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Applicability of “Wallace” damages to public sector clarified
May 16, 2005

A recent court decision has clarified the extent to which public servants subject to the Employment Termination Standards may be eligible for increased notice of dismissal or severance pursuant to the Supreme Court of Canada’s 1997 decision in Wallace v. United Grain Growers.

In Wallace, the Supreme Court held that employers owe employees a duty of good faith and fair dealing in the manner of dismissal. The Court further held that an employee’s entitlement to notice of dismissal or severance in lieu of notice may be increased if the employer breaches that duty.

In British Columbia, the Employment Termination Standards, which are applicable to many public servants, limit severance for those individuals subject to the Standards to a maximum of 18 months. In Jalan v. Institute of Indigenous Government, the plaintiff argued that the Standards did not preclude the Court from awarding her more than 18 months’ notice or severance if the award included damages for her employer’s breach of the duty of good faith and fair dealing pursuant to Wallace.

The B.C. Supreme Court held that “Wallace” damages are an extension of the period of reasonable notice, not a separate head of damages, and therefore must be included within the 18-month maximum. The Court did not consider whether the 18-month limit includes an award of punitive or aggravated damages.

Jalan v. Institute of Indigenous Government et al., (2005) B.C.S.C. 590