DAMAGES FOR IMPROVIDENT EMPLOYER BEHAVIOUR: TWO JUDICIAL APPROACHES

Abstract

The work undertaken in the following focuses on modern English and Canadian judicial approaches to the compensatory model imposed in common law employment disputes by the 1909 decision of the House of Lords in Addis v. Gramophone Co. Ltd., [1909] A.C. 488 (H.L.). The dissertation is concerned, primarily, with the legal impact of the Addis case, as well as both the legal and public policy considerations which favour a departure from the same. Both the House of Lords and the Supreme Court of Canada have, in the past six years, addressed the restrictions imposed by the Addis case on contemporary employment law damages. Although each of these courts recognized a need to depart from Addis, distinct approaches to the issue have resulted. The House of Lords has chosen a course by which the limit of damages prescribed by Addis (being compensation in the amount of “reasonable notice” of dismissal) may be overcome by a related claim for breach of the dismissing employer’s duty of “trust and confidence”. In Canada, however, the Supreme Court has devised a principle which affords judicial discretion to award additional “notice” compensation to an employee who has been dismissed in “bad faith”. The Supreme Court of Canada approach has been questioned, on the basis that it defies established contract law principles and, further, is not wholly responsive to the practical realities of modern employment as a “relational contract”. After a comprehensive review of these two judicial responses to Addis, it is submitted that neither approach is adequate or, for that matter, as legally complete as contemporary concepts of employment allow or demand. If the common law is to have relevance in employment law, it must evolve at a pace and direction consistent with the evolution of employment itself. At this juncture, the common law has been nudged (by both the House of Lords and the Supreme Court of Canada) in an appropriate general direction, but further reforms, which would equate typical employment relationships with insurance agreements and other “peace of mind” contracts, are desirable.