Just Cause for Dismissal? What to Know for Employees

Wrongful dismissal cases are often confusing, highly stressful, confusing and financially troubling for employees who find themselves suddenly without a job. To add insult to injuries, some employers act without much regard for an employee’s well-being. As a result, the courts often take the role of a protector of some sort for employees, with their goal being to protect employees’ workplace rights and ensure fair treatment, which is often done as part of a wrongful dismissal claim where an employee cannot prove just cause for dismissal.

In fact, in Ontario employment law, a lot has been made of recent court decisions scrutinizing employers’ conduct, especially in the circumstances leading up to, including and even following a termination of employment. Put simply, courts award employees with additional compensation referred to “bad faith damages” (also called “moral” damages), especially in cases where an employee can prove to a court that the employers’ conduct was very unfair and caused them to suffer mental distress.

However, it is important to note that the very fact that an employer terminated an employee’s job does not automatically entitle the wrongfully dismissed employee to receive damages for mental distress that he or she suffers as a result of the dismissal. Why? Because in employment law, it is accepted that at the time the parties entered in to the employment contract, they both understood and agreed that the other party had the right to end the employment relationship at some point in the future (subject to the obligation to provide prior notice or a severance package, and not act in discrimination or reprisal).

What are Examples of Bad Faith Manner of Dismissal?

An employer acting in faith conduct at the time of dismissal refers to scenarios where an employer is untruthful, misleading or unduly insensitive, such as:

terminating an employee alleging just cause for dismissal and being unable to prove it when challenged in a wrongful dismissal claim
falsely accusing the employee of misconduct
misleading the employee (such as regarding the reasons for the termination or what financial severance package they will be provided)
deliberately humiliating the employee
trying to undermine the employee’s re-employment prospects (such as badmouthing an employee)
dismissing the employee to deprive the employee of a pension benefit (such as bonus pay or pension plan benefits)

What is a Wrongful Dismissal?

Under Ontario employment law, a wrongful dismissal occurs when an employer terminates an employee’s job without providing them with prior reasonable notice or pay in lieu of notice (also called a fair severance package), or otherwise cannot prove just cause for dismissal. How much depends on a few factors, including whether an employee has signed a valid employment contract. Otherwise, under common law, an employee is entitled to a reasonable notice period (or pay in lieu of notice) based on their age, length of service, character of employment, and availability of similar employment.

Bad Faith Damages Award for Wrongful Dismissal

In the Ontario court case called Rutledge v Markhaven Inc., 2022 ONSC 3183, the court awarded significant bad faith damages to a wrongfully dismissed employee as a result of the employer’s bad faith conduct in how it conducted a workplace investigation and its behaviour during the wrongful dismissal litigation, in addition to a severance package consisting of 22 months’ pay in lieu of reasonable notice.

Facts

In this case, the employee worked for the employee for nearly 21 years when she was wrongfully dismissed. The company had conducted an investigation into a romantic relationship she had with a subordinate at the workplace. The employer had concerns about a conflict of interest, but took no action when it learned of certain, including the fact that the employee was promoted during the time they were allegedly in a relationship. However, after receiving anonymous complaints months later, the company conducted an investigation that ultimately led to her termination for just cause for violating the employer’s workplace policy. In finding in favour of the employee, the court awarded $50,000 in bad faith and moral damages as a result of the following:

the employee was only informed that the investigation would be conducted by an independent third party, but it was actually conducted by a business associated with the company’s wrongful defence counsel
the workplace investigation was undertaken surreptitiously before the employee was informed that the investigation would be taking place, and the investigator secured information from her without her prior knowledge or awareness
part of the interviews connected with the workplace investigation took place at a local Tim Hortons where some of the 150 employees of the company frequently visited, thereby failing to conduct the investigation in a confidential manner
during the wrongful dismissal litigation, the employee walked into an examination for discovery where she was confronted with photographs of her home (which were unrelated to the wrongful dismissal claim), and comments by the company’s wrongful defence lawyer regarding a pending motion for security for costs (which was never brought).

Lessons

An employer must always be mindful of its legal obligation to act fairly and in good faith toward an employee during the dismissal process, which is already a vulnerable time for employees. Additionally, if conducting a workplace investigation into an employee’s conduct, employers should follow basic rules, including providing the employee with details to understand the allegations against them; a fair opportunity to respond; a reasoned and thoughtful decision; and a fair and unbiased investigator who respects the employee’s dignity and confidentiality. Otherwise, this case is recent example that although bad faith damages are not easy to obtain, the courts will award them when employers act unfairly towards employees.

Call a Toronto Employment Lawyer

In Ontario employment law, it is always prudent for employers (and employees) to speak with an experienced employment lawyer when they would like to know what legal rights you have as an employer or employee in Ontario. If you are an employee who believes you were wrongfully dismissed or want to negotiate your severance package, please speak with our experienced wrongful dismissal lawyer in Toronto regarding your legal rights and options as an employee, including negotiating your severance package to obtain the severance compensation you deserve, as well as wrongful dismissal claim.

Contact a Toronto human rights lawyer by phone 647-822-5492 or fill out the contact form to the side. Our employment lawyer in Toronto would be happy to assist in your employment law matter as quickly as possible.

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