Intentional Mistreatment of Employee Leads to Damages

Mercey v. Consolidated Recycling Inc. (c.o.b. Metro Recycling) – Ontario Superior Court of Justice – September 14, 2007

Court demonstrates that deliberate mistreatment of an employee by an employer in order to encourage the employee to resign will not be tolerated.

The Ontario Superior Court of Justice’s decision on September 14, 2007 in Mercey v. Consolidated Recycling Inc (c.o.b. Metro Recycling) [2007] O.J. No. 3608 (“Mercey”) is an important case that should be brought to the attention of all employers and employees. It demonstrates that the Courts will not tolerate an employer’s deliberate mistreatment of an employee in order to encourage the employee to resign from their employment.

In Mercey, the employee had been sexually assaulted by a co-worker after regular work hours and off company premises. Until the co-worker was criminally charged with sexual assault, the employer did not take any effective steps to keep the co-worker away from the employee at the workplace. After the co-worker was convicted, the employer gave the co-worker one week’s suspension with pay and moved him to another job location.

After the co-worker’s removal, the employee was criticized, ostracized and demeaned at her workplace, causing her to have physical and psychological reactions. As a result, the employee stayed at home, received appropriate care from her family physician and a psychiatrist. Three months after the sexual assault occurred, the employee resigned from her position claiming that the treatment she was receiving at work resulted in her being constructively dismissed. The employee brought a claim of wrongful dismissal seeking damages in lieu of notice, bad faith damages, punitive damages and damages for intentional infliction of mental suffering.

The Trial Judge found that the employee had been constructively dismissed and awarded one month’s pay in lieu of notice. Additionally, the Trial Judge decided that there should be awards for both bad faith and punitive damages, while the damages for intentional infliction of mental suffering were dismissed.

The award of bad faith damages was based on the Trial Judge’s view that “The conduct that the [employer] exhibited, and which representatives of the [employer], even today refuse to accept as having taken place, was calculated to cause [the employee], a person who had to be known to be strong willed and stubborn, to knuckle under. The conduct of the [employer] therefore, had to be egregious and it was. It was a nasty piece of work designed solely for the purpose of trying to get the –troublemaker’ out, and the –rainmaker’ back.” This conduct, in the view of the Trial Judge, was worthy of a finding of bad faith damages against the employer in the amount of six month’s wages.

Punitive damages were also awarded to the employee for the employer’s actions in the amount of $10,000. The Trial Judge justified this award by finding that the employer “set about a deliberate course of conduct, for business and profit motives only, to favour the interests of the –rainmaker’…over the [employee]. Their conduct, as I have already indicated, was reprehensible; it is deserving of censure. Conduct of that sort must be deterred; punitive damages are one way to do that.”

The Mercey decision demonstrates how the Courts will handle situations where there has been intentional mistreatment of either party of an employment relationship. Within the employment relationship there is the duty for both employers and employees to treat one another with respect and dignity. However, if this duty is not fulfilled by the employer, then the Courts may award the employee bad faith and punitive damages. Both employers and employees should be mindful of this decision and be conscious of what duties they owe to those who are in an employment relationship with them.

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