Bad-Faith Conduct in Dismissals
Due to the power imbalance that exists in employment relationships, the manner in which an employer treats an employee during dismissal is crucial. If the employer otherwise dismisses the employee dishonestly or harshly, the employee may be entitled to damages for the employer’s bad-faith conduct.
An implied term of employment agreements is that an employer will treat the employee with dignity, fairness, and respect over the course of employment. A failure on the part of the employer to treat an employee in good faith during a dismissal, when the employee is most vulnerable, can result in additional liability for the employer.
Often, clients come to us confused as to what might constitute “bad faith”. Understanding what constitutes bad-faith conduct is important because the normal bad feelings that come from a dismissal does not count. For an employer, being mindful in how they dismiss their employees can save them thousands of dollars in the future.
Employer’s Duty of Good Faith and Damages for Bad-Faith Conduct
In Wallace v United Grain Growers Limited, [1997] 3 SCR 701 (SCC), the Supreme Court of Canada set the employer’s duty of good faith, holding that employers ought to:
- be candid, reasonable, honest and forthright; and
- refrain from engaging in conduct that is unfair or bad in faith e.g. untruthful, misleading or unduly insensitive.
Where an employer fails to act in good faith during a dismissal, a claim for bad-faith damages may arise. Previously, bad-faith conduct was used as a factor to extend an employee’s notice period. After the case of Honda Canada Inc v Keays, [2008] 2 SCR 362, the Supreme Court of Canada held that where the plaintiff can prove they suffered damages as a result of bad-faith conduct, they are entitled to separate moral damages (now aggravated damages).
In an employment context, the manner in which an employer dismisses an employee will determine whether the employer engaged in bad-faith conduct. If, for example, the employer attempts to deprive the employee of a benefit or right, misrepresent the reason for the dismissal, or attacks the employee’s reputation, the employer may be liable for aggravated damages.
While employees still have the hurdle of proving their damages, employers should still be careful with how they dismiss their employees. Even though decisions to dismiss are often difficult for the employer, the dismissal itself will be hardest on the employee. Therefore, it is best to consult an employment lawyer how to make sure the manner of dismissal is at all times civil, respectful, and if appropriate, helpful with regards to transitioning the employee to find new work.
Seeking Legal Assistance
Whether you are an employer who wants to ensure your dismissal procedures comply with your employer obligations, or whether you are an employee who has been dismissed and has questions, our team of experienced workplace lawyers at Achkar Law can help. Contact us by phone at (800) 771-7882, or email at [email protected] and we would be happy to assist.
If you are a small or medium-sized company looking for full-service support, visit our CLO program page for our strategic solutions.
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Disclaimer: This blog is not intended to serve as, or should be construed as legal advice, and is only to provide general information. It is in no way particular to your case and should not be relied on in any way. No portion or use of this blog will establish a lawyer-client relationship with the author or any related party. Should you require legal advice for your particular situation, fill out the contact form, call (800)771-7882, or email [email protected].
