Yahoo Finance Howard Levitt: When it comes to terminating an employee, don't be a Grinch — especially at this time of year
Howard Levitt and Peter Carey
For those of us who work for a living, and that’s most of us, it is one of the most important aspects of our lives. Everyone from Cicero to Martin Luther King Jr. to Mark Twain have commented on the benefits of having a job. Oscar Wilde commented that if you want to enjoy your job, imagine yourself without one.
Not just economically, but socially and emotionally, having a job is important.
This is why being fired is more than simply the end of a contract between employer and employee. Being fired not only has financial consequences but emotional and psychological ones as well. Individuals who suddenly lose their jobs frequently go through the five stages of grief. Every day in our practices we deal with ex- or soon to be ex-employees. Let me tell you, they are generally very unhappy people.
You would think that what we are saying would be obvious and that employers would be cognizant that firing an employee is fraught with emotional turmoil, at least for the employee, and that they would try to make the process as painless as possible. Yet everyday we are confronted by employers who seem to go out of their way to make the process more, rather than less, difficult.
They do so at their economic peril. Not only is minimizing the impact of a job loss the right thing to do, it might also save the employer some money at the end of the day.
The courts have recognized this important role that work fills in people’s lives in numerous decisions.
This brings us to the question of “bad faith.” There are a number of different legal definitions of “bad faith” but if we may boil them down to colloquial English it translates as “don’t be a jerk.” At this time of the year, it might be appropriate to define it as “don’t be a Grinch.”
This means that if you are an employer, don’t lie to your employee about why they are being fired. You typically aren’t under an obligation to give reasons for a termination, but if you do, give real reasons — don’t lie about them. Don’t hold back statutorily required payments in exchange for a release. And don’t have people “walked out” of the office unless there is a compelling reason to do so. In short, treat people the way you would like to be treated if you were being fired.
As stated by the Supreme Court in Honda v Keays “conduct during the course of dismissal that is unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive can give rise to an award of additional damages.”
There are many cases where such damages have been awarded.
In one such case, an employee was dismissed, for cause, for having a romantic relationship with a co-worker who was technically reporting to her. There was no policy against such a relationship, no evidence that either employee had let their relationship interfere with their duties and evidence that similar relationships had been condoned by the employer in the past. As such the employee was awarded damages for wrongful dismissal. However, in their zeal to dismiss the employee, the employer had conducted an investigation and compelled the employee to meet with the investigator whom they assured the employee was an impartial third party. The investigator was no such thing. Rather, he had been retained by the employer’s law firm and was used to gather evidence to support her dismissal. The circumstances surrounding her dismissal were so egregious that she suffered anxiety and depression. The court awarded an extra $50,000.00 in damages.
In another case, an employee who had been employed for 28 years by a large retail employer was “walked out” of his office when he was fired without cause. He was then presented with an offer of “alternative” employment which would have required him to give up his seniority and work for an hourly wage which, even if he had been given the hours, would have resulted in less than one half his previous salary. By the way, lest you think this Dickensian state of affairs occurred in the time of Queen Victoria, the case was heard in 2022.
In this case, the court framed the issue as one of “moral damages.”
The factors considered by the court were: First, the decision to “walk” the employee out the door with no good reason. Second, the offer of the alternative employment was misleading and a breach of the duty of good faith and fair dealing. Third, the employer did not fulfill its obligations under the Employment Standards Act by paying the employees statutory benefits in a timely fashion. Fourth, the employer did not issue a correct record of employment as required by the Employment Standards Act.
The court awarded an extra $45,000 in damages to the employee.
The moral of the story is this: If you are going to terminate an employee, particularly without cause, treat them the way you would like to be treated were the circumstances to be reversed. This “golden rule” is not only the right thing to do, it will probably save you money. A win-win. Take this as your Christmas lesson!
Howard Levitt is senior partner of Levitt Sheikh, employment and labour lawyers with offices in Toronto and Hamilton. He practices employment law in eight provinces. He is the author of six books including the Law of Dismissal in Canada. Peter Carey is a partner at Levitt Sheikh.
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