JPAK Employment Lawyers Toronto | Recent Court Ruling Means Terminated Employees may not Need Medical Proof for Aggravated Damages

In May 2024, a case from the Ontario Court of Appeal reviewed the damages awarded to an employee in a wrongful dismissal suit and upheld that aggravated damages for mental distress were appropriate even without a diagnosed psychological injury.

In Krmpotic v Thunder Bay Electronics Ltd, 2024 ONCA 332, the plaintiff employee, Mr. Krmpotic, was on medical leave after back surgery. His job required physical labour, which resulted in a number of back injuries over the years.

The day he returned to work after his leave, within hours of arriving, he was called into a meeting where he was terminated. In this meeting, the plaintiff was told that he was being let go for financial reasons and the company’s financial statements would support this claim, however his manager, Don Caron, refused to produce the statements.

The trial judge also found that while Mr. Caron did not outright lie, he was neither candid nor forthright, acting in a manner that was untruthful, misleading and unduly insensitive. It was determined at trial that despite the company’s claims, Mr. Krmpotic was terminated because his physical limitations restricted him from continuing to perform the entire array of duties that he had performed pre-surgery.

Mr. Krmpotic did not have any medical evidence for his case to prove mental distress. This aspect of the claim was based on his statements as well as his wife’s and son’s about his states of anxiety, depression, fear, mental distress, confused emotions, anger, disturbed sleep, worry, frustration, helplessness, and defeat.

The Court of Appeal accepted this. It is expected that an employee who is terminated suffers distress and hurt feelings, which are not compensable damages. However, it was established that Mr. Caron’s conduct amounted to bad faith in the manner of dismissal, causing additional harm to Mr. Krmpotic.

The Court noted that mental distress exists on a spectrum, where on one end is a person who experiences normal distress, and on the other end is a person who experiences a severe and diagnosable psychological condition. On this spectrum is psychological harm exceeding what is normal but that does not reach the level of a diagnosable psychological injury.

As long as it can be proven on a balance of probabilities that (1) the employer’s conduct, during the course of termination amounted to a breach of their duty of honest performance and good faith, and (2) the employee suffered harm beyond the normal distress and hurt feelings as a result of the breach, medical evidence is no longer a requirement for aggravated damages to succeed in Ontario.

Note that some claims for mental distress do still require medical support. This analysis is limited to a claim for aggravated damages.

If you are an employee who has been dismissed, get legal advice for compensation you are owed.

If you are an employer, it is crucial that the company review its contractual and statutory obligations to ensure you are compliant and minimize the risk of additional damages being owed to an employee.

Contact JPak Employment Lawyers today.