Canadian HR Reporter

C O L U M N S 30 www.hrreporter.com T O U G H E S T H R Q U E S T I O N Have a particularly difficult or interesting question? Why not share it with us? Email: sarah.dobson@keymedia.com Have a question? WHAT EXACTLY MAKES A TERMINATION BAD FAITH? Q What makes an employer's conduct in terminating an employee bad faith? A Employers owe a general duty of good faith and fair dealing to their employees. While this duty is ongoing throughout the employment relationship, it will most often become a point of dispute in relation to the manner in which an employee is terminated. Behaviour that amounts to bad faith in the context of termination will give rise to addi- tional damages. When an employer's conduct in terminating an employee is found to be in bad faith, employees are entitled to receive payment — or damages — to compensate for mental distress sustained from that conduct. However, bad-faith damages are not awarded for the fact of the dismissal itself. Injured feelings and emotional upset asso- ciated with job loss alone are not compensable. To succeed in a claim for bad-faith damages, the employee must prove two things: • The employer breached its duty of good faith and fair dealing in its conduct during the course of dismissal. • The employer's breach caused the employee mental distress or other intangible effect. We focus here on the kind of behaviour that will give rise to a finding of bad faith. The case of Keays v. Honda Canada Inc., 2008 SCC 39 (Honda) is the leading case from the Supreme Court of Canada on bad-faith damages in termination. Honda affirmed the view that conduct during dismissal that is "unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive" will attract mental distress damages. That said, the obligation of good faith and fair dealing is incapable of precise definition. At minimum, it requires employers, in the course of dismissal, to be candid, reasonable, honest and forthright with their employees and to refrain from engaging in conduct that is unfair or is in bad faith by being untruthful, misleading or unduly insensitive. The court in Honda held that examples of conduct in dismissal resulting in compensable damages include: attacking the employee's reputation by declarations made at the time of dismissal; misrepresentation regarding the reason for the decision; or dismissal meant to deprive the employee of a pension, benefit or other right — such as permanent status, for instance. Bad-faith conduct has been described as conduct that is akin to "intent, malice or blatant disregard" for the employee or "callous or insen- sitive treatment." Examples of employer miscon- duct that is unfair or in bad faith in the manner of termination include: • misrepresenting the reason for the employee's termination • maintaining a wrongful accusation against the employee and communicating the accusa- tion to other potential employers • making attacks on the employee's reputation • f ir ing an employee upon return from disability leave • dismissing the employee to deprive them of a benefit or other right, such as permanent status • telling the employee that they would be trans- ferred to a new position upon eliminating their current one, though simultaneously planning to terminate the employee's employment • laying an employee off, purportedly for lack of work, but simultaneously advertising for their replacement This list is not exhaustive. The B.C. Court of Appeal's 2017 decision Lau v. Royal Bank of Canada, 2017 BCCA 253, added a few more that include: • terminating an employee who was promised a transfer to a new position and was already in the process of moving to the new position • attack ing the employee's reputation by declarations made at the time of dismissal, misrepresenting the reason for the decision or dismissal meant to deprive the employee of a pension benefit or other right The grounds for bad-faith damages are assessed on a case-by-case basis. The courts will review the employer's conduct in context and as a whole, rather than on an isolated incident basis. The statement of the Supreme Court in Honda cited above is a useful guideline, and employers must use common sense to avoid untruthful, misleading or unduly insensitive actions at the time of an employee's termination. Otherwise, damages will flow. CHRR Employers are required to provide terminated employees certain entitlements and they also have a duty to act with good faith and fair dealing. Melanie Samuels of Singleton Reynolds looks at what types of conduct could breach that duty and increase liability for damages Melanie Samuels partner and co- chairperson of the Employment and Labour Group, Singleton Reynolds in Vancouver

• Cover