Chu v China Southern Airlines Company Limited, 2023 BCSC 21 (BCSC) is a new case where a terminated employee received a stunning wrongful dismissal award, in large part due to the employer’s many false allegations of incompetence and misconduct.
This case should serve as a reminder to employers that making weak or false allegations of just cause can have serious consequences. This is not an Alberta case, but it could be used as persuasive authority here as well.
Facts
The following are the pertinent facts found by the Court:
- The plaintiff employee worked for the defendant as a contractor for about 3 years prior to formally becoming an employee
- The employee then worked for the defendant as marketing and business development manager for about 8 years, and was 68 years old when his employment was terminated
- About a year before termination of his employment, a new GM was put in place above him. Prior to that, there were no complaints about his work
- The new GM was dismissive of his role and embarked on a campaign to manufacture cause for dismissal of the plaintiff’s employment or to cause him to resign. This included criticism of his work, unjustified reprimands, threat of dismissal, a demotion (which he accepted), a further demotion, the imposition of a new probationary period, and then dismissal, purportedly for just cause including “time theft” and “completely unacceptable performance”
- The employee sued for wrongful dismissal, aggravated damages and punitive damages
- The defendant employer’s statement of defence contained many serious but unfounded allegations. A few of these unfounded allegations were withdrawn prior to the trial: fraud, theft of model airplanes and sexual harassment in the workplace
Analysis / Conclusion
The Court first considered the allegations of “incompetence”. The Court noted that “mere dissatisfaction with an employee’s performance is insufficient to ground just cause for dismissal”, and there was no cause on the basis of incompetence in this case because he was not incompetent in the job he held prior to his demotions, and the defendant knew he would not be able to do the jobs he was demoted into because he had no experience there. Further, his mistakes in those roles were minor.
As noted in the facts above, the Court found that after the new GM started, all the criticism, reprimands, threats of dismissal demotions, etc., were part of a campaign to manufacture just cause.
The Court went on to reject several further allegations of misconduct that were made only after termination of employment, because there was no evidence supporting them.
On the issue of just cause for dismissal, the Court concluded:
[120] The defendant has singularly failed to establish just cause for dismissal without notice. All of its allegations are either entirely unsupported by evidence or lacking in any merit. Accordingly, the plaintiff is entitled to damages for wrongful dismissal.
In calculating reasonable notice of termination, the following is some of the reasoning:
- The Court considered the demotions near the end of the employee’s employment to be part of the process of termination, and chose his position from prior to the demotions as the relevant one for the purpose of determining the “character of employment”
- The Court noted that he was an employee for 8 years, but took “into account” the fact that he had been a contractor for 3 years prior to that, for the purpose of calculating length of service
- The employee’s experience was in a relatively niche area
The Court awarded a whopping 20-month reasonable notice severance period.
The Court then considered the issue of aggravated damages. The Court determined that the employer’s campaign of trumped-up just cause, poor treatment of the employee, and serious but false allegations in its litigation pleadings were a breach of its duty of good faith toward the employee. The Court also found these things had a significant emotional impact on the employee. The Court awarded aggravated damages of $50,000 in this regard.
The Court then considered the issue of punitive damages. The Court found that: the employer’s actions were highly blameworthy, the employee was a vulnerable individual who experienced profound harm as a result of the employer’s actions, the employer was a very large corporation, and deterrence and denouncement were necessary. The Court awarded punitive damages in the amount of $100,000.
My Take
This case is a stunning example of what an employer should not do. Employers are always tempted to assert just cause for dismissal, because if they succeed then there is nothing owed to the employee. But Courts are well aware of this motive and highly skeptical of just cause allegations.
Courts also have a great deal of discretion when it comes to damages. Making a Judge angry with poor behavior is a good way to get slapped with a high notice period, and high aggravated damages and punitive damages. The amounts of damages are within the discretion of the Court, within ranges of course. However, those ranges are fairly broad, so making the Court angry with a ton of flimsy cause allegation is a very bad idea.
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Bow River Law is a team of knowledgeable, skilled and experienced lawyers handling employment law, human rights (discrimination) and labour law matters. Bow River Law is based in Calgary but we are Alberta’s Workforce Lawyers.
