Mental Distress Damages: Not Just for Dismissals

A federal employee recently appealed a Public Service Labour Relations Board decision denying her damages for mental distress after her 10 day suspension was overturned and substituted with a verbal warning.

Ms. Gatien worked in the federal public service for 35 years and had no prior history of discipline. She became a manager in 1995. In late 2010, she began having significant difficulties with one of her employee’s poor behaviour. She reported these issues to her supervisors and was repeatedly told not to discipline the employee in question. Ms. Gatien and the employee had a physical altercation in the workplace which she reported and the employee was relocated to another department. Ms. Gatien blockaded herself in her office when the employee returned to collect personal belongings. She was issued a 10 day suspension without pay for her actions.

The Board determined that the 10 day suspension was excessive and substituted a verbal warning for the suspension, as well as ordering back pay. The Board denied Ms. Gatien’s $100,000 claim for mental distress damages, concluding that the decision to discipline her did not constitute a “separate actionable wrong” pursuant to Wallace v. United Grain Growers Ltd., [1997] SCR 701. Ms. Gatien then sought judicial review from the Federal Court.

The Federal Court granted the application for Judicial Review, concluding that mental distress damages, or moral damages do not flow only from wrongful dismissals, but can also result from disciplinary actions.

The Court found that the Board erred in law by applying the test from Wallace and confirmed the test for mental distress damages set out in the Supreme Court of Canada’s 2008 decision in Honda v. Keays. In Honda, the Supreme Court did away with the concept of Wallace damages, stating at paragraph 59:

“…. Thus, if the employee can prove that the manner of dismissal caused mental distress that was in the contemplation of the parties, those damages will be awarded not through an arbitrary extension of the notice period, but through an award that reflects the actual damages.”

In addition to finding the Board applied the incorrect test for mental distress damages, the Court also concluded that the Board failed to consider if the evidence provided by Ms. Gatien supported an award of damages for mental distress. The issue of damages was remitted back to the Board for redetermination.

Employers seeking to discipline employees should be aware that any unreasonable discipline may attract damages for mental distress, if such damages are provable and were reasonably foreseeable.

Gatien v. Canada (Attorney General), 2015 FC 543

Click here for a refresher on Honda Canada Inc. v. Keays.

Questions relating to the content of this article may be directed to Kacey A. Krenn.