Duty of Good Faith in Employment Law – Bhasin v. Hrynew, 2014 SCC 71
There can be little doubt that the decision of the Supreme Court of Canada in Bhasin, released in November 2014 will significantly impact on Canadian employment law. It is far too early to say how.
The impact will be felt not only in contract negotiations, the employment relationship and termination situations. Pre-Bhasin the obligation of good faith was limited to termination of employment. Clearly the Bhasin decision has extended the duty of good faith beyond Wallace and Honda Canada. In Karmel v. Calgary Jewish Academy, below, the Court noted: “duty of good faith as one which extends throughout the duration of employment, and not just at the time or event of termination. Employers must therefore demonstrate good faith for the entirety of the employment contract.”
As of the time of writing, Bhasin has been considered by the Courts in some 142 cases. The following are those related to employment law:
The Employer did not breach duty of good faith in terminating probationary employee for unsuitability consistent with established arbitral jurisprudence: Telus Corp. and TWU (USW, Local 1944) (Zerebeski), Re, 2016 CarswellAlta 178, 125 C.L.A.S. 329.
The term employment contract provided that school could terminate principal for cause prior to contract expiry. The principal had a falling out with the chair of the board of the school. Ultimately the principal was terminated. The Court found that the reasons had no merit and that the chair was “pursuing strategy of papering path to principal’s termination in such way so as to spare school from paying balance of principal’s salary under remaining term of contract.” The principal was entitled to damages for salary owed to him under employment contract in total amount of $669,988.06 and aggravated damages in amount of $200,000. Karmel v. Calgary Jewish Academy, 2015 ABQB 731, 2015 CarswellAlta 2159, [2015] A.W.L.D. 4527, [2015] A.W.L.D. 4528, [2015] A.W.L.D. 4529, 260 A.C.W.S. (3d) 279.
The defendant had breached contract by failing to pay plaintiff’s commissions, without contractual or other basis, and breached the duty of good faith: Szojka v. Pewter Financial Ltd., 2015 ABQB 708, 2015 CarswellAlta 2124, [2016] A.W.L.D. 335, 260 A.C.W.S. (3d) 500
The employee was enrolled in long-term incentive plan. The employee was fired without cause and given three months notice as per the employment contract. The employee sued for wrongful dismissal and claimed the benefits of the incentive plan. The employer opposed. The Court found that employer’s exercise of its discretionary contractual rights in manner that deprived employee of his legitimate interests plan was unfair, unreasonable and arbitrary and violated the duty of good faith. The employee was awarded the value of the plan, award to the Plaintiff of $444,205: Styles v. Alberta Investment Management Corp., 2015 ABQB 621, 2015 CarswellAlta 1858, [2015] A.W.L.D. 4083, 22 C.C.P.B. (2nd) 169, 258 A.C.W.S. (3d) 539.
The doctrine of laches was interpreted in light of the duty of good faith: Schlegel Villages and SEIU, Local 1 (100215283), Re, 2015 CarswellOnt 15934, 124 C.L.A.S. 295, 259 L.A.C. (4th) 225.
The employer’s disagreement with employee or failure to concede to his demands with respect to incentive plan was not indicative of bad faith. The employer was simply doing what it was entitled to do and did not seek to undermine his legitimate contractual interests. The employer listened to the employee and addressed his concerns. The employer did not violate duty of good faith: Shewchuk v. Blackmont Capital Inc., 2015 ONSC 5079, 2015 CarswellOnt 12601, 257 A.C.W.S. (3d) 579, 27 C.C.E.L. (4th) 196.
The employee was employed by a car dealership as fleet manager for over twelve years. He was reprimanded over error and left the dealership, leaving his cell phone and keys on the general manager’s desk. The employer took the position that he had resigned. The Court found that he had resigned but resignation was neither voluntary nor equivocal and the employer breached the duty of good faith in failing to give Plaintiff time to reconsider, or make further enquiries in response to resignation: Evans v. Avalon Ford Sales (1996) Ltd.,
2015 NLTD(G) 100, 2015 CarswellNfld 255, [2015] N.J. No. 242, 1147 A.P.R. 1, 2015 C.L.L.C. 210-058, 256 A.C.W.S. (3d) 116, 367 Nfld. & P.E.I.R. 1.
The fact that the parties are presumed to act in good faith is not sufficient to give the PSLR Board jurisdiction: Cameron v. Deputy Head (Office of the Director of Public Prosecutions), 2015 PSLREB 98, 2015 CRTEFP 98, 2015 CarswellNat 8737, 2015 CarswellNat 8738, 126 C.L.A.S. 19; Leduc v. Clerk of the Privy Council and Secretary to Cabinet, 2015 PSLREB 47, 2015 CRTEFP 47, 2015 CarswellNat 2266, 2015 CarswellNat 2267, 25 C.C.E.L. (4th) 59.
The alleged breach of the duty of good faith may form part of basis for a class action and the Court refused to strike claim: Baroch v. Canada Cartage Diversified GP Inc., 2015 ONSC 40, 2015 CarswellOnt 1157, 2015 C.L.L.C. 210-028, 249 A.C.W.S. (3d) 519, 66 C.P.C. (7th) 72.
In one case, the Court noted the alleged breach of an implied contractual obligation of good faith and fair dealing remains extant and allowed the plaintiff to amend the claim: Rodd v. Alberta Health Services, 2015 ABQB 320, 2015 CarswellAlta 917, [2015] A.W.L.D. 2988, [2015] A.W.L.D. 2989, 254 A.C.W.S. (3d) 490.
The employment contract was clear that a bonus was only to be paid if the employee was either still employed or within the statutory notice period when payment was due. The fact that a co-worker received gratuitous bonus payment after being terminated in seemingly similar circumstances did not entitle the employee to bonus payment. The employer did not breach duty of good faith: Kielb v. National Money Mart Co., 2015 ONSC 3790, 2015 CarswellOnt 9377, 2015 C.L.L.C. 210-051, 255 A.C.W.S. (3d) 638.
In one case the employer induced the employee to join by offering shares in the company, asserting that it was doing well and the shares would be worth $500,000. The company terminated the employee. The Court held that the employee was entitled to recover eight months’ salary on account of notice and $500,000 on account of the shares (premised upon the misrepresentation of the value of the company): Antunes v. Limen Structures Ltd., 2015 ONSC 2163, 2015 CarswellOnt 7985, 254 A.C.W.S. (3d) 358.
In one case, the Supreme Court of Canada awarded significant damages to an employee, a lawyer who had been appointed to the position of Executive Director of Legal Aid. The appointment was for a 7-year term. Prior to expiry of the term there was a breakdown in the relationship between the board and the Director, who went on sick leave. The board suspended the Director, who sued for constructive dismissal. The board then stopped paying salary and benefits. The Director lost before the trial and appeals court. The Supreme Court found that the employer had no right to suspend the Director and allowed his action for constructive dismissal: Potter v. New Brunswick (Legal Aid Services Commission), 2015 SCC 10, 2015 CSC 10, 2015 CarswellNB 87, 2015 CarswellNB 88, 2015 C.E.B. & P.G.R. 8120 (headnote only), [2015] 1 S.C.R. 500, [2015] S.C.J. No. 10, 1128 A.P.R. 1, 18 C.C.P.B. (2nd) 1, 2015 C.L.L.C. 210-017, 21 C.C.E.L. (4th) 1, 249 A.C.W.S. (3d) 802, 33 B.L.R. (5th) 1, 381 D.L.R. (4th) 1, 432 N.B.R. (2d) 1, 468 N.R. 227.
In one case the employer’s failure to properly investigate a complaint that led to the dismissal of the employee, breached the duty of good faith. The employer claimed it had received complaint regarding employee, but did not mention this to employee and did not investigate claim thoroughly. The Court characterized this as bad and awarded $5,000. The complaint could not reasonably have been proved: Bray v. Canadian College of Massage and Hydrotherapy
2015 CarswellOnt 1232, 249 A.C.W.S. (3d) 349.