The Duty of Good Faith and Workplace Investigations: Joshi v. National Bank of Canada
A recent decision of the Ontario Superior Court has indicated that employers may breach their contractual duty of good faith if they fail to provide employees with due process in workplace investigations. In Joshi v. National Bank of Canada, 2016 ONSC 3510, Justice Diamond refused to strike out portions of a statement of claim alleging that the National Bank of Canada breached its duty of good faith to Mr. Joshi by failing to notify him of any investigation or allegations of misconduct while he was employed.
Mr. Joshi had voluntarily resigned from the National Bank of Canada. He only became aware of the allegations after commencing employment with the Bank of Montreal, where he discovered that the National Bank had added his name to a crime prevention database used by banks to report individuals found guilty of serious banking offences. In addition, the National Bank had made representations to other banks, including the Bank of Montreal, regarding the allegations against Mr. Joshi. As a result, Mr. Joshi alleged that his subsequent employment with the Bank of Montreal was terminated early.
In dismissing the National Bank’s motion to strike regarding Mr. Joshi’s claim, Justice Diamond stated that, at a minimum, there exists an implied contractual obligation to afford employees who are the subject of a misconduct investigation the opportunity to respond or refute allegations. Failing to provide this opportunity could qualify as a breach of the duty of good faith (para. 27). Justice Diamond further noted that the National Bank’s subsequent actions, such as adding Mr. Joshi to a crime prevention database and making representations to other banks, would be premised upon a potential breach of the duty of good faith and carried out in furtherance of that alleged breach (para. 27).
Outside the statutory context, for example, the Human Rights Code, it remains unclear to what extent employers will be held accountable for their conduct in workplace investigations. Justice Diamond does not conclusively determine whether the duty of good faith extends to such investigations, but his decision certainly opens the door to this type of claim.
The Joshi decision serves as a reminder to employers and their counsel that the standards for workplace investigations are still evolving. Best practices should always be employed, which means that the accused employee should be notified of any alleged misconduct and provided with an opportunity to respond.