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Recent Supreme Court of Canada Decision May Signal a Stronger Duty of Good Faith for Employers

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In the recent case of Bhasin v. Hrynew the Supreme Court of Canada established a new duty of good faith that applies to all contracts, including employment contracts. This duty requires the parties to be honest with each other in regards to the performance of their contractual obligations. The court held that, while performing the contract, each party should have an "appropriate regard" to the legitimate interests of the other party. Further, the parties may not act in a manner which is arbitrary or capricious. 

This duty of good-faith dealing has been subsequently applied to the employment-dismissal context in Styles v. Alberta Investment Management Corp.The case concerned an employee who had been dismissed prior to the maturation of payments under the employee-incentive plan and who was later denied the payments because he was no longer employed by the company. The court adopted Bhasin v. Hrynew in order to argue that even the discretionary powers of the employer must be exercised in good faith and with regards to the interests of the other party. While the employer was allowed to terminate the employment of the employee at its discretion, this decision did undermine the employee's interest in the payments under the incentive plan, which required active employment. As such, the employer's actions were contrary to its common-law duty of good faith since they disentitled the employee to the payments that he had rightfully earned.

This decision is a welcome change in contract law and appears to importantly strengthen employment protections for employees. While it remains to be seen how these principles will be applied in the future, they provide employees with a new means of recourse when treated with bad faith by their employer. De Bousquet PC has a proven track record of fighting for the rights of employees. If you believe that your employer has treated you unfairly, don't face your struggle alone - let us help you obtain the best results in your case.

Bhasin v. Hrynew, 2014 SCC 71

Styles v. Alberta Investment Management Corp., 2015 ABQB 621

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