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Punitive damages The SCC also held that punitive damages ought not to have been awarded to Keays at all, because there was no egregious or outrageous misconduct warranting pun- ishment of Honda. The court found that Keays was not harassed by Honda. An important aspect of the case is that the court ruled that Honda's disability pro- gram was not discriminatory, but was rather a good-faith attempt to monitor employees who were regularly absent from work. The court has given a signal to employees who seek an accommoda- tion at work by being allowed frequent absences: they have to co-operate by providing ongoing medical explanation for those absences. No punitive damages available for breach of Human Rights Code Prior to the SCC decision in Honda, there was uncertainty as to an employ- ee's right to make overlapping claims related to discrimination under both human rights legislation and in a claim for wrongful dismissal. The Honda deci- sion clarifies that a party seeking puni- tive damages in a case involving breach of contract must establish an "indepen- dent actionable wrong" beyond the fact of the breach of the contract, and that a breach of human rights legislation can- not constitute an "independent action- able wrong" to support a claim for puni- tive damages in a civil action. The court stated that a Human Rights Code is "a comprehensive scheme for the treat- ment of claims of discrimination." Al- though the recently amended Ontario Human Rights Code may permit a court to award damages related to "injuries to dignity, feelings and self-respect," this does not mean that an employee can base a claim for punitive damages on an allegation of discrimination. IMPACT OF RULING The Honda decision will have a signifi- cant impact on employment law litiga- tion. It is a positive development employers because it eliminates exten- sions of the notice period where the employer is alleged to have acted in bad for faith in the manner they conducted a dismissal. A Wallace "bump" has recently been requested by employees as a mat- ter of course in wrongful dismissal cases. Wrongfully dismissed employees will now be limited to pursuing a separate claim for fixed compensatory or aggra- vated damages for an employer's bad- faith conduct. By having to prove that ac- tual damages were incurred as a result of the employer's conduct in the manner of dismissal, employees have a more oner- ous standard to meet. This decision also appears to heighten the threshold as to what constitutes "out- rageous" or "reprehensible" conduct. The misconduct must be very exceptional to attract an award of damages. Employ- ees will also be unable to claim punitive damages solely for breach of the human rights code by an employer and may be required to seek recourse by filing a hu- man rights complaint. The decision also provides comfort to employers struggling with how to moni- tor ongoing absenteeism. It recognizes an employer's need to monitor employee absences in managing its workforce. It suggests that the courts may be reluctant to challenge good-faith steps taken by an employer to manage workplace absentee- ism. It also confirms that employees need to co-operate with employers with a view to achieving viable accommodations of any disability that may impact an em- ployee's performance or attendance. However, employers should remember that Keays' claim for wrongful dismissal did succeed on the basis that it was wrong of Honda to consider that it had just cause to terminate Keays' employment just be- cause he wouldn't see their medical ex- pert. Prudent employers should still care- fully strategize when to assert just cause and how to reduce potentially costly awards related to notice of termination. LITIGATION STRATEGIES Right now, claims resulting from an al- leged "bad-faith discharge" will be much less likely to succeed. The probable appli- cation of Honda raises questions for both employers and employees, and provides all parties with a good reason to reas- sess their strategy in handling a claim for wrongful dismissal. Any party to a court action can be penalized by a court for persisting with an unmeritorious claim, by virtue of the courts' discretion in awarding legal costs. On the employee side, the number of claims asserted for an employer's bad- faith conduct throughout litigation will certainly decrease. Counsel for employ- ees may see little value in advancing bad-faith and punitive damage claims that are likely to fail in the wake of the Honda decision, if there is a risk in being penalized later with an unfavour- able costs ruling. Employers who are currently involved in wrongful dismissal litigation where a claim for punitive or bad-faith damages has been asserted might now be in a po- sition to consider two complementary strategies. First, the Honda case provides employ- ers with fertile ground on which to set- tle existing wrongful dismissal actions. Where the real issue between the parties is the length of the notice period, this is a good time for an employer to make a reasonable offer to settle and avoid liti- gation. The employee may now be more inclined to settle. Second, the case also provides good ammunition for a motion for summary judgment or a motion to strike those por- tions of the statement of claim dealing with bad-faith or other types of "punitive" damages. Pallett Valo LLP litigators have already been able to cite the Honda case to succeed in obtaining a consent order to strike a $2.5-million claim for Wal- lace and punitive damages. The courts will likely see an increase in the number of such motions brought in the wrong- ful dismissal context. In our experience, there are many cases before the courts where this type of motion stands a sub- stantial chance of success. The time is right to drive a "Honda" into court. Andy Balaura (abalaura@pallettvalo. com) and Pamela Yudocovitch (pamyud- co@pallettvalo.com) are members of the labour & employment law group at Pallett Valo LLP in Mississauga, Ont. IH C ANADIAN Lawyer INHOUSE OC T OBER 2008 33