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LYING ABOUT REASONS FOR TERMINATION CAN COST EMPLOYER

A woman we will call Lucy had been working as a business manager for a car dealership in Alberta for ten months when she was approached by another car dealership offering her employment.  She had not been actively looking for other employment and was at first hesitant to entertain the offer. After two interviews, however, she was persuaded that she would be able to make more money at the new job, resigned her old employment and changed employers.
 
Business managers at car dealerships do not really have managerial responsibilities.  Nobody reports to them.  They are the people that, after you decide to purchase a car, will help you fill out your leasing or credit applications and sell you related insurance and warranties.
 
After five months in the job with no criticisms of her performance, Lucy was called into the boss=s office one day and was told that her employment was being terminated  for economic reasons.
 
Given this explanation, Lucy asked if she would be provided with a reference letter and the employer said she would.  After repeatedly requesting that reference letter in the following weeks, Lucy became frustrated with the lack of response and drafted a reference of her own.  She gave it to her old employer but they still did not sign it. 
 
The employer gave Lucy one week's pay in lieu of notice and Lucy sued for wrongful dismissal.  Lucy claimed that the reasonable notice to which she was entitled should be increased for two reasons: (1) She had been induced away from secure employment only five months before she was terminated, and (2) the employer had acted in bad faith in refusing to give her a reference letter and  lying to her about the reasons for her termination. 
 
It turns out that despite the fact that Lucy was told she was being terminated for economic reasons, she was replaced in less than a week.  To add insult to injury, when Lucy did sue for reasonable notice, the employer defended the action arguing that Lucy's performance had been so bad that there was just cause for her termination and that they owed her nothing.
 
When the matter finally got to trial, the employer at least conceded that it did not have just cause for her termination.  The judge thought that this admission was a bit too late.  The judge increased Lucy's reasonable notice as a result of the employer's bad faith behaviour in lying to her about the reasons for her termination and  arguing that she was such a bad employee she didn't deserve any notice at all.  The judge also found that Lucy had been induced away from secure employment with her previous employer and that her notice should be increased for that reason also. 
 
Having said all that, Lucy only got three months pay in lieu of notice, enough to cover her until she found a new job.  It was implied that in the absence of being lured away from secure employment and the bad faith treatment, she would only have received one month's pay in lieu of notice after her five months of service.
 
Lucy's case raises an interesting question: Is an employer obliged to tell the employee exactly why they are being fired?  Despite this case, I still think the answer is no.  Lucy's employer made the mistake of arguing that she was a bad employee as a defence to her lawsuit and that angered the judge.  If however, the employer had not argued that Lucy was guilty of just cause and simply said it told Lucy she was being fired for economic reasons because it didn't want to hurt her feelings,  bad faith damages would likely not have been awarded.  It may not be honest, but trying to save someone=s feelings is not exactly acting in bad faith.
 
As published in the Hamilton Spectator, January 20, 2004
 
Ed Canning
Ed Canning
P: 905.572.5809
ecanning@rossmcbride.com