Reducing Exposure to Aggravated Damages: Lessons from Dhatt v. Kal Tire Ltd.

A recent decision of the BC Supreme Court provides valuable insight into the manner in which aggravated damages will be awarded to employees, and reinforces the significance of conducting thorough investigations before terminating an employee for cause.

In Dhatt v. Kal Tire Ltd., 2015 BCSC 1177, the plaintiff had been employed for approximately 23 years. While helping move the defendant’s shop from one location to another, he took a battery charger and a pole for himself, on his understanding that he had been given permission to do so. Approximately two weeks after removing these items, the plaintiff was suspended for two days as the defendant believe he lied about the battery charger. Subsequently, he was terminated for cause. At no point was the plaintiff given the opportunity to explain his actions. Following termination, the plaintiff spiraled into a pattern of depression and alcohol abuse, and was twice admitted into hospital after threatening suicide. The Court found that the plaintiff had not acted dishonestly when he removed the items from the defendant’s shop and held that there was no cause for termination. In addition to awarding the plaintiff 21 months’ notice and compensation for lost long-term disability benefits, the court awarded the plaintiff $25,000 in aggravated damages as a result of the defendant’s:

• failure to provide the plaintiff with an opportunity to respond to the allegations against him;

• failure to take into consideration the plaintiff’s employment record;

• decision to change the penalty from a suspension to termination; and

• failure to advise the plaintiff why he had been terminated after originally being suspended.

The fact that it would not have been within the reasonable contemplation of the defendant that the plaintiff would spiral into depression and substance abuse did not dissuade the court from making this award. The court held that it was in the reasonable contemplation of the defendant that the plaintiff would have some sort of negative reaction as a result of being terminated for cause for alleged theft and dishonesty.  

Lessons for Employers

This case reinforces the importance of conducting thorough workplace investigations prior to terminating an employee for cause, particularly where serious allegations, such as theft or dishonesty, are at play. In particular, this case reinforces that prior to terminating an employee for cause, employers should:

• conduct thorough investigations that take into consideration the employee’s employment history;

• provide the employee with an opportunity to respond to the allegations raised; and

• if suspending an employee prior to completing an investigation, inform the employee that further penalties, including termination, may be imposed depending on the results of the investigation.

As can be seen in this case, the failure to take such steps can have significant and costly consequences, particularly where the allegations giving rise to termination are serious and capable of giving rise to negative reactions, such as depression, on the part of the terminated employee. By conducting thorough and diligent investigations, employers are able to reduce the likelihood of exposure to liability for aggravated damages.