Employment Treatment Upon Termination

The Supreme Court of Canada has stated that when an employer is terminating an employee they have a duty to treat an employee fairly, reasonably, and decently at the time of termination. (Wallace v. United Grain Growers)

United Grain Growers Ltd. terminated its employee Jack Wallace, a 58 year old senior salesman who had been employed by the company for 14 years. Jack had worked for a competitor for 25 years and had received assurances upon his transfer that if he performed as expected, he could continue to work for the company until retirement. In fact, Jack was the top salesman for the company when he was summarily discharged without explanation in 1986.

In the Court action, United Grain Growers defended on the basis that Wallace had been discharged for cause, an allegation which it abandoned only when the trial commenced. The company’s position and the refusal to give a proper explanation had a significant emotional impact on Mr. Wallace, who required psychiatric help as a result.

The Court, in awarding 24 months of severance pay to Jack Wallace stated: “that in the course of dismissal employers ought to be candid, reasonable, honest and forthright with their employees and should refrain from engaging in conduct that is unfair or is in bad faith by being for example untruthful, misleading, or unduly insensitive”.

Employers should take note and should be extremely cautious and must realize that alleging cause for misconduct where there is none, or being insensitive or dishonest with the employee, may result in additional damages being awarded to the employee.