Punitive Damages — Ontario Employment Law
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About Punitive Damages
In Ontario employment law, a termination can feel unfair, but what happens when an employer's conduct goes beyond unfair and into the realm of malicious or oppressive? This is where punitive damages come into play. Unlike other types of damages, such as severance or pay in lieu of notice which compensate for lost wages, punitive damages serve a different purpose entirely: to punish the employer for egregious misconduct and deter similar behaviour in the future. They are not meant to compensate the employee for a loss, but rather to condemn the employer's actions.
Punitive damages are not awarded for the act of dismissal itself, even a wrongful one. Instead, they are reserved for exceptional cases involving an independent actionable wrong, where the employer's conduct is so harsh, vindictive, reprehensible, or malicious that it offends the court's sense of decency. The legal test is high: the conduct must be a 'marked departure from ordinary standards of decent behaviour.' This principle stems from common law and has been applied in numerous Ontario employment cases. Examples of conduct that might attract punitive damages include an employer making false allegations of cause to avoid paying severance, intentionally withholding earned commissions or wages after termination, or engaging in a calculated campaign to harm the employee's reputation.
It is crucial to distinguish punitive damages from aggravated damages. While both relate to an employer's bad faith conduct during dismissal, aggravated damages compensate the employee for the actual mental distress suffered (e.g., anxiety, depression) due to that conduct. Punitive damages, on the other hand, are about punishment and deterrence. While a single act of bad faith might lead to one or both, they are legally distinct remedies. Because the threshold is so high, punitive damage awards are rare. Assessing whether an employer's behaviour rises to this level requires a careful analysis of the specific facts, making it a complex area of employment law where professional guidance is invaluable.
Frequently Asked Questions
What is the difference between punitive damages and aggravated damages in Ontario?
Punitive damages are intended to punish an employer for malicious or oppressive conduct and deter others. Aggravated damages, sometimes called moral damages, are intended to compensate an employee for the mental distress they suffered because of the employer's bad faith manner of dismissal. One is for punishment, the other for compensation.
Can I get punitive damages just for being fired without enough notice?
No. A wrongful dismissal, which is the failure to provide adequate notice under common law, only entitles you to damages for lost wages during the notice period. To get punitive damages, you must prove the employer engaged in separate, outrageous conduct that was malicious, vindictive, or reprehensible.
What kind of employer behaviour could lead to a punitive damages award?
Conduct that has attracted punitive damages includes fabricating allegations of cause to avoid paying severance, threatening to ruin an employee's reputation, maintaining a toxic work environment leading to a constructive dismissal, or vindictively withholding legislated payments like final wages or vacation pay.
Is there a cap on how much can be awarded for punitive damages in an employment case?
There is no legislated cap in Ontario, but awards are meant to be proportional to the misconduct, the employer's resources, and the need for deterrence. Courts award them cautiously and they remain rare, with amounts varying significantly based on the severity of the employer's actions.
Is there a time limit to sue for punitive damages in Ontario?
Yes. A claim for punitive damages is typically part of a broader wrongful dismissal lawsuit. In Ontario, you generally have two years from the date of the dismissal (or the discovery of the claim) to file a lawsuit under the Limitations Act, 2002.
When should I talk to a lawyer about punitive damages?
If you believe your employer's conduct during or after your termination was intentionally cruel, deceitful, or malicious, you should consult an employment lawyer. Because these damages are awarded only in exceptional cases, a lawyer can help you determine if the high legal threshold has been met and whether you have a viable claim.
Common Scenarios
- An employer terminates a senior manager and then falsely alleges cause, forcing the employee into expensive litigation just to get their basic entitlements.
- After an employee is constructively dismissed due to a toxic environment, the company intentionally delays paying out their significant earned commissions for over a year.
- A company fires an employee for reporting a serious health and safety violation, then tells industry recruiters that the employee was fired for incompetence.
- During a termination meeting, a director subjects a junior employee to a humiliating and baseless personal attack in front of other staff members.
What You Should Know
- Keep a detailed written timeline of all events related to your dismissal, paying special attention to any conduct you believe was malicious, dishonest, or unduly insensitive.
- Preserve all evidence of the employer's conduct, such as emails, text messages, performance reviews, and letters, as this documentation is critical to proving bad faith.
- Understand that a claim for punitive damages is secondary to your main claim for wrongful dismissal damages; focus first on establishing your entitlement to reasonable notice.
- The legal standard for punitive damages is extremely high and fact-specific; seek advice from an employment lawyer to get a realistic assessment of whether your employer's actions qualify.
Featured Cases
Carroll v. Oracle Canada ULC
2025 ONSC 4889 (CanLII) · 2025-08-26Wrongful Dismissal: 12 Months' Notice, $57,740.55 in Punitive Damages
A wrongful dismissal case involving a Global Strategic Client Executive with short service and high income. The court awarded 12 months' notice based on Bardal factors, denied damages for lost Restricted Stock Units, awarded benefits and RRSP contributions, and granted $57,740.55 in punitive damages for delayed commission payments.
Grealy v. XL Tool Inc.
2025 ONSC 4010 (CanLII) · 2025-07-09Wrongful Dismissal: Inducement and Notice Period Determined
A wrongful dismissal case where the court determined whether the plaintiff was entitled to an enhanced notice period due to inducement and applied Bardal factors to determine a 12-week notice period. The court also considered punitive damages for alleged bad faith, finding no entitlement.
Wigdor v. Facebook Canada Ltd.
2025 ONSC 4861 (CanLII) · 2025-07-08Employment Standards Compliance: 10 Months' Notice Awarded in Termination Case
A case involving the termination of an employment agreement and compliance with the Employment Standards Act, 2000. The court determined a 10-month notice period and upheld clear forfeiture language in Restricted Stock Unit agreements. Punitive damages were not awarded due to administrative errors in payment.
Koshman v. Controlex Corporation
2023 ONSC 7045 (CanLII) · 2023-12-13Wrongful Dismissal: Senior Executive Employee Awarded 24 Months' Notice and $50,000 in Damages
A senior executive employee was summarily dismissed after 18.5 years of service. The court determined the appropriate notice period and awarded damages, including 24 months' notice of termination, $50,000 in aggravated damages, and $192,112.19 in costs for the employer's improper conduct and lack of defense.
Chalmers v. Airways Transit Service Ltd. and Badder Capital Group Ltd.
2023 ONSC 5725 (CanLII) · 2023-10-11Constructive Dismissal: Layoff Without Recall and Punitive Damages Awarded
A constructive dismissal case involving layoffs due to COVID-19 and subsequent claims for reasonable notice and punitive damages. The court ruled that the plaintiff was constructively dismissed due to an indefinite layoff without recall, and awarded 25 months' notice and $30,000 in punitive damages.
Giacomodonato v. PearTree Securities Inc.
2023 ONSC 5628 (CanLII) · 2023-10-05Wrongful Dismissal: Plaintiff Awarded Over $700,000 in Damages and Costs
A wrongful dismissal case where the plaintiff was awarded over $700,000, including $10,000 in punitive damages, and the defendant was ordered to pay $830,761.75 in costs. The court considered the defendant's conduct and the meritlessness of the counterclaim in determining the costs award.
Pohl v. Hudson’s Bay Company
2022 ONSC 5230 (CanLII) · 2022-09-1528-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.
Humphrey v. Mene
2021 ONSC 2539 (CanLII) · 2021-05-04Constructive Dismissal: Toxic Workplace and Mental Distress Damages
A constructive dismissal case where the court found the employer's conduct, including a toxic workplace and exaggerated performance issues, constituted repudiation. The plaintiff, a 32-year-old COO with three years of service, was awarded 11 months' notice and $50,000 in aggravated damages for mental distress, and $25,000 in punitive damages for malicious and outrageous conduct. The court also ruled that a 'Without Cause Termination Provision' was void for lack of consideration.
Badreddine v. Shapovalov
2019 ONSC 4914 (CanLII) · 2019-08-26Sexual Harassment Case: Employer's Conduct and Damages Awarded
A case involving sexual harassment and attempted drugging by an employer, resulting in emotional distress and PTSD for the plaintiff. The court awarded damages for general harm, loss of competitive advantage, and costs, but declined to award punitive damages.
Hampton Securities Limited v. Dean
2018 ONSC 101 (CanLII) · 2018-01-08Constructive Dismissal and Wrongful Dismissal: Damages Awarded for Six Months' Salary
A case involving constructive dismissal and wrongful dismissal where the employer unilaterally altered the terms of employment, leading to damages awarded for six months' salary. The court also addressed defamation claims and punitive damages for false allegations, and dismissed a minimum wage claim due to the limitations period. The employment contract's interpretation regarding trading losses was also considered.
Horner v. 897469 Ontario Inc.
2018 ONSC 121 (CanLII) · 2018-01-05Wrongful Dismissal: Aggravated Damages Awarded for Termination During Holiday Season
A wrongful dismissal case where the plaintiff was terminated without notice during the holiday season. The court awarded aggravated damages for the manner of termination but denied punitive damages and other claims, including intentional infliction of mental suffering and discrimination. The court also awarded partial indemnity costs for the trial.
Galea v. Wal-Mart Canada Corp.
2017 ONSC 245 (CanLII) · 2017-12-07Wrongful 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.
Ott v. Canadian Standard Home Services
2017 ONSC 7114 (CanLII) · 2017-11-23Wrongful Dismissal: 14-Month Employee Awarded Notice and Overtime
A wrongful dismissal case where the plaintiff, employed as a Human Resources Coordinator for 14 months, was terminated allegedly due to a lack of work. The court awarded six months' notice based on Bardal factors and granted $62,359 for unpaid overtime and $580 for clawbacks, along with $3,284.58 in punitive damages. The plaintiff was also awarded $11,558.81 in costs.
Morison v Ergo-Industrial Seating Systems Inc.
2016 ONSC 6725 (CanLII) · 2016-10-28Wrongful Dismissal: 12 Months' Notice and $50,000 Punitive Damages Awarded
A wrongful dismissal case where the court determined the appropriate notice period for an employee with a specific length of service, considering age, job market conditions, and the employer's conduct. The court also assessed whether aggravated and punitive damages were warranted due to the employer's bad faith and reprehensible conduct.
Strudwick v Applied Consumer & Clinical Evaluations Inc.
2015 ONSC 3408 (CanLII) · 2015-08-07Wrongful Dismissal: 15-Year Employee Awarded 24 Months Notice and $20,000 for Discrimination
A wrongful dismissal case where an employee with 15 years of service was dismissed after the employer's conduct was deemed egregious and in bad faith. The court awarded 24 months' notice, $20,000 for disability discrimination under the Human Rights Code, $18,984 for psychological treatment costs, and $6,049.92 for loss of benefits during the notice period. Punitive damages of $15,000 were also awarded.
Wyllie v Larche
2015 ONSC 4747 (CanLII) · 2015-07-24Constructive Dismissal: Delay in Claim Rendered Untenable
A constructive dismissal case where the court held that a delay of over a year in asserting the claim rendered it untenable. The court also dismissed a wrongful dismissal claim and awarded severance pay under the Canada Labour Code, while denying punitive damages for non-payment of severance.
Sweeting v Mok
2015 ONSC 4154 (CanLII) · 2015-06-26Wrongful Dismissal: 22-Year Employee Awarded 24 Months Notice
A wrongful dismissal case involving a 22-year employee who was terminated. The court assessed whether the termination was wrongful or constructive and determined the appropriate notice period and whether aggravated or punitive damages were warranted.
Huber v. Way
2014 ONSC 4426 (CanLII) · 2014-07-23Wrongful Dismissal: 2.5-Year Employee Awarded Damages and Commissions
A wrongful dismissal case where the plaintiff, employed for 2.5 years without notice or cause, was awarded five months' salary as reasonable notice. The case also involved claims for commissions, punitive damages for post-termination conduct, and a counterclaim dismissed for lack of evidence.
McGee-Maguire v. Dr. Christopher Tsang Dentistry Professional Corp. et al.
2013 ONSC 7688 (CanLII) · 2013-12-13Wrongful Dismissal: Settlement Agreement Breach and Enforcement
A registered dental therapist brought a wrongful dismissal claim against their former employer. The case involved a settlement agreement that the employer breached, failing to pay the agreed amounts. The court enforced the settlement agreement but declined to award punitive damages for the breach.
Asselin v. Gazarek et al.
2011 ONSC 5871 (CanLII) · 2011-10-11Wrongful Dismissal: Notice Period and Common Employer Doctrine
A wrongful dismissal case where the plaintiff was terminated without cause after three years of employment. The court determined that prior employment should not be included in the notice period and awarded 4.5 months' notice. The claim for punitive damages was dismissed due to lack of evidence of 'hardball' conduct.