In its recent decision, Thompson v Revolution Resource Recovery Inc.2025 BCSC 8 (“Thompson”), the Supreme Court of British Columbia (the “Court”) made a $25,000 punitive damages award against an employer for attempting to make the payment of statutory termination entitlements under the Employment Standards Act (British Columbia) (“ESA”) conditional on a release.
Background
The employer, Revolution Resource Recovery Inc. (“Revolution”), terminated the employment of Key Accounts Manager, Ms. Thompson, after 3.5 years of service. Ms. Thompson’s termination letter was accompanied by a cheque for $7,782.92 (the “Cheque”) representing what Revolution said was her accrued wages and four weeks of severance. The termination letter stated that: “By accepting this payment, you acknowledge that you have no claims against Revolution Resource Recovery Inc., its related companies, officers, and management relation to your employment relationship”.
Ms. Thompson declined the offer. In her response letter to Revolution, she included a detailed breakdown of her sales and retention activity (the “Chart”) to support her request for additional severance at common law. She also requested payment of her statutory entitlements within 48 hours of her last working day, in accordance with the ESA, by way of direct deposit. Revolution did not respond to her letter.
Ms. Thompson subsequently sent a follow-up letter, reiterating her refusal to release Revolution from her claims. Additionally, she requested that Revolution provide their calculation of her average weekly pay in their severance offer, due to the variation in her weekly wages. Revolution did not respond to her letter.
Instead, Revolution sent a cease-and-desist letter to Ms. Thompson, alleging that she had improperly retained confidential company information to improve her negotiation position with Revolution, an apparent reference to the Chart. The letter demanded the immediate return of all confidential information and threatened legal action against her (the "Cease-and-Desist Letter").
Revolution did not provide the information Ms. Thompson had requested, nor did it pay her minimum statutory entitlements by direct deposit. Ms. Thompson eventually deposited the Cheque and then filed a notice of civil claim against Revolution, seeking reasonable notice under common law and $50,000 in punitive damages.
Decision
Ms Thompson was successful in her claim. The Court rejected Revolution’s argument that depositing the Cheque amounted to accepting its offer and releasing it from claims since Ms. Thompson had expressly declined Revolution’s offer in her letters to them. In addition to receiving an award for additional severance, she was awarded $25,000 in punitive damages.
In its decision, the Court articulated that the purpose of punitive damages is to penalize the defendant rather than to provide compensation to the plaintiff. The aims are retribution, deterrence, and denunciation, particularly for "highly reprehensible misconduct that markedly deviates from ordinary standards of decent behavior". The awarded amount will depend on the severity of the harm caused, the degree of misconduct, the relative vulnerability of the plaintiff, and any advantage or profit obtained by the defendant.
Ms. Thompson’s claim for punitive damages included two main arguments. The first argument was that the Cease-and-Desist Letter was heavy-handed and entirely unwarranted. The Court rejected this argument on the basis that it was reasonable for Revolution to have concerns about Ms. Thompson’s possible improper retention of confidential information.
The second argument centered on Revolution's actions concerning the Cheque and their failure to pay Ms. Thompson’s ESA entitlements, which included accrued wages, vacation pay, and three weeks of termination pay. The specific conduct under scrutiny was Revolution’s imposition of a condition that if Ms. Thompson cashed the Cheque, she would release Revolution from all claims; Revolution’s insistence on obtaining a release as a prerequisite for making any payment at all; and their disregard for Ms. Thompson’s requests to be paid in accordance with the ESA and to receive information about the calculation of her termination pay.
The Court found that Revolution’s conduct deprived Ms. Thompson of the ability to make an informed assessment of her position and was done in an ongoing attempt to pressure Ms. Thompson into accepting whatever Revolution was prepared to offer in exchange for a release.
The Court recognized that an employee terminated without notice typically faces immediate financial hardship. Additionally, the Court found that Revolution was aware that Ms. Thompson was particularly vulnerable due to a family crisis she was experiencing as well as unexpected expenses she was incurring for private care providers for her mother.
The Court ultimately determined that Revolution had violated its duty of good faith and fair dealing in the manner of Ms. Thompson’s dismissal, and that its conduct could appropriately be characterized as reprehensible. An award of $25,000 was deemed suitable to achieve the purposes of denunciation and deterrence of punitive damages.
Takeaways for Employers
Thompson underscores the mandatory nature of ESA compliance. In British Columbia, employers are required to provide terminated employees with their accrued wages, including any statutory termination pay, within 48 hours of their final day of work. These payments must be made unconditionally and cannot be contingent upon actions such as signing a release. The Court strongly emphasized that "[e]mployers should clearly be deterred from leveraging their own non-compliance with employment standards requirements to compel financially vulnerable employees to compromise their legal positions."
Furthermore, if an employer realizes they have not complied with the ESA through inadvertence, it is imperative that they address this non-compliance promptly. In the Thompson, an aggravating factor was Revolution's persistent refusal to adhere to the ESA, even after Ms. Thompson had highlighted her statutory rights, seemingly to coerce her into accepting their negotiation terms.
Finally, this decision provides some comfort that the issuance of a cease-and-desist letters respecting an employee’s misuse of employer confidential information will not attract punitive damages, where there is a reasonable basis for expressing concerns.
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