Recent case law clarifies managers' obligations.

Several recent legal cases emphasize how important it is for employers and managers to treat their staff fairly and with respect.

Bad Faith Termination

* What happened:

In 1972, United Grain Growers ("UGG") approached Jack Wallace to work for them. At the time, Wallace had been employed for 25 years at a company which competed with UGG. He told UGG's representative that he was 45 years old and did not want to leave a secure position without some guarantee of job security. UGG's representative assured Wallace that if his performance was satisfactory, he could expect to continue working with UGG until retirement.

Wallace's performance was more than satisfactory, and for the next 14 years, he was UGG's top salesperson. In 1986, shortly after being complemented on his work by the sales manager and general manager, Wallace was fired. UGG alleged that it had just cause to terminate Wallace because he was unable to perform his duties satisfactorily.

Wallace was almost 59 years old when he was fired and he had difficulty finding re-employment. In addition, UGG's allegations about his performance created emotional problems for Wallace, for which he required psychiatric assistance.

Wallace sued for wrongful dismissal. Although UGG knew it did not have just cause to terminate Wallace, it maintained this position up to the eve of the trial.

* What the court said:

This case proceeded all the way to the Supreme Court of Canada.

In deciding this case, the court took special note of the imbalance of power between employers and employees and stated that:

The point at which the employment relationship ruptures is the time when the employee is most vulnerable and hence, most in need of protection... the loss of one's job is always a traumatic event. However, when termination is accompanied by acts of bad faith in the manner of discharge, the results can be especially devastating.

The court went on to state that in order to properly protect employees, employers are obligated to act in good faith and dealing fairly when terminating employees. If employers breach this obligation, the amount of notice of termination to which an employee is entitled will be increased.

The court cited a number of examples of the actions that may be considered bad faith, including: