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The Duty of Good Faith & Workplace Investigations: Joshi v National Bank of Canada

Posted On: August, 25 2016

A recent decision of the Ontario Superior Court has indicated that employers may in breach of their contractual duty of good faith if they fail to provide employees with due process rights in workplace investigations.

The recent decision in Joshi v National Bank of Canada, 2016 ONSC 3510 Justice Diamond refused to strike out portions of a statement of claim that alleged, among other things, that the National Bank of Canada breached its duty of good faith to Mr. Joshi because it did not notify him of any investigation into any allegation or any kind of misconduct while he was an employee. 

Mr. Joshi had voluntarily resigned from the National Bank of Canada.  In fact, Mr. Joshi only found out about the allegations of misconduct after he commenced employment with the Bank of Montreal and discovered that the National Bank of Canada had added his name to a crime prevention database intended for banks to report individuals found guilty of serious banking crimes.  In addition, the National Bank of Canada had made representations to other banks, including the Bank of Montreal, about the allegations against Mr. Joshi.  As a result of these acts, Mr. Joshi alleged that his subsequent employment with the Bank of Montreal was terminated early.

In dismissing the National Bank of Canada’s motion to strike in respect of Mr. Joshi’s claim of a breach of the duty of good faith, Justice Diamond stated that at a minimum, there exists an implied contractual obligation to afford employees who are the subject of an investigation of misconduct the opportunity to respond or refute the allegations of misconduct. Failing to provide the opportunity to respond “could qualify as a breach of the duty of good faith” (paragraph 27).  If the National Bank of Canada had commenced an investigation prior to Mr. Joshi’s resignation, Justice Diamond opined that the facts, as pleaded, could support a claim for the breach of a duty of good faith. Justice Diamond further stated that the National Bank of Canada’s subsequent actions – including 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” (paragraph 27).

Outside of the statutory context (i.e. the Human Rights Code) it is still unclear to what extent and whether employers will be held to account for their conduct in workplace investigations. Justice Diamond does not conclusively opine on whether the duty of good faith extends to workplace investigations, but he certainly opens the door to this type of claim. The Joshi decision is a good reminder to employers and their counsel that the standards for workplace investigations are still being delineated and best practices should always be employed, which means that the accused should always be notified of the alleged misconduct and should always be given an opportunity to respond to allegations made against them.  


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