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When you are terminated in Ontario, your employer is required to act fairly, honestly, and in good faith throughout the process. Where they do not where they mislead you, humiliate you, conduct the termination in a harmful way, or punish you for asserting your rights the manner of the dismissal may itself give rise to additional compensation on top of your severance entitlement. This is called bad faith termination, and it is one of the most frequently overlooked sources of additional damages in wrongful dismissal cases.
Ontario courts have consistently held that employers owe employees a duty of good faith and fair dealing in the manner of dismissal. Where that duty is breached, courts may award damages for mental distress, aggravated damages, or in serious cases punitive damages, all of which are separate from and in addition to your standard notice entitlement.
Was your termination handled in a way that felt dishonest, humiliating, or retaliatory?
The manner of your dismissal may entitle you to additional compensation beyond severance. Get advice before accepting any offer or signing a release bad faith damages are frequently not reflected in initial packages.
What bad faith conduct looks like in a termination
What damages bad faith termination can add to your claim
Extended notice period
Courts may award a longer reasonable notice period where the manner of dismissal was particularly harmful or where the employer’s conduct made the employee’s job search more difficult.
Mental distress damages
Where an employee proves they suffered actual mental distress as a result of the employer’s bad faith conduct during dismissal, compensation for that distress can be awarded as a separate head of damages.
Aggravated damages
Awarded where the employer’s misconduct during the termination process caused the employee foreseeable harm beyond the ordinary distress of losing a job. These are assessed based on the actual harm caused.
Punitive damages
Reserved for the most egregious employer conduct where the behaviour was so harsh, vindictive, or reprehensible that the court feels it warrants separate punishment beyond compensation for harm suffered.
The cases that established this framework
The Supreme Court of Canada established that employers must act in good faith and deal fairly in the manner of dismissal. Employees who face bad faith conduct such as misleading reasons or deliberate humiliation may receive extended notice or additional damages as a result.
The Supreme Court confirmed that aggravated damages can be awarded where an employee proves mental distress arising from an employer’s bad faith conduct during dismissal. The focus is on compensating actual harm rather than simply extending the notice period.
Signs your termination may have involved bad faith
Was the manner of your termination unfair, humiliating, or dishonest?
Bad faith in the manner of dismissal can entitle you to compensation on top of your severance. These damages are rarely included in an initial offer. Get your situation reviewed before accepting anything or signing a release.
Get Your Situation Reviewed
Or call us: 1-800-771-7882
What to do if you believe your termination was handled in bad faith
Document everything about how the termination was handled
Write down what was said during the termination meeting, who was present, how the meeting was conducted, and how you felt afterward. Save all written communications. Notes taken close in time to the event carry more evidentiary weight than accounts reconstructed months later.
Do not sign any release without legal advice
A release waives your right to pursue bad faith damages in addition to any shortfall in your severance offer. Employers sometimes use short deadlines to prevent employees from getting advice. You do not have to sign by an employer-imposed deadline. Take the time to get your full situation assessed.
Seek medical support if the termination affected your health
If you experienced anxiety, depression, or other health consequences related to how the termination was handled, document this with your doctor. Medical evidence establishing the link between the employer’s conduct and your mental distress is important to a damages claim.
Get legal advice promptly
Bad faith claims are assessed on the specific facts of how the termination was conducted. The sooner you get advice, the more complete your account will be and the more options you will have. The two-year limitation period for wrongful dismissal claims applies in Ontario.
Frequently asked questions about bad faith termination in Ontario
What is bad faith termination in Ontario?
Bad faith termination occurs when an employer acts dishonestly, misleadingly, or unnecessarily harmfully in the manner of dismissal rather than simply in the decision to terminate. Ontario courts have established that employers owe employees a duty of good faith and fair dealing in how a termination is conducted. Where that duty is breached, additional compensation beyond standard severance may be available.
What compensation can I get for bad faith termination in Ontario?
Depending on the circumstances, bad faith conduct in a termination may result in an extended notice period, damages for mental distress caused by the employer’s conduct, aggravated damages for foreseeable harm beyond the ordinary distress of losing employment, and in the most serious cases punitive damages. These are awarded in addition to your standard reasonable notice entitlement and are not typically included in an initial severance offer.
How is bad faith different from wrongful dismissal in Ontario?
Wrongful dismissal refers to a termination without proper notice or severance. Bad faith is about how the termination was conducted rather than whether it was justified. You can have both claims simultaneously for example, where you were terminated without adequate notice and the manner of the dismissal was also dishonest or humiliating. Bad faith damages are assessed separately from and in addition to your notice entitlement.
Can I claim bad faith damages if I was terminated for cause?
Yes, where the manner of the termination involved bad faith conduct independent of the cause allegation. Even where a for-cause termination is ultimately justified, an employer who conducted the dismissal dishonestly, publicly, or in a humiliating way may face separate liability for the manner of the dismissal. And where the cause allegation itself fails, both the underlying wrongful dismissal and any bad faith conduct in the process may be compensable.
What is the difference between aggravated and punitive damages in a termination?
Aggravated damages compensate the employee for actual foreseeable harm caused by the employer’s bad faith conduct during dismissal, such as proven mental distress. Punitive damages are not compensatory they are intended to punish particularly egregious employer behaviour and deter similar conduct. Punitive damages are reserved for the most serious cases where the employer’s conduct was harsh, vindictive, or reprehensible. Both are separate from and in addition to your notice entitlement.
Does my employer have to explain why I was fired in Ontario?
For a without-cause termination, your employer is generally not legally required to provide a reason. However, where the reason given is false or misleading, or where no reason is given in circumstances where one is expected, this may form part of a bad faith claim. Providing deliberately vague or shifting reasons that prevent you from understanding what happened has been recognized by Ontario courts as conduct that can support additional damages.
Was your termination handled unfairly or dishonestly in Ontario?
Bad faith in the manner of dismissal can entitle you to compensation beyond your severance. Our team advises employees across Ontario on wrongful dismissal and bad faith termination claims. Contact us for a confidential consultation before accepting any offer or signing any release.
Call us at 1-800-771-7882 or fill out the form below and we will be in touch.
The article in this client update provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Achkar Law Professional Corporation and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Achkar Law Professional Corporation. ©
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