A recent Ontario Superior Court decision has attracted significant attention in employment law. In Wilsher v. Olympic Wholesale, 2026 ONSC 3620, the Court found that an employee who was wrongly accused of fraud and dismissed for alleged “time theft” was entitled not only to 19 months of reasonable notice, but also an additional 14 months because of the employer’s bad faith conduct during the dismissal process, resulting in an extraordinary 33-month notice award.

For employees and employers alike, the decision serves as an important reminder that how a dismissal is carried out can be just as important as whether the dismissal itself was legally justified.

Background

The employee worked for Olympic Wholesale for approximately 17 years, eventually becoming a Night Shift Supervisor.

The employer alleged that he had engaged in “time theft” by adjusting employee timesheets and terminated him for just cause without notice, accusing him of fraudulent conduct.

The employee argued that the practice had existed for years, was openly performed by multiple supervisors, formed part of the workplace’s longstanding operational practices, and that he had never personally benefited from the adjustments.

The Court Rejected the Employer’s Just Cause Allegations

Applying the Supreme Court of Canada’s contextual approach from McKinley v. BC Tel, the Court concluded that the employer failed to establish just cause.

Several factors proved decisive:

  • the practice had existed for nearly two decades;
  • the employee had been trained to perform the adjustments by previous supervisors;
  • there were no written policies prohibiting the conduct;
  • the employee openly recorded every adjustment using his own login credentials;
  • he never attempted to conceal his actions; and
  • he did not personally profit from the practice.

Rather than viewing the conduct as dishonest, the Court characterized it as a longstanding institutional practice that management had failed to properly regulate.

This portion of the decision reinforces an important principle in Ontario employment law:

Allegations of dishonesty or fraud must always be assessed within their full factual context. An employer cannot simply label conduct as “fraud” without proving that it fundamentally destroyed the employment relationship.

A Significant Notice Award

Because just cause was not established, the Court assessed reasonable notice under the traditional factors.

Considering the employee’s:

  • age (55),
  • 17 years of service,
  • supervisory role,
  • compensation, and
  • difficulty finding comparable employment,

the Court awarded 19 months of reasonable notice.

That alone would have represented a substantial wrongful dismissal award.

The Most Interesting Part of the Decision: An Additional 14 Months for Bad Faith

The truly noteworthy aspect of the decision came afterward.

The Court found that the employer’s conduct throughout the investigation and termination process was sufficiently unfair to justify extending the notice period by another 14 months, bringing the total award to 33 months.

Among the factors identified by the Court were:

  • conducting what the Court described as a targeted investigation;
  • failing to investigate whether the same practice existed among other supervisors;
  • interrogating the employee without meaningful procedural fairness;
  • accusing the employee of fraud;
  • issuing a termination letter referring to fraudulent activity;
  • recording the dismissal on the Record of Employment in a manner that negatively affected the employee; and
  • impairing the employee’s ability to secure new employment.

The Court ultimately concluded that these actions caused compensable harm beyond the ordinary consequences of dismissal.

Is Ontario Seeing a Return of “Wallace Damages”?

Historically, the Supreme Court of Canada recognized that employers acting in bad faith during dismissal could justify an extension of the reasonable notice period under Wallace v. United Grain Growers.

Later decisions, particularly Honda Canada Inc. v. Keays, generally shifted the law toward awarding compensatory damages for proven mental distress, rather than mechanically extending the notice period.

The Wilsher decision is therefore interesting because the Court expressly awarded relief by extending the notice period itself, relying on the employer’s bad faith conduct.

Whether appellate courts will endorse this approach remains to be seen. For now, the decision highlights that courts continue to scrutinize an employer’s conduct during investigations and dismissals very closely.

Implications for Ontario Employers

This case offers several practical reminders for employers:

  • conduct thorough and impartial workplace investigations before alleging just cause;
  • avoid making allegations of fraud or dishonesty unless supported by clear evidence;
  • ensure workplace policies are written, communicated, and consistently enforced;
  • investigate comparable conduct by other employees before imposing discipline;
  • document expectations regarding payroll, timekeeping, and supervisory authority; and
  • carry out dismissals professionally, fairly, and respectfully.

Poor dismissal procedures can substantially increase liability, even where an employer believes misconduct has occurred.

Implications for Employees

Employees who are dismissed for alleged misconduct should remember that:

  • an employer bears the burden of proving just cause;
  • longstanding workplace practices may be highly relevant to whether misconduct actually occurred;
  • accusations of dishonesty or fraud should not automatically be accepted at face value;
  • the manner in which an employer conducts an investigation may itself affect the damages available in a wrongful dismissal claim.

How Pelsmakher Law Can Help

At Pelsmakher Law, we advise both employees and employers on every aspect of Ontario employment law, including:

Whether you have been dismissed without cause or are an employer considering termination for alleged misconduct, obtaining legal advice early can significantly affect the outcome.

If you have questions about your workplace rights or obligations, contact Pelsmakher Law for experienced employment law advice tailored to your situation.