Bad faith treatment of employee nullifies contract

Dianne had been the chief operating officer (COO) of a jewellery company for 3 years. She thought she was doing very well and asked the chairman of the board for a meeting to review her salary. She thought it was time for a raise. Instead of receiving the expected invitation to meet, she received an email from the chairman telling her that she was suspended for 2 weeks while the board investigated some performance issues. She was told that she would either be terminated at the end of the 2 weeks or offered a demotion to a non-executive position. 

Within 24 hours the employer had told a vender Dianne was no longer an employee. It had also sent out an email to all the employees of the company indicating that Dianne was suspended “pending further investigation into a few matters”. The company wide email concluded by indicating that the board had decided that Diane was not the right person to service COO. Given these communications Dianne felt it would have been impossible for her to be taken seriously by venders or employees in any ongoing position with the company. It had clearly been implied that Dianne was guilty of some sort of misconduct and she would forever be under a cloud in the organization. Continued employment would have been intolerable. 

The way the boss handled communications around Dianne’s suspension was indicative of an overall abusive pattern. The boss was in the habit of sending abusive and fowl mouthed texts to Dianne whenever he was unhappy. He has constantly swore at her in these communications and repeatedly threatened to fire her. On the rare occasion she asked for an apology she was told she was being too emotional. When all of it went to trial in Dianne’s lawsuit the judge concluded that the cumulative impact of the toxic workplace and the imminent demotion Dianne was threatened with along with the negative communications to clients and staff constituted a constructive dismissal. Dianne had been fired even though no one had said the words. 

Ultimately the board terminated Dianne and claimed it had just cause for her termination. It said she kept her regular work hours, was late for photo shoots and did not appropriately separate work from her personal life. Apparently she had a glass of wine at lunch on one occasion. The list went on and all the allegations were vague. When Dianne first sued the employer defended the claim on the basis of having just cause for her termination but about a year into that process it withdrew the allegation of just cause. It claimed it had to withdraw the allegations because all the supporting documents were destroyed by accident. Judges never roll their eyes in a court room but it is hard to imagine the judge in Dianne’s case resisting the temptation. The judge decided that the alleged performance concerns were simply an attempt by the employer to get rid of Dianne without having to pay her a severance package. The judge also decided that the only reason the employer wanted to get rid of her was because she had the nerve to ask for a raise. 

Somewhere along the line Dianne had signed a contract which said that if she was ever terminated she would receive only the Employment Standards Act minimums. She would not be entitled to reasonable notice a common law based on her age, seniority and level of responsibility. The judge in this case decided that Dianne had been treated so badly throughout her employment and at the time of termination that the contract did not apply. The judge found that the employer had set her up to fail, subjected her to a toxic workplace, embarrassed and humiliated her before co-workers and clients, exaggerated performance concerns and alleged just cause for her termination when it knew or ought to have known that it did not have it. The employers bad faith treatment nullified the termination provisions in the employment contract. Dianne was awarded 11 months pay in lieu of notice, $50,000.00 for aggravated damages arising from the mental distress Dianne suffered and $25,000.00 in punitive damages.