While employers in Ontario have a right to terminate their employees, there is also a requirement that the termination is done in good faith. If employees are treated poorly by their employer during the course of their termination, there can be serious financial penalties for the offending employer. In the recent Ontario Superior Court of Justice decision of Galea v. Wal-Mart Canada Corp., 2017 ONSC 245, the Court awarded a combined $750,000.00 for moral and punitive damages. This award of damages is one of the highest in this area of law in Canada.
Ms. Galea was hired by Wal-Mart in August, 2002 as a District Manager-in-Training. Over the course of her employment, Ms. Galea received numerous promotions and was considered a valued employee. In 2005, she was required to sign a non-competition agreement when she was promoted to General Merchandise Manager. The non-competition agreement prevented her from working for other mass retailers for 2 years after her termination, during which time Wal-Mart would continue to pay Ms. Galea.
In 2008, Ms. Galea was promoted to Vice-President, General Merchandise.
On January 29, 2010, Ms. Galea was informed that the position of Vice-President, General Merchandise was removed as part of restructuring. Wal-Mart assured her she was still a valuable employee and that it would find her another position. However, no other job offers were made to Ms. Galea. At one point, Wal-Mart announced in front of 500-600 people that Ms. Galea would be working as Senior Vice-President Merchandising-Strategic Initiatives – a demotion from her previous position. Even with this announcement, Ms. Galea was not assigned any responsibilities or any further roles within the company once that position did not materialize. During this time, Wal-Mart also changed her employee ranking to list her as not currently promotable.
Upon Ms. Galea’s return from an 8 week course at Harvard on November 1, 2010, she found that her personal effects had been packed up and moved to a different office and her telephone had been disconnected.
Ms. Galea’s employment was terminated on November 19, 2010. Walmart paid Ms. Galea her base salary for 11.5 months following her termination. Ms. Galea brought an action for wrongful dismissal, including moral and punitive damages.
The Court held that the non-competition agreement was an employment contract and that Ms. Galea was entitled to the remainder of the 2 years notice, in addition to a payment in lieu of her benefits, a payment for her incentive plan, and payment for her Executive Retirement Plan.
In regards to damages, as mentioned above, the Court awarded moral damages of $250,000.00 and punitive damages of $500,000.00.
The Court found the Wal-Mart breached its implied duty of good faith to Ms. Galea between January 29 and November 19, 2010 and it caused her mental distress. During litigation, the Court also found that Wal-Mart either purposefully or indifferently delayed matters, which caused Ms. Galea mental distress beyond that of hurt feelings that accompanies a termination. The Court found that Wal-Mart’s conduct was “misleading at best, and dishonest at worst, in the way the company treated Ms. Galea.” Ms. Galea was kept in “suspended animation”, which was unduly incentive by Wal-Mart.
The Court found that Wal-Mart’s treatment of Ms. Galea between January 29 and November 19, 2010 was callous, highhanded, incentive, and reprehensible. The Court summed up Wal-Mart’s behaviour by stating, “It is not that Wal-Mart set Ms. Galea up to fail; it is that Wal-Mart built her up, only to let her down that much more. That corporate behaviour was not just unduly insensitive, it was mean.” The Court awarded a higher amount of punitive damages to deter Wal-Mart from behaving in a similar way in the future.
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