AuthorGeoffrey England
The writing for this edition was completed in late May 2008. At the end
of the editorial proce ss — and, regrett ably, too late to incorporate into
this edition — the Supreme Court of Canada handed down its ruling
in Honda Canad a Inc. v. Keays.1 This case is importa nt in two respects.
First, it holds that if an employee i s dismis sed in bad faith and suffers
consequential psychological har m, compensation for such harm must
be awarded under t he u sual principles of contract law regarding the
award of damages, namely that such harm must be in the reasonable
contemplation of the pa rties at the date t he contract was made. Previ-
ously, the courts generally extended the period of reasonable notice
of termination to account for bad faith di smissal under the Walla ce
doctrine, examined in Chapter 9 of this book. The Supreme Court’s
new r uling means that Wallac e extensions can no longer be given in
these circumst ances. Second, the Supreme Court quashed the award of
$100,000 in punitive damages ordered by the Ontario Court of Appeal.
In so doing, the Supreme Court signalled that punitive damages should
only be awarded in exceptional circumstances where the employer’s
conduct is f‌lagrantly egregious. The reader is alerted, therefore, that the
Keays decision signif‌icantly modif‌ies Chapter 9 of this book in relation
to Wall ac e extensions and compensation for wrongful dismi ssal.
1 2008 SCC 39.

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