Bad Faith Conduct — Ontario Employment Law
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About Bad Faith Conduct
In Ontario employment law, "bad faith conduct" refers to actions by an employer that are untruthful, misleading, or unduly insensitive, particularly during the administration of discipline or the termination of employment. While employers have the legal right to manage their workforce and even terminate employees without cause (provided they provide proper notice under the Employment Standards Act, 2000 and common law), they are strictly obligated to execute those decisions in good faith. When management behavior crosses the line from merely clumsy into malicious or deceitful territory, courts can penalize the employer.
Evaluating what constitutes bad faith conduct goes beyond a boss simply having a bad day. Courts look for specific, tangible behaviors that represent unfair dealing. Common examples include alleging "just cause" for dismissal while knowing the allegations are entirely false, intentionally delaying a Record of Employment (ROE) out of spite, or making deliberate misrepresentations to an employee during the hiring process. For instance, if a company attempts to leverage an employee's financial vulnerability to force them into signing a predatory release, or falsely accuses an employee of theft to save money on severance pay, these actions represent textbook bad faith conduct.
Distinguishing bad faith from poor management is a crucial legal distinction. A supervisor who is disorganized, aloof, or emotionally detached during a termination meeting might be acting unprofessionally, but judges frequently rule that such behavior does not meet the high threshold for bad faith conduct. The law requires an element of unfairness, deceit, or a breach of the duty of honest performance.
Historically, bad faith conduct during termination led to an arbitrary extension of the employee's notice period (formerly known in Canadian law as a "Wallace bump"). Today, the legal approach has shifted. Employees who suffer foreseeable psychological harm or mental distress as a direct result of the employer's bad faith conduct are typically awarded specific monetary compensation, such as moral or aggravated damages, to address the specific harm caused.
Because the line between acceptable hardball corporate tactics and unlawful bad faith conduct is highly dependent on the unique facts of your situation, it is always wise to have an employment lawyer review your employer's actions before you make any binding decisions.
Frequently Asked Questions
What exactly makes an employer's behavior count as 'bad faith'?
In Ontario, bad faith conduct generally involves untruthful, misleading, or unduly insensitive actions, especially during the termination process. Examples include making false allegations of misconduct to avoid paying severance, or aggressively withholding an earned bonus to financially pressure a departing employee.
Is my boss being rude or yelling at me considered bad faith conduct?
Not usually on its own. While bullying or harassment may violate the Occupational Health and Safety Act (OHSA), courts distinguish between a manager who is merely unprofessional or insensitive, and one whose actions constitute legal bad faith. Bad faith requires a deliberate breach of the duty of fair and honest dealing.
What compensation can I get if my employer acted in bad faith?
If your employer's bad faith conduct causes you mental distress beyond the normal, expected upset of losing a job, a court may award you damages. Rather than extending your severance period, judges now typically award a specific lump sum amount known as moral or aggravated damages to compensate for the emotional harm.
They are refusing to give me my Record of Employment (ROE)—is that bad faith?
It very well can be. Deliberately withholding an ROE to pressure you into accepting a lowball severance offer, or simply out of spite, is a strong indicator of bad faith conduct. Employers have a strict statutory obligation to issue the ROE within specific timeframes regardless of how the employment ended.
When should I have a lawyer look into my employer's conduct?
You should connect with legal counsel immediately if your employer creates sudden, false performance records, makes baseless 'just cause' allegations, or uses threats regarding your final wages to force a signature. A professional can quickly assess if their tactics cross the legal threshold into actionable bad faith.
Is there a deadline to sue my employer for their bad faith actions?
Yes. You generally have two years from the date the bad faith conduct occurred (which often coincides with your termination date) to file a civil claim under the Limitations Act, 2002. Missing this two-year deadline usually means you lose the right to pursue compensation for their actions.
Common Scenarios
- An executive with 20 years of service is fired and baselessly accused of financial fraud, an allegation the employer knowingly fabricated to avoid paying out a massive common law severance package.
- A senior sales manager is abruptly terminated, and the company intentionally delays issuing her Record of Employment while simultaneously badmouthing her to potential new employers in the same specialized industry.
- A software developer is induced to leave a stable ten-year career by a competitor who promises long-term security, only to act in bad faith by firing the developer three months later in a cruel, highly public manner.
- An employer receives an employee's two-week resignation notice but responds by immediately terminating them 'for cause' and refusing to pay out their accrued vacation pay, violating the Employment Standards Act.
What You Should Know
- Keep a detailed, time-stamped personal journal of all interactions, emails, and meetings if you suspect your employer is slowly fabricating a false paper trail to justify firing you.
- Do not retaliate or engage in bad faith conduct yourself, as an employee's own poor behavior or dishonesty can severely undermine their ability to claim damages against the employer.
- If your employer threatens to withhold your ROE or unpaid final wages unless you sign a full release, do not sign it; have this unlawful pressure tactic reviewed by an employment lawyer immediately.
- Save copies (to a personal device, where legally permissible) of positive performance reviews or emails praising your work, as these are crucial evidence if the company suddenly alleges 'incompetence' to mask a bad faith termination.
Featured Cases
Evans v. Complex
2012 ONSC 6508 (CanLII) · 2012-11-16Wrongful Dismissal: 9-Month Notice Period and Damages Awarded
A wrongful dismissal case where an employee with 8.5 years of service was dismissed without cause. The court determined a 9-month notice period, considering age, length of service, and role. Damages included salary, bonus, and benefits, with no deduction for post-termination benefits. The employer's unprofessional conduct was noted but did not warrant bad faith damages.
Pate v. Galway-Cavendish and Harvey (Township)
2009 CanLII 70502 (ON SC) · 2009-12-16Wrongful Dismissal with Bad Faith Conduct and Damages Awarded
A wrongful dismissal case where the plaintiff was wrongfully dismissed without notice or opportunity to respond to allegations. The defendant offered clemency in exchange for resignation, and the court awarded Wallace damages for bad faith conduct, aggravated damages for emotional distress, and punitive damages for egregious actions. Special damages were also awarded for legal costs incurred.
Brien v. Niagara Motors Limited
2008 CanLII 41823 (ON SC) · 2008-08-20Wrongful Dismissal: 23-Year Employee Awarded 24 Months Notice and Severance
A wrongful dismissal case involving a plaintiff with 23 years of service who was terminated by the defendant, who alleged just cause based on incompetence and unprofessional conduct. The court applied the Bardal factors to determine 24 months’ notice and severance entitlement, and found that the defendant’s post-termination conduct constituted bad faith, awarding two additional months’ notice. The plaintiff’s mitigation efforts were deemed reasonable, and the court ruled that the gaps in service due to childbearing were not counted toward total years of service.
Crouch v. Securitas Canada
2008 CanLII 201 (ON SC) · 2008-01-09Resignation or Constructive Dismissal: Employee Refused Alternative Employment
A merits decision involving a dispute over whether the plaintiff resigned or was constructively dismissed. The court found the plaintiff resigned by refusing to return to training at a new client site, and the constructive dismissal claim was dismissed as the alternative employment offered was deemed reasonable.
Antidormi v. Blue Pumpkin Software Inc.
2004 CanLII 30885 (ON SC) · 2004-09-22Wrongful Dismissal: Notice Period Extended to 12 Months with $320K Damages
A wrongful dismissal case where the plaintiff left a secure, lucrative job at BEA Systems based on representations from the employer, Blue Pumpkin Software Inc. The court extended the reasonable notice period to 10 months under Bardal factors and added two months due to bad faith conduct, resulting in damages of $320,000 plus benefits. The employer was also found to have violated the Ontario Employment Standards Act by failing to issue a Record of Employment and properly calculate commissions.
Chen v. Sigpro Wireless Inc.
2004 CanLII 13956 (ON SC) · 2004-06-01Constructive Dismissal: Layoff Without Contractual Authority and Reasonable Notice Determination
A wrongful dismissal case involving a constructive dismissal claim where the employer allegedly imposed a temporary layoff without contractual authority, potentially repudiating a fundamental term of the employment contract. The court also addressed the reasonable notice period owed to the plaintiff, applying the Bardal factors, and considered whether the employer's conduct during termination warranted an extension of the notice period. Additionally, the case included a breach of confidentiality claim, which was dismissed as the information provided was not confidential and used for legitimate purposes.
Carter v. Packall Packaging Inc.
2004 CanLII 15496 (ON SC) · 2004-01-15Wrongful Dismissal: 10-Year Extruder Operator Awarded 12 Months Notice
A wrongful dismissal case involving a plaintiff who was dismissed after ten years of employment as an extruder operator. The employer conceded the termination was without cause, and the court applied the Bardal factors to determine a reasonable notice period of twelve months. The case also addressed allegations of bad faith conduct, including a profane voicemail and allegations of misconduct in the Record of Employment, which led to an extension of the notice period under the Wallace principles. The court also ruled that the plaintiff did not fail to mitigate damages after retraining due to occupational asthma, as their reliance on medical advice was deemed reasonable.
Drinkwater v. Normapac Inc.
2002 CanLII 49505 (ON SC) · 2002-08-09Wrongful Dismissal: 58-Year-Old Employee Awarded 10 Months Notice
A wrongful dismissal case involving a 58-year-old tow motor operator with 15 years of service who was terminated due to decreased operational need. The plaintiff was awarded 10 months’ notice minus statutory payments, and the court addressed issues of bad faith conduct, the Wallace principle, and the plaintiff’s duty to mitigate damages.
George v. Imagineering Ltd.
2001 CanLII 28311 (ON SC) · 2001-08-10Wrongful Dismissal: 22-Year Employee Awarded 30 Months Notice
A wrongful dismissal case involving a plaintiff employed for over 22 years, who was dismissed without adequate notice. The employer’s unilateral changes to employment terms were deemed constructive dismissal, and the reasonable notice period was extended to 30 months due to bad faith conduct. The court applied the Wallace v. United Grain Growers Ltd. principles. The case also addressed issues of fixed-term employment, fiduciary duties, and entitlement to lieu time and punitive damages, with some claims dismissed.