Imposition of Punitive Damages Reminder to Employers of Duty of Good Faith

Punitive damages are an extraordinary remedy that we don’t often see being awarded in wrongful dismissal cases. Their purpose is to punish the employer for reprehensible conduct, not to compensate the dismissed employee for the loss of their employment. An award of punitive damages reflects the court’s disapproval of the actions of the employer and is intended to deter similar behavior in the future.

A recent decision of the British Columbia Supreme Court reinforces the requirement of good faith and fair dealing in termination and the consequences that will follow if that duty is not fulfilled. In Thompson v. Revolution Resource Recovery 2025 BCSC 8, Ms. Thompson was terminated from her role after working for 3½ years. The termination was without cause and on the basis of redundancy. At the time of termination, the employer provided Ms. Thompson with a cheque to satisfy their requirements under the Employment Standards Act, while maintaining that if she were to cash this cheque, this would release them from any further liabilities. Ms. Thompson reminded the employer of their requirement to provide the payment within 48 hours of her termination and to do so without a forced release. The employer continued to maintain their position. The court found that the employer withheld Ms. Thompson’s wages, including her severance pay, at a time when she was financially and emotionally vulnerable. The court found that the employer acted in a manipulative and reprehensible manner and that accordingly punitive damages were warranted.

The trial judge awarded $25,000 in punitive damages, noting: “I am satisfied that Revolution’s conduct in this respect can fairly be labelled reprehensible. Employers should clearly be deterred from leveraging their own non-compliance with employment standards requirements to compel financially vulnerable employees to compromise their legal positions.”

This decision serves as both a warning and reminder to employers. A failure to comply with employment standards requirements and leveraging that to compel a release of claims will result in the disapproval of the court and a likely award of punitive damages.

If you have questions regarding employment terminations or employment standards, we encourage you to get in touch with a member of Harper Grey’s Workplace Law group.