Bad-faith dismissal with generous severance package

Manner of dismissal still in play
By Tim Mitchell
|Canadian Employment Law Today|Last Updated: 04/03/2019

Question: If an employer provides a terminated employee with a severance package more generous than the common law entitlement, can it still be at risk of liability for bad-faith conduct in the manner of dismissal if the employee is unhappy with the way the termination was handled?

Answer: An employee’s entitlement to some combination of statutory termination and severance pay, common law reasonable notice, or pay in lieu thereof (collectively, “severance entitlement”), is often the central issue at the time an employee is dismissed without cause. However, an employer also has an obligation to conduct the dismissal in good faith and in a manner that is “candid, reasonable, honest and forthright with their employees.” A failure to act in good faith in the dismissal process may justify an award of bad-faith damages in excess of any severance entitlement.

For example, a bad faith dismissal could include the following scenarios: