Terminating an employee is tough. The conversation in which the employer provides the employee with notice of termination can be awkward. Given how difficult terminations are, for both the employer and the employee, courts hold employers “to an obligation of good faith and fair dealing in the manner of dismissal.” This standard requires that employers, at a minimum, be “candid, reasonable, honest and forthright with their employees” when terminating them and “refrain from engaging in conduct that is unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive” (Wallace v. United Grain Growers Ltd., [1997] 3 SCR 701). I’m sure that was quite a mouthful! But what exactly does all that look like? 

Examples of bad faith in the manner of dismissal

Below is a sampling of employer misconduct that courts have determined amounted to bad faith in the manner of dismissal of an employee:

• Attacking the employee’s reputation by declarations made at the time of dismissal (Keays v. Honda Canada Inc., 2008 SCC 39);
• Misrepresenting the reason for the dismissal (Keays);
• Dismissing the employee to deprive them of a pension benefit or other right, permanent status for instance (Keays);
• Deciding to dismiss or denigrate the employee to the point where she might resign, then moving her to an ad hoc position that was essentially an international job search and letting her “twist in the wind” for almost 10 months (Galea v. Wal-Mart Canada Corp., 2017 ONSC 245); and
• Failing to pay the employee his statutory minimums and provide him with a letter of recommendation which was bound to have an effect on his ability to secure a relatively unique position. Additionally, the court did not look favourably upon the employer for indicating on the employee’s Record of Employment that the employee did not meet the expectations of his position, as there was no real evidence to support such a statement (Middleton v. Highlands East (Municipality), 2013 ONSC 763).

Examples of employer conduct that is not bad faith 

Here are some instances where courts did not find employer’s conduct to amount to bad faith in the manner of dismissal, in spite of employees raising the issue:

• Damage to the employee’s personal property during the process of returning same to the employee post-termination and lack of care and expediency in handling the employee’s vacation pay, the delivery of his T4 and Record of Employment, and the refund of deductions on his paycheque (McNevan v. AmeriCredit Corp., 2008 ONCA 846);
• Failing to provide adequate payment to the employee on termination (Spalti v MDA Systems Ltd., 2018 BCSC 2296); and
• Alleging cause for termination where the employer has an honest, reasonably held belief the employee’s misconduct amounts to just cause for dismissal (Mulvihill v. Ottawa (City), 2008 ONCA 201).

Takeaways for employers 

Employers should take care to avoid adding insult to injury when terminating an employee. The above findings of bad faith in the manner of dismissal are essentially rooted in the judicial view that losing a job is a traumatic event and the way in which one is terminated is just as important to one’s identity as the work itself (Machtinger v. HOJ Industries Ltd., [1992] 1 SCR 986). Remember, an employee can be awarded hundreds of thousands of dollars for aggravated or moral damages if there is a causal link between the employer’s breach of its duty of good faith and fair dealing on termination and the employee’s resulting symptoms of mental distress. What good faith in the manner of dismissal looks like for each employer will depend on the circumstances. The important thing for employers to keep in mind when terminating an employee is that they should ensure to avoid doing so insensitively, in an intentionally malicious manner, or with blatant disregard for the employee. Though the threshold for meeting bad faith such that it merits moral or aggravated damages can be moderately high, it is always in the best interests of the employer to terminate in good faith and reasonably, so as to avoid having such damages awarded against them.