As illustrated in the recent British Columbia Supreme Court decision Chu v China Southern Airlines Company Limited, 2023 BCSC 21, efforts to unfairly deprive employees of their severance can be more expensive than the severance itself. In this case, the employer’s conduct both before and after termination resulted in an award of aggravated and punitive damages of $150,000, 3x the court’s notice award, which the airline attempted to avoid (unsuccessfully) through their conduct.
Background
The Plaintiff, Mr. Chu, had worked for South China Airlines (“SCA”) since 2008 as a Marketing and Business Development Manager, reporting to the General Manager. In 2017, a new General Manager was brought on, with whom Mr. Chu evidently did not get along. The court found that the new GM “embarked upon a campaign designed to manufacture cause for dismissal or induce the plaintiff to resign”. During the time from the GM’s hire to the time of the plaintiff’s termination, the plaintiff was subjected to numerous unmerited reprimands with threats of dismissal, undue criticism, and two consecutive unjustified demotions.
The Plaintiff was eventually terminated for cause for his performance and allegations that he had engaged in time theft. He was sixty-eight (68) at the time of termination.
Wrongful Dismissal
The court was not persuaded by SCA’s various allegations of incompetence, and found that SCA’s own internal documents only highlighted their unreasonable approach. It found that the Plaintiff had been wrongfully dismissed and awarded him twenty (20) months of pay in lieu of notice, largely driven due to his age and niche area of employment.
Aggravated and Punitive Damages
More significantly, the court found that the Defendant had flagrantly breached its duty of good faith and fair dealing in the manner of the Plaintiff’s termination. These actions notably included:
- Unfairly disciplining and insulting the employee, at times publicly
- Carrying out discipline in humiliating and embarrassing ways
- Humiliating the employee by unliterally demoting him to an entry-level position, with a substantial reduction in salary
- Creating an inaccurate and self-serving disciplinary record to be used to justify termination
The court accepted that the Defendant’s behaviour was intentional, and had the effect of degrading and humiliating the Plaintiff which extended far beyond the emotional upset and injured feelings that can accompany a termination.
Given the wide range of misconduct the Defendant had engaged in for a protracted duration of time, as well as the vulnerability of the employee at 68 years of age, the court awarded the Plaintiff $50,000 in aggravated damages and $100,000 in punitive damages for the Defendant’s harsh actions.
Conclusion
While the courts do not penalize employers for asserting cause in good faith, this case made clear that dealing with an employee dishonestly, unreasonably, or unfairly can attract sizable damages in addition to the rightfully owed severance the employer may be attempting to avoid.
We regularly advise employers on difficult terminations. Should you have any questions, please do not hesitate to reach out to the team at Rodney Employment Law at [email protected] or complete our contact form here.