Part 2

Use this hub to navigate Canadian employment law cases and commentary on aggravated (mental distress), punitive (reprehensible conduct), and duty-of-honest-performance (Bhasin) damages in dismissal litigation.

Aggravated (Mental Distress) Damages

What they are: Compensatory damages for mental distress caused by the employer’s conduct in the manner of dismissal (e.g., bad faith, unfair or insensitive treatment). Often anchored by Honda v. Keays.

Leading Principles

Require proof of mental distress linked to the manner of dismissal.
Independent of reasonable notice; not a “top-up” of notice.
Medical evidence helpful but not always strictly required if the record shows real and serious distress.

Punitive Damages

What they are: Non-compensatory damages to punish and deter malicious, oppressive, or high-handed employer conduct (think Whiten v. Pilot). Awarded only where compensatory damages are insufficient to achieve denunciation/deterrence.

Leading Principles

Exceptional remedy; requires reprehensible conduct.
Proportionality to overall award and misconduct.
Often considered alongside aggravated damages but serve different purposes.

Good Faith / Bhasin Damages

What they are: Damages flowing from breach of the duty of honest performance in contracts (Bhasin v. Hrynew; Callow). In employment, focus is on honesty and fairness in performance and termination communications.

Leading Principles

Duty of honest performance: no lying or knowingly misleading the other party.
Remedy aims to put the employee in the position had the duty been fulfilled honestly.
Distinct from aggravated damages (which address mental distress) and from punitive (which punish).

Practical Takeaways

For Employers

Plan and document the manner of dismissal; avoid conduct that risks aggravated/punitive exposure.
Be accurate and candid in communications (honest performance).
Train HR and managers on termination scripts and post-termination references.

For Employees

Keep contemporaneous notes and records of employer communications and conduct.
Seek medical corroboration for mental distress where appropriate.
Identify whether conduct fits aggravated, punitive, or Bhasin categories — or a mix.

Linked Case Index

Browse all related cases and commentary below.

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