BAD FAITH DISCHARGE

Employers have a legal obligation to act in good faith when terminating an employee. If an employer does not discharge this duty properly, the employee may have grounds to sue the employer for a bad faith termination. The Supreme Court of Canada established in the landmark 1997 decision, Wallace v. United Grain Growers Limited, that employers must be candid, reasonable, honest and forthright with their employees, and should refrain from engaging in conduct that is unfair, untruthful, misleading or insensitive. Even if the termination was otherwise legal or valid, the employer may still have liable for damages if the manner of dismissal shares the above characteristics.

Examples of bad faith conduct include the employer making declarations that result in an attack on the employee’s reputation, misrepresenting the employee’s reason for leaving, or terminating the employee to deny them a right such as a pension benefit.

The employee has the burden of proving that the employer engaged in bad faith conduct during the termination process.

Stacey Ball of Ball Professional Corporation was the lawyer acting on behalf of the winning party in the landmark case, Wallace v. United Grain Growers Ltd.. It was in this decision, with the help of top Toronto employment lawyer Stacey Ball, that the employer’s obligation of good faith and fair dealing in the manner of dismissal was created. The court stated, at paragraph 98, that although the obligation of good faith and fair dealing is incapable of precise definition, at a minimum, it should require: “in the course of dismissal employers ought to be candid, reasonable, honest and forthright with their employees and should refrain from engaging in conduct that is unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive.” [Emphasis added]

Thanks to the obligation of good faith and fair dealing, an employer in violation of the obligation could be liable for a separate quantum of damages, entirely independent of damages for reasonable notice. Bad faith discharge or discharge for bad faith can therefore create an actionable wrong in its own right. However, it is noteworthy that bad faith discharges or breaches of the implied obligation of good faith and fair dealing in the manner of dismissal are not all equally injurious. A trial judge must, in each case, examine the nature of the bad faith conduct and its impact.

Arguments regarding bad faith discharges are not always successful. The employee has the burden of showing that their employer engaged in bad faith conduct or unfair dealings in the manner of dismissal, and that their injuries flow not from the dismissal itself but from the manner in which it was effected. Employees are not always successful in discharging this burden. Examples of circumstances in which a bad faith discharge was not found include:

• In Gaudio v. Banca Commerciale Italiana of Canada, there was no award of extended damages where the mental distress experienced by the employee stemmed from the fact they had been terminated and not from the manner in which they were terminated;
• In Clendenning v. Lowndes Lambert (B.C.) Ltd., an it did not necessarily follow that there would be a breach of the implied obligation of good faith and fair dealing where an employer makes unsuccessful cause allegations with a solid foundation in the evidence; and
• In Blondeau v. Holiday Ford Sales (1980) Ltd., extended damages were denied where an employer failed to communicate their intention of returning the employee to her job on a gradual basis, causing her to reasonably believe she had been constructively dismissed.

Having an experienced employment law counsel, such as Stacey Ball of Ball Professional Corporation, will make it far more likely that your claim of bad faith discharge is successful.