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Is there now an implied duty to provide reasons for dismissal?

reasonfordimissalOne of the most common complaints employment lawyers hear from workers who have just lost their jobs is that they don’t know why they were fired. Many become even more aggravated when they ask for a reason and are told ‘we don’t have to give you one.’ Unsurprisingly, this type of response can often result in the now ex-employee imagining all kinds of innovative rationales as to explain their dismissal.

Pursuant to the Employment Standards Act, which applies to most Ontario employers, there is no requirement to tell dismissed employees’ why they are being fired. Accordingly, ‘we don’t have to tell you’ can be a valid response [1].

Employers should, however, take note of two recent decisions from the Supreme Court of Canada (the “SCC”) and how these may impact their duties at the time of termination. In Bhasin v Hrynew (2014 SCC 71) the SCC endorsed a new implied duty of “honest contractual performance” in commercial contracts. In coming to this position, the SCC drew upon pre-existing developments of law, such as the well-known duty of good faith in the manner of dismissal from the employment law context.

While Bhasin was not an employment law case, its spirit of promoting honesty and fair dealing has been broadly applied. This was particularly the case in the recent decision of Potter v. New Brunswick Legal Aid Services Commission (2015 SCC 10). In Potter, the issue was whether an administrative suspension of a senior employee, instituted without explanation, constituted a constructive dismissal.

Drawing from Bhasin, the SCC in Potter stated:

It seems to me that, in most circumstances, an administrative suspension cannot be found to be justified in the absence of a basic level of communication with the employee. At a minimum, acting in good faith in relation to contractual dealings means being honest, reasonable, candid, and forthright: Bhasin v. HrynewFailing to give an employee any reason whatsoever for his suspension is, in my opinion, not being forthright. (emphasis added, para. 66)

Bhasin was also applied in a recent Small Claims case in Ontario, Bray v Canadian College of Massage and Hydrotherapy (2015 CanLII 3452). In Bray, the new duty of honest contractual performance was used to justify punitive damages for an employer who imposed a quasi-disciplinary action on an employee by failing to schedule hours of work and not informing the worker of the rationale for the resulting period of unemployment.

Accordingly, the law now finds itself in a bit of a strange place. To justify an administrative suspension, employers should provide employees with a reason for the suspension. Discipline also cannot be imposed in silence. Yet, ostensibly, employers can still dismiss workers and provide no comment as to the rationale motivating the decision. Given the comparative importance of suspensions and employee discipline, as compared to ending the entire employment relationship, this legal discrepancy seems all the more anomalous.

So, to return to the title of this article, is there now an implied duty to give reasons for dismissal? The conservative answer is probably not yet (see paras. 86-87 of Bhasin). However, given the trend in the case law towards more openness surrounding important events in the employment relationship, it is not inconceivable that a duty to provide reasons for dismissal may soon become a reality. To provide one simple example of how this might develop, the Courts, for instance, could consider the provision of reasons to be a prerequisite for an employer to discharge their duty of good faith in the manner of dismissal. After all, how are employees to be confident that their treatment has not been “unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive” [2] if they are not even provided with the rationale for their job loss?

For employers, the best course of action is to err on the side of caution. When dismissing a worker, be sensitive to the emotional impact of the situation and show compassion. You need not provide a laundry list of reasons, however, an honest, respectful explanation may pay dividends.

[1] By contrast to the situation for provincially regulated employees, under the Canada Labour Code (the “CLC”), there is a mechanism by which most non-unionized employees can seek an explanation for their dismissal. As part of the CLC’s Unjust Dismissal provisions, workers who have at least 12 months continuous service can request a written statement by the employer of its reasons for dismissal.

[2] Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701 at para. 89.

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Vey Willetts LLP

Employment and labour lawyers at Vey Willetts
Vey Willetts LLP is an Ottawa-based workplace law firm, serving individuals and employers across Eastern Ontario. They recognize that operating a business is complex and maintaining an efficient and legally-compliant workplace is a continuous challenge. The firm helps simplify legal workplace obligations so that employers can focus on what matters: their business. Learn more about Vey Willetts LLP by contacting Andrew Vey, or Paul Willetts or by visiting the firm’s website. Read more.
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