By Stephen Dugandzic
This Alberta Court of Justice case involved a wrongful dismissal claim by a licensed practical nurse against her former employer, Northern Nursing Solutions Inc. The plaintiff had been recruited from a secure job in another province and later terminated after experiencing delayed and unpaid wages. The court addressed several key legal issues, including the appropriate notice period (severance) for termination, the employer’s failure to pay owed wages, the duty of good faith in contract performance (and whether aggravated damages were warranted), and whether punitive damages should be awarded. Below is a summary of the main legal questions and the court’s reasoning on each, along with relevant statutes, common law principles, and precedents applied.
Wrongful Dismissal and Reasonable Notice Period
One central issue was the amount of reasonable notice (severance) the employee was entitled to for her termination without cause. Under Canadian common law (as established by Bardal v Globe & Mail Ltd), employers must give reasonable notice of termination (or pay in lieu) for indefinite-term employees, considering factors like the employee’s age, length of service, position, and the availability of similar employment. In this case, the plaintiff was 49 years old and had just over two years of service as a specialized Licensed Practical Nurse (LPN).
Inducement as a Factor: A particularly important factor was that the employee had been induced to leave secure employment in another province to join the company. The plaintiff relocated from New Brunswick to Alberta based on promises of a high salary, overtime pay, and paid living allowances in a “Master Employment Agreement”. Canadian courts recognize that if an employer actively lures an employee from secure employment with inducements, it can lengthen the reasonable notice period because the employee took a greater risk in accepting the new position. Justice Skitsko accepted that the circumstances of this recruitment justified extending the notice period. The court cited the Alberta case Toole v Northern Blizzard Resources Inc, which explained inducement as a spectrum and noted that persuading someone to leave a secure job by offering incentives is an aggravating factor for notice.
Notice Determination: After weighing the common law Bardal factors and the inducement, the court decided the appropriate notice period was six months. Despite the plaintiff’s short tenure of two years, her age (49), the specialized nature of her role, the fact she was uprooted from a stable job, and the challenging job market (impacted by COVID-19) supported a longer notice. In the judgment, the court stated it “most certainly would justify an increase in the common law notice period” due to the inducement and related circumstances.
Mitigation of Damages: In calculating damages for wrongful dismissal, the court also applied the principle of mitigation – the employee’s earnings from new employment during the notice period were deducted from her award. The plaintiff had found part-time work after termination (at a lower wage), which mitigated some of her loss. Ultimately, the court awarded pay in lieu of six months’ notice, amounting to approximately $30,843 after accounting for mitigation.
Breach of Contract: Unpaid Wages and Benefits
Another key issue was the employer’s failure to pay the plaintiff all the wages and benefits she had earned. Under the employment contract (the Master Employment Agreement), the nurse was to be paid $60/hour (plus overtime at $90/hour) with biweekly payments, along with $2,000 per month for housing and other travel reimbursements. Starting in August 2023, the employer stopped paying some of the submitted invoices for the plaintiff’s work or paid only partial amounts without explanation. By the end of her employment, a substantial sum in wages and allowances had accrued unpaid.
The court treated this as a straightforward breach of contract – the failure to pay earned wages violated the fundamental terms of the employment agreement. In fact, the judge remarked that the most essential obligation of an employment contract is for the employer to pay the employee on time. The termination letter (issued December 1, 2023) even acknowledged the arrears and promised to pay the outstanding invoices by the end of the termination notice period (December 31, 2023). However, the employer still did not fully pay what was owed. At the damages hearing, the court found approximately $14,388 in wages and expenses remained unpaid, and it awarded the employee that full amount as damages for breach of contract. (It’s worth noting that Alberta’s employment standards legislation also requires timely payment of wages upon termination, underscoring that these unpaid amounts were unlawfully withheld. The court’s award in this case was based on contract law, since the employer did not appear to dispute the claim.)
Duty of Good Faith and Aggravated Damages
Beyond the monetary losses, the court examined whether the employer’s conduct in handling the dismissal and wage payments breached the duty of good faith and honest performance in the employment relationship. In Canadian law, even when an employer has the right to terminate without cause by giving notice, the manner of dismissal must be handled fairly and in good faith. The Supreme Court of Canada’s decision in Bhasin v Hrynew (2014) recognized a general doctrine of honest contractual performance – parties must not lie or knowingly mislead each other about matters directly linked to the performance of the contract . Additionally, CM Callow Inc v Zollinger(2020) emphasized that if one party’s conduct has led the other to be under a misapprehension, there is a duty to correct that false impression. In the employment context, cases like Honda Canada Inc v Keays (2008) affirm that bad faith conduct in the manner of dismissal can merit aggravated (moral) damages.
Bad Faith Conduct: Justice Skitsko found that Northern Nursing Solutions breached its duty of good faith in how it dealt with the plaintiff. Several aspects of the employer’s behavior led to this conclusion:
• The company repeatedly failed to respond or acknowledge the employee’s inquiries about her unpaid wages over many months.
• It continued to keep her working under the false presumption that she would be paid if she simply submitted her hours/invoices, even when it knew it was not paying in accordance with the contract.
• The termination letter misrepresented the situation by expressly promising that the outstanding invoices would be paid, which further “perpetuated the misapprehension” that the plaintiff would receive the money owed.
In short, the employer was not honest or forthright: it withheld pay without justification, did not inform the employee of the truth or resolve the issue, and gave false assurances. The court noted this conduct was “deplorable” and “without question a breach of the duty of good faith” owed by an employer. Importantly, the judge highlighted that an employer must have “appropriate regard to the legitimate contractual interests” of the employee and not undermine those interests in bad faith. Paying wages on time is a core contractual interest of any employee, and the defendant’s actions undermined that interest.
Aggravated (Moral) Damages: Having found a breach of the duty of good faith, the court considered the plaintiff’s evidence of the distress and anxiety this caused her. The months of not receiving full wages, combined with financial strain on her family (after relocating across the country), resulted in serious stress for the plaintiff. The law allows “aggravated damages” in wrongful dismissal cases if the manner of termination caused mental distress beyond the normal upset of losing a job, provided that harm was contemplated by the employment contract or was a foreseeable result of the employer’s bad faith conduct (Honda v Keays, 2008). Here, the court accepted the plaintiff’s evidence of mental distress “without hesitation”, finding it was directly caused by the employer’s bad-faith conduct.
As a result, the court awarded $30,000 in aggravated damages to compensate for the emotional harm and to denounce the employer’s conduct. In reaching this figure, the court drew on precedent that an employer’s blatant dishonesty and refusal to pay an employee can justify significant moral damages. This award was in addition to the amounts for severance and unpaid wages. The decision underscores that “there can be no doubt that an employer has a duty of good faith to their employees”, and breaching that duty has financial consequences.
Punitive Damages Consideration
The plaintiff also sought punitive damages, causing the court to address whether the employer’s misconduct merited punishment beyond the compensatory and aggravated awards. Punitive damages in civil cases are reserved for exceptional wrongdoing – they are meant to punish and deter conduct that represents a marked departure from ordinary standards of decent behavior. Canadian courts require an “independent actionable wrong” (separate from the basic breach of contract) and conduct that is harsh, vindictive, or reprehensible to justify punitive damages. Essentially, the behavior must offend the court’s sense of decency such that mere compensation is insufficient.
In Rosenberg, Justice Skitsko declined to award punitive damages. While the employer’s bad faith was serious, the judge found that the substantial compensatory damages (six months’ pay and the unpaid wages) plus the $30,000 aggravated damages were adequate to achieve the goals of deterrence and denunciation. The court noted that punitive damages were not warranted because there was no additional distinct wrong beyond the breach of contract and breach of good faith that had already been addressed. In other words, the employer’s misconduct, though wrongful, did not rise to a separate legal wrong that would call for an extra punishment on top of the other damages. The objectives of punishment in this case were met by the aggravated damages award, which the court viewed as sufficient to condemn the behavior. Thus, no punitive damages were added.
Conclusion
In summary, Rosenberg involved multiple intertwined legal issues commonly seen in employment law, resolved as follows:
• Reasonable notice for termination: Even a short-term employee may be entitled to a lengthy notice period if circumstances warrant. The court applied the Bardal factors and especially noted the inducement of the employee to leave secure employment, ultimately awarding six months’ pay in lieu of notice. This affirmed the principle that inducement can extend notice beyond the norm for a short service employee.
• Unpaid wages: An employer’s failure to pay earned wages is a clear breach of contract. The court enforced the contract by awarding all outstanding salary and benefits owed to the employee (about $14,388), reinforcing that wages must be paid as agreed.
• Duty of good faith in dismissal: The case highlights the now well-established duty of honesty and good faith in contract performance (Bhasin principle). The employer’s deceptive and unresponsive conduct surrounding the non-payment of wages was found to breach this duty. The court’s reasoning shows that employers must be candid and fair with employees, especially in termination contexts – misleading an employee or acting in bad faith can give rise to additional liability.
• Aggravated damages: Because the manner of termination (with months of broken promises and financial hardship) caused the plaintiff mental distress, the court awarded significant aggravated damages as a remedy for the intangible harm and to denounce the employer’s conduct. This underscores that employers who act in bad faith may face monetary consequences beyond ordinary severance.
• Punitive damages: The court considered punitive damages but confirmed the high threshold for such awards. It held that, in this case, the compensatory and aggravated damages were sufficient, and no separate punitive award was justified absent an extra egregious, independent wrong.
Overall, Justice Skitsko’s decision applied established employment law principles and recent Supreme Court doctrines to ensure the employee was made whole and to signal that good-faith conduct is an integral legal obligation in employment contracts. The case serves as a clear reminder that recruiting someone away from secure employment comes with added responsibilities, and that employers who fail to pay wages or deal honestly with their employees risk serious legal repercussions in court.
*Always seek legal advice. The above is for information purposes only.
Stephen Dugandzic received his Juris Doctor degree from the University of Alberta in 2013 and is Calgary-based. He previously practised with Bennett Jones LLP and Taylor Janis LLP before founding YYC Employment Law Group in 2018.