It is well established that employers owe an obligation of good faith and fair dealing at the time of terminating an employee. This obligation requires employers to be reasonable, honest and to refrain from bad faith actions. The failure to act in such a manner can result in significant damages against the employer. In the case of Ojanen v. Acumen Law Corporation, 2021 BCCA 189, the bad faith actions of one employer resulted in an astonishing damages award.
In Ojanen v. Acumen Law Corporation, 2021 BCCA 189, Acumen Law Corporation (“Acumen”) was found to have acted unlawfully in terminating an articling student. Specifically, their actions in terminating the employee were described as “unnecessary and psychologically brutal” and their response to certain actions by the employee were found to be “disproportionate and bullying”. The result of Acumen’s actions was an outstanding damages award made against them in the amount of $193,944.
This interesting case serves as a stark warning to employers to act respectfully, particularly at the time of termination, or risk a significant damages award.
Ojanen was employed at Acumen as an articled student. Only a few months into Ojanen’s articling period, issues arose between her and her employer to the point where Acumen believed they had cause to terminate her employment. Acumen claimed cause on the basis that Ojanen was (a) setting herself up to compete with Acumen by creating a law blog; and (b) that she had committed theft while attending the office after hours. Instead of discussing either of the aforementioned issues with Ojanen, Acumen decided to terminate her employment for cause. While this decision is concerning in itself, as cause is a high threshold to meet, the real issue relates to the manner in which Acumen terminated Ojanen. Acumen terminated Ojanen by serving her with a letter and a lawsuit for a claim of theft while she was attending the mandatory legal training course all articling students must complete to become lawyers. Shockingly, these documents were served on Ojanen in front of all her classmates.
Ojanen commenced a lawsuit for wrongful dismissal. She was successful at trial and was awarded $18,934 for breach of the employment contract and $50,000 for aggravated damages.
Acumen appealed the award on the basis that Ojanen was not wrongfully dismissed. Ojanen cross appealed seeking punitive damages and general damages for the loss of opportunity to become a lawyer. Acumen’s appeal was unsuccessful. The Court of Appeal decided in favour of Ojanen and increased the award owed to Ojanen by an outstanding $125,000 for a total of $193,944, along with costs of the appeal and cross appeal.
GENERAL DAMAGES INCREASED BY $100,000
Ojanen sought damages for loss of opportunity to become a lawyer. Both the trial judge and Court of Appeal agreed that the wrongful termination of her employment, together with the lawsuit, rendered Ojanen unemployable in the legal profession for as long as the allegations against her remained outstanding. However, the trial judge declined to make an award on the basis that any award in that sense would be speculative. The Court of Appeal disagreed. It found that even though a loss cannot be determined or calculated with certainty, this does not relieve the defendant of the responsibility to pay damages for a loss of opportunity resulting from the breach of contract. Accordingly, the Court of Appeal assessed damages for loss of opportunity to become a lawyer and concluded that Ojanen was entitled to an award of $100,000 for loss of opportunity in addition to the $18,934 general damages previously awarded to her.
PUNITIVE DAMAGES OF $25,000
Punitive damages are awarded to punish a wrongdoer and deter the wrongdoer and others from engaging in similar conduct in the future. The Court of Appeal considered Ojanen’s claims for punitive damages and concluded the damages awarded to Ojanen thus far were not sufficient to accomplish the objectives of punitive damages. The Court considered the conduct of Acumen to be high-handed, malicious, arbitrary or highly reprehensible misconduct that departed to a marked degree from ordinary standards of decent behaviour. As such, the Court ordered an award of $25,000 for punitive damages.
While a public firing of an articling student by a law firm may seem like a relatively specific incident, there are some important points that all employers should take note of from this case.
Damages for future loss of opportunity can be significant
As was seen in this case, loss of opportunity awards can (a) far exceed what an employer likely would have paid an employee had they terminated them lawfully; and (b) may be awarded even if the amount can’t be calculated with precision. It is important to note though that awards for loss of opportunity can’t just be for the loss of any opportunity, it must have been within the reasonable contemplation by the parties when they entered into the employment contract.
Difficulty of just cause terminations
While it’s apparent the working relationship was not perfect between Ojanen and Acumen, there is always a duty of good faith on behalf of the employer in terminating an employee. This is because in these situations the employee is seen as being in a particularly vulnerable position. Just cause terminations, while they may seem logical and well-reasoned to the employer at the time, should always be approached with caution. Just cause is a high threshold to meet. Had Acumen sought advice on how to appropriately address the situation, it’s possible that a very different outcome may have occurred.
If you have any questions about this case or terminations for cause, please contact one of the members of our Employment Law Team.