In New Brunswick, if your employer fires you in a cruel, dishonest, or humiliating manner, you can claim bad faith damages (historically known as Wallace damages) through a wrongful dismissal lawsuit. You must file your claim at the Court of King’s Bench, and these moral damages can add anywhere from $5,000 to over $50,000 CAD to your standard severance package.
Losing your job is inherently stressful, but when an employer handles the termination process with unnecessary cruelty or dishonesty, the emotional toll can be devastating. In Canadian employment law, employers have a strict legal duty to act in good faith during the dismissal process. When they breach this duty-by publicly humiliating you, making false allegations of theft, or marching you out with security without cause-you have the right to seek additional financial compensation.
These extra funds are commonly referred to as “Wallace damages” or moral damages. 📖 Whether you were fired from an office in Fredericton, a manufacturing plant in Moncton, or a retail store in Saint John, New Brunswick courts do not tolerate malicious corporate behaviour. It is important to note that these damages are entirely separate from your standard severance pay or pay in lieu of notice; they are specifically meant to compensate you for the mental distress caused by the employer’s unfair conduct.
Step-by-Step Process for Claiming Bad Faith Damages in New Brunswick
Claiming moral damages requires solid evidence and strategic legal action. 📍 You cannot simply claim an employer was “mean”; you must prove that their specific actions during the termination process were untruthful, misleading, or unduly insensitive. A local employment law firm will generally guide you through the following steps.
Step 1: Document the Unfair Treatment
The moment you suspect bad faith, start documenting everything. Save copies of aggressive emails, write down the names of colleagues who witnessed a public firing, and keep any termination letters that contain false allegations of “just cause.” If your employer claims you committed a major offence to avoid paying severance, retaining evidence of your good performance is crucial.
Step 2: Seek Medical Documentation for Mental Distress
To successfully claim moral damages today, Canadian courts generally require proof that the employer’s bad faith conduct caused you actual mental distress beyond the normal sadness of losing a job. 👨⚐️ You should visit your doctor or a psychologist in New Brunswick to formally document any anxiety, depression, or sleep loss you are experiencing as a direct result of the firing.
Step 3: Send a Formal Legal Demand Letter
Before filing a lawsuit, your lawyer will draft a comprehensive demand letter to your former employer. This letter will outline your entitlements to standard common law severance and explicitly state your demand for bad faith damages due to their conduct. Often, employers will offer a higher settlement at this stage to avoid a public trial.
Step 4: File a Claim in the Court of King’s Bench
If the employer refuses to negotiate fairly, your law firm will file a Statement of Claim at the New Brunswick Court of King’s Bench. 📁 This official legal document initiates a wrongful dismissal lawsuit, officially seeking both your standard pay in lieu of notice and the specific moral damages for the unfair termination process.
How Much Does it Cost in New Brunswick?
Fighting a bad faith termination requires professional legal representation, but many law firms offer flexible payment structures to help unemployed workers.
- Contingency Fee Agreements: Many employment lawyers in New Brunswick will take your wrongful dismissal case on a contingency basis. This means you pay $0 CAD upfront, and the lawyer takes a percentage (usually 25% to 35%) of the final settlement or trial award.
- Hourly Rates: If you prefer to pay out-of-pocket, senior employment lawyers typically charge between $300 and $500 CAD per hour.
- Court Filing Fees: Filing a Statement of Claim at the Court of King’s Bench costs approximately $110 CAD.
| Type of Compensation | Purpose | Typical Amount in NB |
|---|---|---|
| Standard Severance | Replaces lost wages during job search | 2 to 4 weeks per year of service |
| Bad Faith (Wallace) Damages | Compensates for mental distress from cruel firing | Lump sum of $5,000 – $50,000+ CAD |
| Punitive Damages | Punishes exceptionally malicious corporate behaviour | Very rare, $10,000 – $100,000+ CAD |
How Long Does the Process Take?
Securing bad faith damages takes time, as employers rarely admit to acting maliciously without a fight. ⌛ If your lawyer sends a strong demand letter backed by medical evidence, a negotiated settlement can sometimes be reached in 3 to 6 months.
However, if the employer digs their heels in and the case proceeds to a full trial at the Court of King’s Bench, navigating the discoveries and court backlogs can take 1.5 to 2.5 years. Your lawyer will work to resolve the matter as quickly as possible through mediation to save you from prolonged litigation.
Frequently Asked Questions (FAQ)
Can I claim Wallace damages just because I am sad I lost my job?
No. Normal emotional distress from losing employment does not qualify for moral damages. You must prove that the employer engaged in specific bad faith conduct, such as lying, making false accusations, or firing you in a deliberately humiliating manner.
Are bad faith damages taxable by the CRA?
Unlike standard severance pay (which is taxed as a retiring allowance or employment income), moral damages awarded specifically for mental distress are generally considered non-taxable by the Canada Revenue Agency. Your lawyer will ensure the settlement agreement is structured correctly.
What if my employer falsely accused me of an indictable offence to fire me?
Making unfounded allegations of criminal conduct (like theft or fraud) to justify a termination is a classic example of bad faith. Courts in New Brunswick severely penalize employers who try to manufacture “just cause” to avoid paying severance.
Do I need medical proof of mental distress?
Yes. Following a major Supreme Court of Canada decision, you generally need to provide objective evidence, such as clinical notes from a doctor or therapist, proving that the employer’s unfair conduct caused you actual psychological harm.
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