Case In Point
Unwritten Practices, Selective Discipline, and the Cost of Bad Faith
Date: July 13, 2026
In Wilsher v. Olympic Wholesale, Justice Woodley of the Ontario Superior Court of Justice awarded an employee who was dismissed for cause 33 months’ pay in lieu of notice, extending a 19-month notice period by 14 months due to the employer’s bad faith conduct. The employee, a 55-year-old Night Shift Supervisor with 17 years of service, had edited timesheets to top up the hours of unionized warehouse employees who had worked fewer than 40 hours in a week.
The Court held that the employee’s conduct did not amount to just cause for termination. It found that topping up did not constitute a dishonest act or misconduct, and accepted that the practice existed as an unwritten rule in a workplace with no written policies, procedures, training manuals, or job descriptions governing timesheet editing. The decision highlights the risks for employers of relying on unwritten practices, enforcing workplace rules inconsistently, and singling out individuals for disciplinary action for conduct that reflects a broader organizational practice.
Background
A 55-year old Night Shift Supervisor with 17 years of service was dismissed for cause after his employer discovered that he had edited timesheets to top up the hours of unionized warehouse employees who had worked fewer than 40 hours in a week. The employer characterized the practice as fraudulent activity and time theft.
The Plaintiff’s Position
The Plaintiff maintained that his conduct did not provide just cause for his dismissal. He admitted to topping up employees’ time sheets on occasion but argued that it had been an unwritten workplace practice throughout his employment and was intended to comply with the collective agreement which guaranteed them 40 hours of work per week. Although he participated in a widely accepted practice, the employer dismissed only him and the supervisor who reported his conduct and damaged his reputation by referring to fraudulent behaviour and theft of time in his termination letter, hindering his ability to secure new employment.
In addition to claiming damages for wrongful dismissal, the plaintiff sought damages for the manner of dismissal, as well as aggravated and punitive damages.
Decision
The Court held that the plaintiff’s conduct did not amount to just cause for termination. It concluded that topping up did not constitute a dishonest act or misconduct. Justice Woodley found that because there was sufficient justification for the employee’s conduct, the plaintiff did not disregard the essential conditions of his employment contract.
An Ingrained Institutional Practice
The Court found that topping up was an ingrained institutional practice that all Night Shift Supervisors applied consistently and uniformly throughout the organization. Justice Woodley accepted evidence from three current employees who corroborated the existence of the practice and rejected the employer’s contention that the plaintiff had engaged in fraud or attempted to conceal misconduct. He accepted that the practice existed as an unwritten rule in an environment where there were no written policies, procedures, training manuals, or job descriptions governing timesheet editing. The Court also accepted that the practice was intended to facilitate compliance with the collective agreement, noted that it was not concealed by the plaintiff, and observed that he did not personally benefit from it.
Bad Faith and Unfair Dealings in Dismissal
Justice Woodley held that the employer engaged in bad faith and unfair dealings when dismissing the plaintiff. He observed that the employer focused solely on the plaintiff, subjecting- him to an intimidating and one-sided interrogation without notice, explanation, or representation, and terminated him with the apparent objective of removing him from the company rather than addressing the underlying practice. The employer further aggravated the situation by accusing the plaintiff of fraud and theft in his termination letter, recording his departure as a dismissal/suspension on his Record of Employment, and refusing to provide references after 17 years of service. These actions impeded his ability to obtain new employment and employment insurance benefits, and caused the plaintiff embarrassment and humiliation.
Context Matters When Dishonesty Alleged
The court relied heavily on the decision of the Supreme Court of Canada (SCC) in McKinley v. BC Tel, emphasizing that allegations of dishonesty must be assessed contextually rather than through a categorical approach. The court repeatedly emphasized McKinley’s proportionality principle, noting that misconduct cannot be considered in isolation and that the surrounding circumstances must be examined before concluding that cause for dismissal exists. The Court held that the contextual factors provided sufficient justification for its finding that dismissal for cause was disproportionate.
Treatment of Damages
Having found that the employer did not have just cause for dismissal, the Court found that the appropriate notice period for the plaintiff was 19 months’ payment in lieu of notice. Justice Woodley declined to award aggravated or punitive damages because the employer’s actions in dismissing the plaintiff did not rise to the required standard. Instead the Court awarded the plaintiff 33 months’ pay in lieu of notice, extending the 19-month reasonable notice period by 14 months due to the employer’s bad faith conduct. In extending the notice period, the Court expressly relied on the SCC’s decision in Wallace v. United Grain Growers, which permitted the notice period to be increased to compensate an employee for their employer’s bad-faith conduct in the manner of dismissal.
The Court’s reliance on Wallace was a departure from the approach taken by courts following Honda Canada Inc. v. Keays, where the SCC explicitly rejected the Wallace approach of extending the notice period to compensate for damages resulting from the employer ‘s unfair or bad faith conduct during the course of dismissal. Rather, the SCC held that in such circumstances an employee should be compensated for mental distress and other intangible harm through an award of moral damages.
Key Takeaways
- Longstanding and broadly accepted workplace practices may complicate allegations of misconduct.
- Selective discipline for a practice that is widespread may be a significant factor in a court’s analysis.
- Workplace misconduct cannot be assessed in a vacuum. Context is central to a just cause assessment.
- Courts will closely scrutinize an employer’s investigation and termination processes.
- Bad faith in the manner of an employee’s dismissal can have substantial financial consequences.
If you have any questions or require more information, please contact your Hicks Morley lawyer.
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