Violating an employee's privacy is a breach of the implied terms of an employment contract according to an Ontario Judge. The result was a damages award payable to the employee by her former employer and a strong rebuke from the court.

In Colwell v. Cornerstone Properties Inc. and Krauel, a former commercial manager sued her employer for constructive dismissal after she learned that her immediate boss, Mr. Krauel, had surreptitiously installed a surveillance camera in the ceiling above her desk nine months beforehand. When the employee learned of the camera, she had it removed and eventually was so distressed that she had to seek medical assistance and began taking sedative drugs.

Her boss tried to defend his bizarre behaviour by explaining that he had installed it to try and assist the company in detecting theft by the maintenance staff, that he had no intention of spying on her, and that although he understood that the employee was upset, he had a full right to install such a camera. The employee disagreed with the explanations noting before she learned of the camera she was not aware of any thefts which had occurred from her office, she was not told about the camera even though she was responsible for the maintenance staff at the company, and there were no valuables kept in her office.

The employee tried to resolve the issue by going over her boss's head to the president of Cornerstone seeking a letter of recommendation and a severance payment. However, the company did not provide her with what she asked. She sought legal advice and eventually quit, alleging that the invasion of her privacy was a fundamental breach of her employment contract amounting to constructive dismissal. And she sued.

In the end, the Ontario Court of Justice sided with the employee and held that the employer's conduct was indeed a breach of the implied terms of the contract of employment. Although the judge recognized Ontario does not have privacy legislation protecting employees, and Canadian employment standards legislation has not yet gone very far in protecting employee's rights to privacy in the workplace, this was an emerging and evolving area of law. The court considered the case law developed around surveillance in unionized workplaces and agreed in principle that the employer must have a "reasonable apprehension of abuse by an employee to justify the introduction of a [surveillance] device" into the workplace. In this case, there were no reasonable explanations for the surveillance. Applying the Supreme Court of Canada's concepts of "good faith" and "fair dealing" from the Wallace v. United Grain Growers decision, the court found that the "cost to human dignity caused by the surveillance, coupled with the unbelievable explanation subsequently provided, left the [employee] in a position of being unable to rely upon the honesty and trustworthiness of her immediate supervisor, and amounted to more than merely 'bad faith' and 'unfair dealing.'" The judge held that the employee was more than justified in quitting her job and not returning to work. The judge implied a term into the employment contract that each party would treat the other fairly and in good faith, and that the actions of the employer had clearly violated those terms. The employee was awarded seven months of pay as damages.