When a Bad Investigation Makes a Termination Much More Expensive

The case reinforces that bad faith in the manner of dismissal can be expensive…the employer’s conduct increased the award by 14 months, resulting in a total notice period of 33 months.

A recent Ontario Superior Court decision is a strong reminder that alleging cause is not simply a termination strategy. It is a serious legal position that must be supported by a fair investigation, credible evidence, and careful analysis.

In Wilsher v. Olympic Wholesale, 2026 ONSC 3620, the court awarded a former night shift supervisor 33 months of pay in lieu of notice after finding that his employer did not have just cause to terminate his employment and had acted in bad faith in the manner of dismissal. The result is significant.

The employee was initially awarded 19 months of reasonable notice. However, the court extended the notice period by an additional 14 months because of the employer’s conduct, bringing the total award to 33 months. For employers, the decision is a cautionary example of how a flawed investigation and an improperly handled cause allegation can substantially increase liability.

The Background

The employee was 55 years old and had approximately 17 years of service. He worked as a night shift supervisor. The employer terminated his employment for cause after alleging that he had engaged in fraudulent behaviour and time theft by “topping up” employee time records.

The practice involved manually adjusting time records to show that certain employees had worked to the end of their shift, even where they had left early after completing their assigned work or had worked through breaks. The employer argued that this amounted to serious misconduct.

The employee argued that the practice was longstanding, widely known, and consistently applied among the night shift supervisors. He also maintained that he did not personally benefit from the practice.

Why the Court Rejected Just Cause

The court found that the employer had not established just cause for dismissal. Several factors were important.

First, the practice had existed for many years and was not isolated to the employee.

Second, the employee did not personally profit from the time adjustments.

Third, the evidence suggested that the practice was connected to the workplace’s existing operational arrangements, including employee expectations around guaranteed hours.

Fourth, the court was not satisfied that the employee knew the practice amounted to wrongdoing against the employer.

In other words, the case was not simply about whether the time records were accurate. The broader context mattered. This is consistent with the contextual approach to just cause. Courts will consider not only the alleged misconduct itself, but also the surrounding circumstances, the employee’s history, workplace practices, proportionality, and whether dismissal was an appropriate response.

The Investigation Became a Major Problem

The more significant aspect of the decision was the court’s criticism of the employer’s investigation and termination process. The court found that the investigation appeared to specifically target the employee without adequately examining the broader workplace practice.

Other supervisors were not interviewed about the time-entry practice. Their time edits were not audited. The employer did not meaningfully investigate whether the practice was widespread or condoned.

The court also found that the meeting with the employee closely resembled an interrogation rather than a fair investigation. It was conducted without notice, without proper explanation, and in a manner the court viewed as one-sided and high-handed.

The termination letter accused the employee of fraudulent behaviour and theft of time. The Record of Employment reflected a dismissal, which affected his ability to obtain employment insurance benefits. He also received no reference after 17 years of service. These facts mattered.

The court found that the employer’s conduct caused embarrassment, humiliation, and difficulty in the employee’s job search.

The 14-Month “Wallace Bump”

What makes this decision especially interesting is how the court compensated the employee for the employer’s bad faith. Instead of awarding aggravated or punitive damages, the court extended the reasonable notice period by 14 months.

This is notable because, following the Supreme Court of Canada’s decision in Honda Canada Inc. v. Keays, courts have generally been expected to compensate bad-faith conduct in the manner of dismissal through damages tied to actual harm, rather than by simply extending the notice period.

The Wilsher decision appears to return to the older Wallace-style approach, where bad faith in the manner of dismissal could justify an extension of the notice period. Whether this approach becomes more common or is treated as an unusual result remains to be seen.

However, the practical lesson for employers is clear: Courts will find a way to compensate employees where the dismissal process is handled unfairly.

Lessons for Employers

1. Do Not Predetermine the Outcome
An investigation should be designed to determine what happened, not to support a decision that has already been made. If the alleged misconduct may involve broader workplace practices, employers should investigate the full context before reaching conclusions.

2. Be Careful Before Alleging Fraud or Theft
Allegations of dishonesty, fraud, or theft can seriously damage an employee’s reputation and future employment prospects. Employers should not use this language unless the evidence clearly supports it.

3. Investigate Consistently
If several employees may have engaged in the same conduct, focusing only on one employee can create significant legal risk. Selective investigations may appear targeted, unfair, or personal.

4. Provide Procedural Fairness
Employees should generally be given a fair opportunity to understand and respond to allegations before termination decisions are made. A rushed or aggressive meeting can undermine the employer’s position later.

5. Consider the Consequences of a Cause Allegation
A cause allegation can affect severance, employment insurance, future job searches, and reputation. If the allegation is not supported, the employer may face liability beyond ordinary reasonable notice.

Termination Decisions Do Not Happen in a Vacuum

Wilsher v. Olympic Wholesale is an important reminder that termination decisions do not happen in a vacuum.

Even where an employer has concerns about employee conduct, the response must be fair, proportionate, and grounded in a proper investigation. The case also reinforces that bad faith in the manner of dismissal can be expensive. In this case, the employer’s conduct increased the award by 14 months, resulting in a total notice period of 33 months.

For employers, the lesson is straightforward: before alleging cause, investigate carefully, document properly, and ensure the evidence supports the conclusion.

For employees, the decision is a reminder that a “for cause” label is not the final word. Where the allegation is unfair, unsupported, or advanced in bad faith, significant remedies may be available.

How Minken Employment Lawyers (Est. 1990) Can Help

Minken Employment Lawyers (Est. 1990) regularly advises employers and employees on wrongful dismissal claims, just cause allegations, workplace investigations, employment standards compliance, and employment litigation.

Whether you are an employer who believes they have grounds to terminate for cause or an employee who is being investigated, understanding your rights and obligations is critical.

Contact Minken Employment Lawyers (Est. 1990) today for a confidential consultation at 905-477-7011 or contact@minken.com to connect with our team.

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Please note that this article is for informational purposes only and does not constitute legal advice or opinion.