The Federal Public Sector Labour Relations and Employment Board Decides to “Punish” the Correctional Service of Canada by Awarding $310,000 for Psychological Harm and Punitive Damages
December 1, 2022
Lyons v Deputy Head (Correctional Service of Canada), 2022 FPSLREB 95
On November 21, 2022, the Federal Public Sector Labour Relations and Employment Board (the
“Board”) released its decision in Lyons v Deputy Head (Correctional Service of Canada), 2022 FPSLREB 95. This decision follows the Board’s previous ruling in Lyons v Deputy Head (Correctional Service of Canada), 2020 FPSLREB 122. In that ruling, the Board reinstated a correctional officer (the “grievor”) whose 16-year employment was wrongfully terminated by the Correctional Service of Canada (“CSC”) after an inmate falsely accused the grievor of being a drug mule. The Board expressed its shock at CSC’s decision to act on an allegation without any evidence. Moreover, the Board noted that CSC terminated the grievor without ever fully presenting the allegation to the grievor or “giving her an opportunity to respond to the case being made against her.”
The Board’s 2022 decision dealt with a claim for damages for psychological harm and punitive moral damages. The Board awarded the grievor $135,000 ($150,000 less a 10% discount for other contributing factors) as aggravated damages for psychological harm suffered and $175,000 as punitive damages with simple interest. The quantum of the damages awarded is extraordinary and was intentionally made to “punish the CSC and to deter any future such deplorable misconduct that was so malicious that it offends the Board’s sense of justice and decency.”
Psychological Harm Suffered
In awarding damages for psychological harm, the Board reviewed evidence from the grievor’s family physician and registered psychotherapist. Both health professionals testified the grievor was suffering from stress, anxiety and depression. The grievor felt ashamed of the false allegations made against her and said she “lost all her friends and acquaintances in the community.” The grievor’s registered psychotherapist noted that the problems she now faced related to her being fired from work and how it was handled by her employer.”
CSC “did not deny all responsibility or submit that no harm was suffered by the grievor.” Instead, they argued “that the evidence showed that other factors, unrelated to her suspension and termination of her employment, were responsible for her being unwell.”
In its decision, the Board reviewed the Supreme Court of Canada ruling in Honda Canada Inc v Keays, 2008 SCC 39 and found that CSC acted “in bad faith by being untruthful and misleading.” Based on case law from the Federal Court of Appeal, the Board ruled an award for $150,000 was appropriate:
This award is in accordance with the Tipple appellate decisions given the compelling medical evidence before me and the grievor’s testimony as to the far more severe, long-lasting, and ongoing harm to her health and quality of life caused by the employer’s action than was present in Tipple.
In making this award, the Board accepted “the employer’s submission on the existence of other post-employment domestic causal factors that contributed to the grievor being unwell.” For this reason, the Board discounted the award for aggravated damages by 10%.
Although CSC argued that its conduct did not justify an award for punitive damages, the Board found that CSC “deliberately made its wrongdoing investigation and grievance adjudication strategy very personal and that it attacked [the grievor’s] character.” After reviewing the criteria for punitive damages set out by the Supreme Court of Canada in Whiten v Pilot Insurance Co, 2002 SCC 18 at para 113, the Board found an award for $75,000 was reasonable.
In addition to this amount, the Board awarded the grievor $100,000 after CSC “brought false and highly prejudicial gossip before the Board with no witness or other evidence to testify to its source.” On the final day of the hearing, CSC alleged that the grievor had recently suffered a drug overdose. No evidence was presented to corroborate this allegation. In response to CSC’s claim, the Board noted,
It is hard to conceive of another false allegation brought forward by the employer that could have been more prejudicial to the Board’s hearing on the final day of receiving closing submissions than trying again to connect the grievor to illicit drugs by accusing her of being a drug user and suffering an overdose.
The Board strongly condemned CSC and ruled that an award for “$100,000 is a reasonable award for punitive damages solely intended to punish the employer for its conduct on the final day of the hearing into this matter and to deter it from any such future shockingly unacceptable behaviour.”
Reputational Harm & CPP Benefits
The grievor also sought damages for loss of reputation. The Board refused to make this award because doing so would amount to double compensation. In other words, the “grievor cannot enjoy being reinstated and put back in the place she would have been in had her termination never occurred and then also be paid damages by the employer for its harm causing impairment of her ability to find new employment.”
In addition, the Board dismissed the grievor’s claim for loss of Canada Pension Plan (“CPP”) benefits. The Board ruled the value of this loss “is not to be ascertained in advance and is purely speculative.”
Overall, the Board’s award for psychological harm and punitive damages acts as a warning to employers in the federal public sector and elsewhere. While allegations of employee misconduct can and should be diligently investigated, investigations cannot deprive employees of the right to know and respond to the allegations made against them. Furthermore, employers should not bring “false and highly prejudicial gossip” before the Board or other adjudicators without any witnesses or evidence to support such claims.
Note: The grievor was represented by Corrine Blanchette, staff representative for the Union of Canadian Correctional Officers and counsel in the case. UCCO is a client of Koskie Glavin Gordon, Koskie Minsky LLP’s affiliated firm in Vancouver.
Authored by Abir Shamim, Articling Student
 Lyons v Deputy Head (Correctional Service of Canada), 2022 FPSLREB 95 at para 4 [Lyons 2022].
 Ibid at para 17.
 Ibid at para 26.
 Ibid at para 58.
 Ibid at para 63.
 Lyons 2022, supra note 2 at para 144.
 Ibid at para 114.
 Ibid at para 167.
 Ibid at para 199.
 Ibid at para 234.
 Ibid at para 243.
 Ibid at para 276.
 Ibid at para 261.
 Ibid at para 199.