Common human decency: bad faith in the manner of dismissal
When an employer dismisses an employee, they create an emotional situation, as it is distressing to lose your job. Thus, courts and common human decency suggest that the employer should try to be compassionate when dismissing the employee and should not make the dismissal any harder than it needs to be. Failure to give common human decency when dismissing an employee can result in moral damages for bad faith in the manner of dismissal.
Courts have found that the employer fails to discharge its duty to act in good faith while dismissing an employee when the employer fails to be open, reasonable, truthful, and forthright with the employee. Bad faith in the manner of dismissal covers many different situations where the employer is acting unfairly. This includes harms ranging from reputational harm to harm from an aggressive dismissal strategy. No set test determines whether there is bad faith in the manner of dismissal. The assessment needs to be contextual. A bad faith in the manner of dismissal assessment looks at whether the employer’s actions caused distress beyond what a normal dismissal would cause. The employee needs to introduce evidence proving that the distress was caused by the employer’s actions. However, such evidence can come from non-expert evidence such as testimony from the employee, their family members, and third parties.
The Supreme Court of Canada and its decisions on bad faith in the manner of dismissal
There are two key Supreme Court of Canada (SCC) decisions that specifically deal with bad faith in the manner of dismissal. Wallace v United Grain Growers Ltd ( 3 SCR 701) and Honda Canada Inc v Keays (2008 SCC 39) set out the principles that help determine what is bad faith in the manner of dismissal across Canada.
In Wallace, the Supreme Court of Canada stated that employers are obligated to act in good faith and fair dealing in the manner that they carry out an employee’s dismissal. In Wallace, the SCC stated that for a dismissal to be in good faith it must be:
- Candid and forthright
- Honest, truthful, and not misleading
- Fair and reasonable
In Honda Canada Inc v Keays (Keays) the Supreme Court of Canada set out some examples of what could constitute bad faith in the manner of dismissal:
- The employer makes declarations that attack an employee’s reputation at the time of dismissal
- The employer misrepresents why the employee left
- The dismissal is meant to deprive the employee of a pension benefit or other right, such as becoming a permanent employee
A key difference between Wallace and Keays is how they award the employee for successfully demonstrating bad faith in the manner of dismissal. In Wallace, the SCC found that bad faith in the manner of dismissal results in an increased notice period. This “Wallace bump” was overturned in Keays where the SCC determined that damages for bad faith in the manner of dismissal should be determined separately from the award of notice. The change was because bad faith damages are meant to compensate the employee’s loss rather than act as a punishing deterrent for the employer. This is where hiring an employment lawyer is beneficial, as courts will call out statements of claim that improperly ask for a Wallace bump (see Hogan v Brunswick News Inc / Nouvelles Brunswick Inc, 2019 NBQB 267).
In 2020, the Supreme Court of Canada released Matthews v Ocean Nutrition Canada Ltd (2020 SCC 26). Though the SCC does not address bad faith in the manner of dismissal in-depth, it reaffirms the principles found in Keays on how courts should address bad faith in the manner of dismissal.
Recent case law on bad faith in the manner of dismissal
Though Keays is the supreme law on bad faith in the manner of dismissal, lower court case law shows us how courts have interpreted that ruling. The five following cases from Ontario’s courts also provides examples of bad faith in the manner of dismissal.
In 2016, the Ontario Superior Court released Morison v Ergo-Industrial Seating Systems Inc (2016 ONSC 6725). In Morison, the employee was fired by a quick phone call followed by a letter alluding to a for cause dismissal without providing any reasons for that decision. The employer knew of the employee’s financial issues, but tactically chose to delay giving the employee his record of employment and the minimum amount of money required under the Employment Standard Act (ESA). The court found that the employer’s post-termination conduct was malicious, oppressive, and high-handed. The court also noted that the employer’s behaviour was a marked departure from the ordinary standards of decent behaviour when trying to avoid and defend against a legal action from a former employee. In other words, the court said that the employer did not show common human decency after firing the employee. After considering the harm caused, the degree of misconduct, the relative vulnerability of the employee, and the advantage gained by the employer, the court awarded the employee $50,000 in damages for bad faith in the manner of dismissal. This case shows that employers and their counsel need to act in good faith when addressing a wrongful dismissal claim.
In 2018, the Ontario Superior Court released Johnston v The Corporation of the Municipality of Arran-Elderslie (2018 ONSC 7616). In this case, the employer invited Johnston to come to the municipal building, without providing him with a reason why. When Johnston arrived, his employer was guarded by the police. The employer provided Johnston with a termination letter and a press release. The press release gives the false impression that Johnston was banned from designated buildings within the municipality. The court found that this manner of dismissal caused mental distress beyond what is expected when an employee loses their job. The judge relied on testimony from Johnston and his mother to find that the bad faith in the manner of dismissal caused Johnston to lose weight and that it contributed to his marital breakdown. The judge awarded damages of $100,000. This case is a reminder to have common human decency and be sensitive when dismissing an employee by not making a public show of the dismissal.
In 2019, the Ontario Court of Appeal released Colistro v Tbaytel (2019 ONCA 197). In this case, the employer re-hired an employee that it fired for harassing Colistro 11 years prior. This caused great mental distress to Colistro. As Colistro did not want to work with her harasser, she quit and claimed constructive dismissal. The Court of Appeal noted that assessing Keays damages is an imprecise fact-specific exercise. They stress the importance of looking at case law to find an appropriate amount for damages. The court found that the lower court accomplished that and upheld the $100,000 in damages for bad faith in the manner of dismissal. This case shows that bad behaviour that forces an employee to quit can result in damages for bad faith in the manner of dismissal.
In 2021, the Ontario Superior Court released McGraw v Southgate (Township) (2021 ONSC 7000). In this case, McGraw was fired for bad conduct based on unfounded, sexist allegations made by her colleagues that related to her conduct from years prior. The main allegation was that McGraw would give good grades at the fire college in exchange for sex. The court noted that the employer did not properly investigate what the court found to be fantastical and discriminatory allegations. Thus, the employer did not provide McGraw with a chance to respond to the allegations. In this case, the court noted that the bad faith in the manner of dismissal damages is not just confined to the exact moment of dismissal. The court found that the employer was acting on unfounded sexist allegations that resulted in significant mental anguish. The court noted that McGraw’s family heard of the allegations, which harmed McGraw’s romantic relationship. The court awarded McGraw $75,000 in damages for bad faith in the manner of dismissal. This case shows that Keays damages can cover a broad array of conduct that is not just confined to the exact moment of dismissal.
In 2022, the Ontario Court of Appeal recently released Humphrey v Mene Inc (2022 ONCA 531). In this case, Humphrey was a relatively young Chief Operating Officer (COO) who asked for a raise. A little while later, Humphry received an email from one of Mene’s vendors that informed her that they got an email that said that she no longer worked for Mene. Humphrey tried to access her online business-related accounts but was unable to do so. Humphrey asked one of her colleagues what was going on and was informed that she would be getting a letter from the board shortly. Humphrey then got a suspension letter alleging performance issues that she was not informed of before receiving the letter. Shortly thereafter, Humphrey received a termination letter which stated that the performance issues gave rise to a for cause termination. Mene later withdrew the for cause allegation stating that they lost the relevant documents to prove it. Regardless, even at the appellant level, Mene insisted that they had a for cause reason to dismiss Humphrey. However, the court found that Humphrey’s dismissal was in bad faith. The court stated that abuse suffered throughout the employment relationship can be considered in the manner of dismissal. The court looked at case law, the reputational harm caused by the public nature of the dismissal, and receipts for Humphrey’s psychotherapy to find an appropriate level of damages. The court decided to uphold the motion judge’s award of $50,000. This case shows that an aggressive legal strategy and failure to show common human decency when dismissing the employee will result in damages.
How Suzanne Desrosiers Professional Corporation can help
Suzanne Desrosiers Professional Corporation can help either the employer or a former employee address a bad faith in the manner of dismissal claim. It is a complaint that is rooted heavily in long and confusing case law, which is best understood by employment lawyers. You can reach us and possibly hire one of our employment lawyers by calling us at 705-268-6492.