Honesty a critical component of implied duty of good faith
In the intricate tapestry of workplace dynamics, the employee’s duty of honesty stands as a fundamental pillar in employment law. This duty, embedded within the broader framework of employment law, is not merely a moral obligation but a legal requirement that significantly impacts both employers and employees, and their relationship.
While we assume that employees are intended to be honest, this fundamental aspect is important to review and unpack.
In Canada, the duty of honesty is a critical component of the implied duty of good faith in employment relationships. This duty requires employees to be honest with their employers in various aspects of their work. The legal basis for this duty stems from common law principles that govern employment contracts. Courts have consistently emphasized that honesty is essential to maintaining the trust necessary for a productive employment relationship. Some cases discuss honesty for its own sake, and other judgments discuss the fact that dishonest conduct can constitute just cause because it reveals the character of the wrongdoer who engaged in the dishonesty.
For example, the following excerpt comes from a 1990 decision of the British Columbia Supreme Court, Nacey v. Arbutus Society for Children, 1990 CanLII 360:
“In Jewitt v. Prism Resources Limited,198 1 CanLII 535, the Court of Appeal in the Province of British Columbia dealt with the judgment of the trial judge in the following language at p. 51:
‘Was he justified in this conclusion? The morals of the market place have certainly become more mobile over the past few decades. But as long ago as 1910, in Fed. Supply & Cold Storage Co. of South Africa v. Angehrn & Piel (1910), 80 L.J.P.C. 1 (P.C.), Lord Atkinson said in a not dissimilar case, at p. 151 ‘it is the revelation of character which justifies the dismissal.’ This dictum was applied by the Supreme Court of Canada in Lake Ontario Portland Cement Co. Ltd. v. Groner, 1961 CanLII 1, where Ritchie, J., speaking for the Court, said at p. 598: ‘in my view it is not so much the misconduct itself as the fact that he was capable of it which justifies the respondent's dismissal,’ and thereafter cited the above passage from Lord Atkinson's judgment.
In my respectful view, honesty is still important; and perhaps the more senior and responsible the position held, the more that honesty must be not only inherent, but patent. Here, in my opinion, there were reasonable grounds for the defendant to see, in what the plaintiff did, a revelation of character which justified his dismissal.’”
The duty of honesty begins before the employment relationship is even formally established and the potential employee is hired. Prospective employees have an obligation to provide truthful information in their job applications and resumés. Misrepresentations or false statements about qualifications, experience, or skills can lead to serious consequences, including rescinding job offers or terminating employment if the dishonesty is discovered later. Employers must rely on the accuracy of the information from a candidate in order to make informed hiring decisions, and any deceit undermines this process. While due diligence in performing reference checks is critical, employees must not misrepresent or engage in dishonesty in their applications and interviews.
Once employed, the duty of honesty extends to everyday performance and conduct. Employees are expected to be truthful about their work including reporting hours and other data honestly and accurately, providing honest assessments of their work progress, and being forthright about any mistakes or issues that arise. Concealing errors or providing misleading information can harm the organization and damage the trust between employers and employees.
If an employer is issuing discipline for an employee’s dishonesty, particularly if a just cause dismissal is being considered, it is important that there be an assessment of the proportionality and a weighing of the nature of the dishonesty against the severity of the discipline. As stated by the Supreme Court of Canada in McKinley v. BC Tel, 2001 SCC 38: “An effective balance must be struck between the severity of an employee’s misconduct and the sanction imposed. The importance of this balance is better understood by considering the sense of identity and self-worth individuals frequently derive from their employment…”
In situations where workplace investigations take place, such as for misconduct, bullying and harassment or other issues, the duty of honesty becomes even more pronounced. Employees are expected to provide truthful, complete and accurate accounts of events and to fully co-operate with investigators (whether or not the investigator is a member of the organization or acting on behalf of the employer as an agent). Failure to do so not only undermines the investigation but can also lead to disciplinary action, including termination for just cause.
The consequences of breaching the duty of honesty can be severe. Depending on the circumstances, employers may have the right to terminate employment for just cause if an employee is dishonest, particularly since honesty cuts to the root of the employment relationship. Canadian courts have upheld dismissals where dishonesty was deemed incompatible with the employee's duties or detrimental to the employer's business interests. In some cases, dishonesty can also lead to legal action for fraud or breach of contract.
Employers also play a crucial role in upholding the duty of honesty. They must foster an environment where honesty is encouraged and valued such through clear policies, providing training, and ensuring that there are no incentives for dishonest behavior. Employers should also lead by example, demonstrating honesty and integrity in their dealings with employees.
The duty of honesty is a cornerstone of employment relationships in Canada, integral to maintaining trust and integrity in the workplace. Both employees and employers must understand and uphold this duty to ensure a healthy, transparent, and productive work environment. By prioritizing honesty, organizations can build a culture of trust that benefits everyone involved.
Richard B. Johnson is a partner and co-founder at Ascent Employment Law in Vancouver.
