A recent Ontario Superior Court decision awarded a plaintiff employee 14 months of Wallace damages, on top of an already lengthy 19-month notice period, bringing the employee’s total common law damages to a significant award of 33 months of pay in lieu of notice.
In Wilsher v. Olympic Wholesale, 2026 ONSC 3620, a 55-year-old night shift supervisor with 17 years of service was dismissed for wilful misconduct for “topping up” the shifts of subordinate employees in certain circumstances (such as when an employee worked through their break). The employer argued that the employee had engaged in fraud and time theft, while the employee argued that “topping up” shifts (i.e., manually inputting that an employee had worked an entire shift when they had not) was a longstanding practice within the company, was practiced by every supervisor and was condoned by the employer.
The court ultimately agreed with the employee, and overturned the termination for wilful misconduct, for the following reasons:
- The employee was specifically taught how to “top up” time sheets when he received training to become the night shift supervisor;
- The “topping up” practice had existed for at least 19 years, and continued after the employee’s dismissal for cause; and
- The employee never benefited from the “topping up” practice himself.
This decision is important for two reasons. First, the total notice period awarded is significant, eclipsing the previous presumptive ceiling of 24 months of notice absent exceptional circumstances, and 30 months of notice only in “exceptional” circumstances.
Second, this decision departs from the widely-adopted Supreme Court of Canada’s 2008 decision in Honda Canada Inc. v. Keays, 2008 SCC 39, which found that mental distress arising from a termination of employment that goes beyond the typical distress associated with losing one’s job should be compensated by way of aggravated, punitive, moral or general damages, and not by “arbitrary” extension of the notice period.
Instead, in Wilsher the court relied on the Supreme Court of Canada’s earlier decisions in McKinley v. BC Tel, 2001 SCC 38 and Wallace v. United Grain Growers Ltd. [1997] 3 SCR 701, which determined that “[w]here a dismissal is accompanied by bad faith or unfair dealing on the part of the employer…such conduct merits compensation by way of an extension to the notice period.”
The court in Wilsher also declined to award the employee aggravated or punitive damages, in favour of lengthening the notice period.
The court did not comment on why it departed from the more recent and widely-adopted Keays method of compensating employees for bad faith behaviour and instead followed the earlier McKinley and Wallace decisions.
This case begs the question of whether the earlier method of compensating employees for bad faith behaviour in the manner of termination through extension of the notice period as set out in McKinley and Wallace will make a resurgence, or if this case is simply an anomaly.
For more information on this topic, please reach out to Emily Kroboth.
