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They decide that an employee has to go and then assemble a way to justify the decisionThe Royal Bank of Canada (RBC) headquarters in the financial district of Toronto on April 24, 2025. Photo by Laura Proctor/BloombergSometimes I come out a little ahead of the law.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorIn my June 19 column, I wrote about a largely overlooked danger for financial institutions that fire financial advisers for cause and then report the alleged misconduct to their regulator.In such cases, the employee does not merely lose a job. They can lose their career.Once a bank files a notice of termination alleging misconduct, the adviser is unable to work in the industry while the regulatory process unfolds. Meanwhile, clients who need their investments managed do what clients inevitably do. They find someone else.And often those clients, having built a new relationship, never return.FP Work touches on HR strategy, labour economics, office culture, technology and more.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Work will soon be in your inbox.We encountered an issue signing you up. Please try againI argued that such terminations are fundamentally different from ordinary wrongful dismissals.If a 50-year-old employee is improperly fired and is unemployed for eight months before finding another job at roughly the same salary, her wrongful dismissal damages will compensate her for those eight months.A financial adviser can suffer something much worse.She can lose the book of business painstakingly accumulated over decades, along with the future referrals those clients would have generated. And, as clients and co-workers learn of their suspension, often assuming the worst, they lose their reputation too.Just 11 days after that column was published, Justice Annette Casullo provided a remarkable judicial confirmation of that argument in Silva v. Royal Bank.And she put a number on it.$1,919,000.That was the amount she awarded Silva, a former financial adviser at Royal Bank of Canada, for loss of earning capacity.The total award exceeded $2.6 million once 16 months of severance damages, aggravated damages and punitive damages were included.The case should terrify employers, particularly those that use outside investigators to build a case for cause.Silva was a successful 55-year-old financial professional with a loyal client base.Among other things, RBC claimed that she had sent confidential information to her personal email, processed certain transactions before obtaining documentation of authorization and backdated trade documents.It treated the allegations as cause-worthy.It also reported them to the financial industry regulator.There was just one problem.Their allegations did not withstand judicial scrutiny.Justice Casullo found that the evidence did not establish just cause. The investigation had serious deficiencies. Silva’s explanations were not properly considered. Remarkably, the investigators did not even contact the clients whose transactions were at issue.The court found that Silva had no reasonable prospect of employment in financial planning while the regulatory allegations remained outstanding. No one would hire her as she was unable to practice her trade.This was not speculation about some hypothetical future career.There was actual evidence of forfeited employment opportunities.TD Bank was sufficiently impressed with Silva that its hiring manager wanted to find a way to employ her despite the allegations. Management ultimately refused.IG Wealth was also interested in hiring her. Then it learned she had been terminated for cause and the discussions ended.The employer’s conduct had therefore impaired Silva’s future earning capacity in her chosen profession.That is what made this case different from an ordinary wrongful dismissal.Courts should be cautious about awarding damages for hypothetical future career opportunities. Otherwise, every wrongful dismissal could become a claim for a lifetime of speculative earnings.Silva’s case was different though. The opportunities were real. The prospective employers existed. Silva was inherently employable.And the evidence established why she could not obtain comparable employment. RBC’s conduct created the impediment.Justice Casullo relied on the British Columbia Court of Appeal’s decision in Acumen Law Corporation, which I wrote about previously, where damages were awarded to an employee who lost the opportunity to become a lawyer after an unjustified dismissal prevented her from continuing her legal career.The principle is important.It is not simply that an employee was fired and therefore lost an opportunity. That would describe almost every dismissal.It is that the employer’s wrongful conduct caused a particular professional opportunity to disappear, and the evidence established that the employee’s earning capacity was impaired as a direct result.Silva had intended to work until age 65.The court did not simply award her 10 years of projected earnings; it awarded damages through age 60, giving her five years to get back into the industry, rebuild her client base and reestablish client trust.That was considered reasonable because it had taken Silva eight years to build her original book.An expert quantified the future income and benefits loss, already accounting for contingencies such as disability and mortality. The court accepted the calculation.That is a very long way from 16 months’ salary.There is an extraordinary detail here that employers should not overlook.The very misconduct RBC relied upon to justify termination for cause ultimately produced no substantive regulatory penalty. The conduct was treated by the regulator as sufficiently minor to warrant a caution rather than a significant sanction.Silva did breach RBC’s code by sending confidential information to her personal email. The court expressly recognized that. But the court also found the misconduct to be of extremely low egregiousness.There was no malicious intent. There was no material harm done. There was no evidence of financial loss to RBC or its clients.That should give every employer conducting a workplace investigation pause.The question is not whether an employee technically breached a policy. The question is whether the misconduct was sufficiently serious, in all of the circumstances, to justify the ultimate employment penalty.Employers too often investigate backwards. They decide that an employee has to go and then assemble every conceivable policy violation to justify the decision.The proper sequence is the reverse. Investigate first. Hear the employee. Test the evidence. Contact the people who actually know what happened. Consider whether the conduct was intentional. Consider actual harm.Then ask whether a reasonable employer could conclude that the employment relationship is irreparably broken.RBC did not persuade the court that it was, and the price of getting it wrong was not sixteen months’ salary. It was more than $2.6 million.The $1.919 million is the headline economic award, but the additional $150,000 in aggravated damages should also command employers’ attention. They were not awarded simply because Silva was upset about losing her job. They compensated her for the serious depression, anxiety and distress caused by the manner in which RBC handled her dismissal.Silva had endured approximately 18 months of scrutiny before termination. The investigation was found to be unfair. The cause allegation was not established. The regulatory filing compounded the consequences.The punitive damages are even more significant.Punitive damages are not compensation. They are punishment, denunciation and deterrence.Silva was effectively ambushed by the investigation. She was not told that it was underway. The investigation displayed confirmation bias. She was falsely told by someone involved in the process that they did not know what it was about. Her explanations were not properly tested. People who could have provided critical evidence were not contacted.The judge’s message to RBC was particularly pointed: “RBC is one of Canada’s most revered institutions. It expects high standards from its employees. It should be held to those same standards.”Ouch.The types of problems the court pointed out about this investigation are manifested in most outside investigations that I see.And there is another important nuance: The regulatory filing itself was not found to be defamatory when RBC made it.RBC was entitled to make a regulatory report, but once the court determined that there was no cause for dismissal, the allegation underlying the filing was no longer sustainable. The court ordered RBC to correct the regulatory record.By then, however, the damage had already been done.The lesson is not that employers cannot report legitimate concerns to regulators. They can and, where required, must.The lesson is more uncomfortable. If you make a damaging regulatory allegation, you had better be right. Because the consequences of being wrong may not be limited to a wrongful dismissal award. They may include the destruction of an employee’s professional earning capacity.Let me give you examples I have seen many times in my practice.Consider the executive who is fired after a company performs badly and is publicly blamed for the failure.Or a senior employee accused of financial impropriety.Or the professional whose employer tells customers, competitors or regulators that the employee engaged in misconduct.Or the executive who becomes unemployable because prospective employers believe allegations made by the former employer.In each case, the central question will increasingly become: Did the employer merely terminate the employee, or did its conduct destroy the employee’s ability to earn a living?If it is the latter, the damages can be vastly more expensive.Howard Levitt is senior partner of Levitt LLP, leading his teams of labour lawyers in Ontario, Alberta and British Columbia. Howard has appeared in more Supreme Court employment law cases and provincial appeals than any lawyer in Canadian history. A bestselling author, he discusses current workplace issues on the podcast, At Work with Howard Levitt. Join the Conversation This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.