bad faith in employment terminations
04Jun

Bad Faith in Termination of Employment

When an employer decides to terminate an employee, a significant power imbalance often emerges. Employers hold most of the control, while employees are left vulnerable to decisions that may impact their livelihoods and reputations. While many terminations are handled lawfully, some may involve bad-faith conduct, potentially giving rise to legal claims.

This article explains what bad-faith termination means, how it is treated under Ontario employment law, and what steps employees can take to protect their rights, with help from an experienced Employment Lawyer.

What Is Severance Pay in Ontario?

Severance pay is a specific entitlement outlined in the ESA, and it only applies in limited situations. To qualify, two main criteria must be met:

  • The employee has worked for the employer for at least five years.
  • The employer has an Ontario payroll of $2.5 million or more, or the termination involves 50 or more employees within a six-month period.

If eligible, an employee is entitled to one week of regular pay per year of service, up to a maximum of 26 weeks. This payment is separate from termination pay and is intended to recognize long-term service.

What Is Bad-Faith Conduct in a Termination?

Bad-faith conduct occurs when an employer acts dishonestly, unreasonably, or unfairly during the termination process. While employers have the right to end employment, they must do so in a manner that respects the dignity of the employee.

Examples of bad-faith conduct during dismissal may include:

  • Lack of honesty: Providing false or misleading reasons for termination
  • Unreasonable behaviour: Abrupt changes to employment terms or dismissal without adequate notice
  • Insensitive treatment: Terminating an employee in public or during a vulnerable time
  • Retaliation: Firing someone for asserting their legal rights, such as making a harassment complaint
  • Discrimination: Letting someone go based on a protected ground under the Ontario Human Rights Code, such as race, age, gender, or disability

Such conduct can lead to emotional distress, reputational damage, and financial harm for the affected employee

Why Bad-Faith Terminations Matter in Employment Law

In Canadian law, employers owe a duty of good faith and fair dealing when terminating an employee. This duty requires employers to act reasonably, truthfully, and respectfully. When they fail to meet this standard, courts may award additional compensation to employees beyond regular severance.

This principle was solidified in two major decisions:

Wallace v. United Grain Growers Ltd., [1997] 3 SCR 701

In Wallace, the Supreme Court of Canada held that employers must be candid, honest, and respectful during dismissals. The Court confirmed that employees subjected to bad-faith conduct, such as misleading explanations or humiliating treatment, may be entitled to extended notice or damages.

Honda Canada Inc. v. Keays, [2008] 2 SCR 362

The Court in Keays expanded on Wallace, confirming that aggravated damages may be awarded if an employee proves they suffered mental distress due to the employer’s bad-faith conduct. This case shifted the focus from simply extending notice to awarding compensation for actual harm suffered.

These cases make clear that Ontario courts will not tolerate employers who abuse their power in termination decisions.

Signs You May Have Been Dismissed in Bad Faith

If you have been dismissed and experienced any of the following, you may have a case for bad-faith termination:

  • You were given false or vague reasons for your dismissal
  • Your employer made the termination public or handled it insensitively
  • You were dismissed after filing a complaint or requesting a workplace accommodation
  • Your termination coincided with a medical leave, pregnancy, or other protected circumstances
  • You were pressured to resign or sign a release without legal advice

An Employment Lawyer can help you assess the situation and determine whether legal action is warranted.

What to Do if You Suspect Bad-Faith Termination

Taking proactive steps can strengthen your legal position and help you seek appropriate remedies. If you believe your termination was handled in bad faith, consider the following:

  • Document Everything: Keep detailed records of emails, texts, performance reviews, contracts, termination letters, and conversations.
  • Speak to an Employment Lawyer: Legal professionals can evaluate your situation and help you understand your rights and entitlements.
  • Understand the Legal Remedies Available: In addition to severance pay, you may be entitled to aggravated or punitive damages.
  • Explore Mediation or Settlement Options: Many employment disputes are resolved through negotiated settlements or alternative dispute resolution.
  • Stay Informed and Involved: Maintain communication with your lawyer and understand each step of the process.

At Achkar Law, our team works closely with employees facing wrongful dismissal or bad-faith termination. We ensure every client understands their options and is equipped to assert their legal rights.

How an Employment Lawyer Can Help

If you’ve been dismissed and suspect bad-faith conduct, a lawyer can guide you through:

  • Reviewing your employment contract and termination notice
  • Determining whether the dismissal violates the Employment Standards Act, 2000 or the Ontario Human Rights Code
  • Identifying aggravating factors that may justify additional damages
  • Representing you in negotiations, mediations, or legal proceedings
  • Protecting your reputation and helping you move forward with confidence

We also assist with related issues such as workplace investigations, accommodation requests, and discrimination claims.

Contact Achkar Law for Help with Bad-Faith Terminations

At Achkar Law, we understand how difficult it can be to lose your job, especially when it’s done unfairly. Our experienced Employment Lawyers are here to provide the guidance and advocacy you need.

Why choose Achkar Law?

  • Focused on Employment Law: We understand the complexities of Ontario employment law
  • Client-Centred Solutions: We tailor our approach to your unique situation
  • Proven Results: We’ve helped hundreds of employees assert their rights
  • Transparent Advice: We clearly explain your rights, risks, and options
  • Efficient Dispute Resolution: We aim for cost-effective, practical outcomes

Whether through negotiation, mediation, or court proceedings, we are committed to helping employees achieve justice after unfair dismissals.

Phone toll-free at 1-800-771-7882 | Email us at [email protected]

The article in this client update provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Achkar Law Professional Corporation and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Achkar Law Professional Corporation. ©

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