Aggravated and Punitive Damages in an Ontario Wrongful Dismissal Case

Most wrongful dismissal cases in Ontario are about one central question: was the employee given enough notice, or pay in lieu of it? In a small minority of cases, two other categories of damages can come into play — aggravated (sometimes called moral) damages, and punitive damages. They are often confused with each other, but they serve very different purposes and are awarded on very different grounds.

If you're researching punitive damages in a wrongful dismissal context in Ontario, it's worth understanding both categories, because they are easy to conflate and both are genuinely rare.

Two Different (and Rare) Categories of Extra Damages

Both aggravated and punitive damages sit outside the ordinary notice-period damages that make up the bulk of a typical wrongful dismissal claim. Neither is available automatically, and neither is common — most wrongful dismissal cases resolve based on the notice period alone, without either category coming into play.

Aggravated (Moral) Damages

Aggravated, or moral, damages are compensatory — meant to compensate the employee for genuine, provable psychological or emotional harm caused by the manner in which the employer carried out the dismissal, separate from the harm of losing the job itself. They generally require:

• Bad faith or unfair dealing in how the dismissal was handled (not just the decision to dismiss)
• Actual, demonstrable harm to the employee flowing from that conduct — not just general upset
• A connection between the employer's conduct and that harm

Because these damages are compensatory, they are meant to make the employee whole for real harm suffered — not to punish the employer.

Punitive Damages

Punitive damages serve an entirely different purpose: they exist to punish and deter conduct that is exceptionally harsh, vindictive, malicious, or reprehensible — not to compensate the employee for a loss. Courts award them only in rare, extreme cases, and Ontario courts generally require the employer's conduct to amount to an independently wrongful act, not simply an unfair or poorly handled dismissal on its own.

Because the bar for punitive damages is so high, most bad-faith dismissal cases — even genuinely troubling ones — are resolved through aggravated damages, an extended notice period, or ordinary notice damages alone, without punitive damages ever coming into play.

Side-by-Side Comparison

Why Both Are Rare in Practice

Ordinary difficult, even harsh, business decisions to end employment do not qualify for either category. Employers are generally permitted to end employment without cause, without wrongdoing, as long as adequate notice or pay in lieu is given — so the mere fact of being dismissed, or being dismissed at an inconvenient time, does not open the door to these additional damages. Both categories require something meaningfully worse: real harm caused by unfair conduct for aggravated damages, and truly egregious conduct for punitive damages.

If You Think Your Situation Might Involve Either Category

Because both categories are fact-heavy and rare, building any claim beyond ordinary notice damages generally means gathering specifics rather than relying on a general sense that "this wasn't handled fairly." Consider:

1. Write down a detailed timeline of the dismissal itself and any events leading up to it, while the details are still fresh.
2. Preserve all written communications — emails, texts, letters — from your employer around the time of the termination.
3. Note the specific conduct that troubled you, distinguishing it from the general fact of being let go.
4. Keep any evidence of harm you experienced, including medical records if you sought care.
5. Have a lawyer assess the whole picture before assuming either that you have a strong claim or that you have none at all — these categories are genuinely hard to evaluate without a full review of the facts.

Frequently asked questions