Moral Damages — Ontario Employment Law

14 casesDecisions from 2008–2023

About Moral Damages

When an Ontario employee is terminated, they are typically entitled to notice or pay in lieu of notice. But what happens when the way an employer handles the dismissal is exceptionally unfair, dishonest, or insensitive? This is where moral damages come into play. Moral damages are a distinct category of financial compensation awarded by a court to an employee for the mental distress they suffered due to the employer's bad faith conduct during the termination process. It's crucial to understand that these damages are not for the distress of losing a job itself, which is a normal, albeit difficult, life event. Instead, they compensate for the additional, foreseeable psychological harm caused by the employer’s poor conduct.

The legal foundation for modern moral damages in Canada comes from the Supreme Court case Honda Canada Inc. v. Keays. This decision clarified that to receive moral damages, an employee must prove two things: first, that the employer engaged in conduct during the dismissal that was unfair or in bad faith—such as being untruthful, misleading, or unduly insensitive. Second, the employee must show they suffered mental distress beyond the normal hurt of being fired, and this distress was a foreseeable consequence of the employer's actions. Examples of conduct that can lead to moral damages include making false allegations about the employee's performance, terminating them in a humiliating public manner, or misleading them about their entitlements. Unlike punitive damages, which are meant to punish the employer, moral damages are focused on compensating the employee for their actual suffering. Because every termination is unique, determining whether an employer's conduct warrants moral damages requires a careful look at the specific facts and evidence, often making professional legal guidance invaluable.

Frequently Asked Questions

What is the difference between moral damages and severance pay in Ontario?

Severance pay (or termination pay/pay in lieu of notice) compensates you for the loss of your job and the time it should take to find new work. Moral damages are separate and additional compensation for the mental distress caused by your employer's bad faith conduct during the termination process.

How much are moral damages typically worth?

There is no set amount. Awards in Ontario often range from $15,000 to over $50,000, but can be higher or lower. The final figure depends on the severity of the employer's bad faith conduct and the extent of the mental distress it caused the employee.

Do I automatically get moral damages if I was wrongfully dismissed?

No. A wrongful dismissal simply means you were terminated without adequate notice. To get moral damages, you must also prove that your employer acted in bad faith in the manner of your dismissal, causing you foreseeable psychological harm.

What kind of employer behaviour can lead to a moral damages award?

Conduct such as lying about the reason for termination, making unfounded accusations of misconduct, terminating an employee while they are on a protected leave in an insensitive way, or publicly humiliating an employee during their dismissal can all be grounds for a moral damages claim.

Is there a time limit to claim moral damages in Ontario?

Yes. A claim for moral damages is part of a civil lawsuit for wrongful dismissal. In Ontario, you generally have two years from the date of your termination to file a claim under the Limitations Act, 2002.

How are moral damages different from punitive damages?

Moral damages compensate the employee for their mental suffering. Punitive damages are intended to punish the employer for malicious, oppressive, or highly reprehensible conduct and to deter others from similar behaviour. It is possible, though less common, to be awarded both.

When should I consult a lawyer about a potential moral damages claim?

You should speak with an employment lawyer if you believe the way you were fired was intentionally cruel, dishonest, or humiliating, and it caused you significant emotional or psychological distress beyond the normal upset of losing a job.

Common Scenarios

  • A senior manager is terminated for 'restructuring' but is escorted out by security in front of her team, and the company later tells clients she was fired for cause.
  • An employee on long-term disability leave receives a termination letter filled with insensitive language that questions the legitimacy of their medical condition.
  • After 28 years of loyal service, a worker is dismissed and the employer falsely promises a positive reference letter, only to provide a negative one that hinders their job search.
  • A retail employee is fired in the middle of the store floor during business hours and is falsely accused of theft in front of customers and colleagues.
  • An employer terminates an employee and pressures them into signing a lowball severance offer by threatening to ruin their reputation in the industry if they don't.

What You Should Know

Featured Cases

Teljeur v. Aurora Hotel Group

2023 ONSC 1324 (CanLII) · 2023-02-23

Wrongful Dismissal: General Manager Awarded Notice and Moral Damages

A wrongful dismissal case involving a General Manager terminated without cause after three years of service. The court awarded seven months of reasonable notice, 10% of compensation for lost benefits, and $15,000 in moral damages for bad faith dismissal.

employment contract moral damages reasonable notice period senior manager wrongful dismissal

Rutledge v Markhaven Inc.

2022 ONSC 3183 (CanLII) · 2022-11-15

Wrongful Dismissal: Executive Director Awarded Notice and Damages

A wrongful dismissal case involving an Executive Director dismissed after an investigation into a conflict of interest and a romantic relationship with a subordinate. The court found no just cause for dismissal and awarded 22 months' notice and $48,230 in additional entitlements, as well as $50,000 in bad faith damages.

fiduciary duties moral damages notice wrongful dismissal

Pohl v. Hudson’s Bay Company

2022 ONSC 5230 (CanLII) · 2022-09-15

28-Year Employee Wrongfully Dismissed: 24 Months' Notice, $45,000 in Damages

A wrongful dismissal case involving a 28-year employee terminated without cause. The court assessed the common law notice period using Bardal factors and awarded 24 months' notice. The employer's conduct during termination, including misleading and insensitive behavior, led to an award of $45,000 in moral damages. The employer also faced punitive damages of $10,000 for statutory breaches. The court found no damages for a temporary pay cut and no reduction in damages for the plaintiff's mitigation efforts.

bardal factors moral damages punitive damages reasonable notice period wrongful dismissal

McGraw v. Southgate (Township)

2021 ONSC 7000 (CanLII) · 2021-10-20

Wrongful Dismissal and Gender-Based Discrimination: McGraw v. Southgate (Township)

A wrongful dismissal case involving a plaintiff terminated from dual roles due to unfounded sexist allegations. The court determined the appropriate notice period and awarded moral damages for mental distress, as well as damages for gender-based discrimination under the Ontario Human Rights Code. The case also addressed defamatory statements and punitive damages for the employer's discriminatory and reckless conduct.

gender-based discrimination human rights moral damages reasonable notice period wrongful dismissal

Russell v. The Brick Warehouse LP

2021 ONSC 4822 (CanLII) · 2021-07-09

36-Year Employee Awarded 24 Months Notice and $25,000 in Damages

A wrongful dismissal case involving a 36-year employee who was terminated without cause. The court determined a reasonable notice period of 24 months and awarded $25,000 in moral damages, while also addressing loss of benefits and mitigation issues.

mitigation moral damages reasonable notice wrongful dismissal

Nagpal v. IBM Canada Ltd.

2020 ONSC 8004 (CanLII) · 2020-12-21

Wrongful Dismissal: Moral Damages and Summary Judgment

A wrongful dismissal case where the court considered whether the employer's conduct warranted moral damages. The case also addressed the use of summary judgment to determine damages, including the application of the Honda Canada Inc. v. Keays test. The court also provided procedural directions for advancing the damages determination while an appeal was pending.

employer conduct moral damages summary judgment wrongful dismissal

Schultz v. Canada Lands Company CLC Limited

2019 ONSC 2124 (CanLII) · 2019-04-04

Wrongful Dismissal: 12 Months' Notice and $33,381.38 Bonus Awarded

A wrongful dismissal case where the court determined that the plaintiff's termination without cause was appropriate, awarded 12 months' notice, and $33,381.38 as a bonus, but denied moral and punitive damages.

bonus entitlement moral damages reasonable notice senior management wrongful dismissal

Galea v. Wal-Mart Canada Corp.

2017 ONSC 245 (CanLII) · 2017-12-07

Wrongful Dismissal: Employer’s Misleading Conduct and Moral Damages Awarded

A wrongful dismissal case where the court found the employer’s conduct, including misleading and insensitive treatment, to be unduly highhanded and callous, awarding moral and punitive damages. The court also interpreted an employment contract, awarding transition payments and benefits.

employment contract moral damages punitive damages wrongful dismissal

Bovin et al v Over the Rainbow Packaging Services Inc.

2017 ONSC 1143 (CanLII) · 2017-02-17

Constructive Dismissal and Unpaid Overtime: Senior Employees Awarded Damages

A case involving senior employees who were subjected to harassment, unilateral salary reductions, and demeaning conduct, leading to their constructive dismissal and claims for wrongful dismissal, unpaid overtime, and moral damages. The court awarded 24 months' notice for wrongful dismissal and unpaid overtime under the Employment Standards Act, 2000, but did not grant substantial indemnity costs.

constructive dismissal employment standards moral damages unpaid overtime wrongful dismissal

Ciszkowski v. Canac Kitchens

2015 ONSC 73 (CanLII) · 2015-01-07

Constructive Dismissal: Demotion and Unilateral Changes to Employment Terms

A constructive dismissal case involving an employee who was demoted and had their responsibilities altered upon return from medical leave. The court determined an 18-month notice period and considered whether the employer's conduct during dismissal was in bad faith, applying relevant legal principles.

bad faith dismissal constructive dismissal moral damages notice period wrongful dismissal

Morgan v. Vitran

2013 ONSC 6835 (CanLII) · 2013-11-05

Constructive Dismissal: Dock Supervisor Reassigned to Freight Analyst Role

A constructive dismissal case involving a dock supervisor reassigned to a freight analyst role, which was deemed a substantial alteration of essential employment terms. The court determined the appropriate notice period and awarded moral damages based on the employer's conduct during dismissal.

constructive dismissal moral damages reasonable notice unilateral changes

Altman v. Steve’s Music

2011 ONSC 1480 (CanLII) · 2011-03-08

Wrongful Dismissal: Long-Term Employee Awarded 22 Months' Salary and $35,000 in Damages

A wrongful dismissal case involving a long-term employee with 30 years of service who was terminated without notice. The court awarded 22 months' salary and $35,000 in moral damages for mental distress, and $20,000 in punitive damages for the employer's breaches of statutory obligations. The case also addressed the deduction of disability benefits from wrongful dismissal awards.

disability benefits moral damages punitive damages reasonable notice wrongful dismissal

Zesta Engineering Ltd. v. Cloutier

2010 ONSC 5810 (CanLII) · 2010-10-21

Wrongful Dismissal: 19-Year Employee Claims Moral and Compensatory Damages

A wrongful dismissal case involving an employee dismissed after 19 years of service. The employer's conduct, including intimidation and lack of severance, is scrutinized. The case also addresses fiduciary duties, conspiracy, injunctive relief, and punitive damages.

bad faith breach of fiduciary duty moral damages wrongful dismissal

Simmons v. Webb

2008 CanLII 67908 (ON SC) · 2008-12-15

Wrongful Dismissal: 20-Year Employee Awarded 24 Months Notice

A wrongful dismissal case involving a plaintiff who was dismissed without notice after 20 years of service. The court awarded 24 months’ notice and $20,000 in moral damages for the insensitive manner of dismissal and post-termination conduct.

employment law moral damages notice period reasonable notice wrongful dismissal