Dismissal for Cause

Employment Standards Act, 2000

No termination without notice 54 No employer shall terminate the employment of an employee who has been continuously employed for three months or more unless the employer,

(a) has given to the employee written notice of termination in accordance with section 57 or 58 and the notice has expired; or

(b) has complied with section 61. 2000, c. 41, s. 54.

James Caldwell v Noble Corporation, 2018 CanLII 44825 (ON LRB)

11. The second matter for determination, is whether the Applicant is disentitled to termination and severance pay otherwise payable by reason of “wilful misconduct” on his part. Ontario Regulation 288/01 stipulates at section 2(1):

2(1) The following employees are prescribed for the purposes of section 55 of the Act as employees who are not entitled to notice of termination or termination pay under Part XV of the Act:

…

3. An employee who has been guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.

At section 9(1), O.Reg 288/01 stipulates:

9(1) The following employees are prescribed for the purposes of subsection 64(3) of the Act as employees who are not entitled to severance pay under section 64 of the Act:

…

6. An employee who has been guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.

12. The concept of “wilful misconduct, disobedience or wilful neglect of duty” is a term of art distinguishable from that of “just cause” in the wrongful dismissal cases or in the arbitral jurisprudence under a collective agreement. A much-cited articulation of its meaning is that found in VME Equipment of Canada Ltd. (Re), [1992] OESAD No 230 (QL) where the Referee wrote:

There are two general categories of serious misconduct. There will be single acts: insubordination, theft and dishonesty, and physical violence against other employees, for instance, which may, standing on their own, meet that standard of seriousness. As well, there will be less serious repetitive forms of misconduct, which if handled properly by the employer, will also meet this standard of seriousness. The employer, in this scenario, must have explained to the employee after each occurrence that the conduct in question was not acceptable and that if continued would result in termination and there must be, subsequent to these warnings, a culminating incident.

In addition to proving that the misconduct is serious, the employer must demonstrate, and this is the aspect of the standard which distinguishes it from 'just cause', that the conduct complained of is 'wilful'. Careless, thoughtless, heedless, or inadvertent conduct, no matter how serious, does not meet the standard. Rather, the employer must show that the misconduct was intentional or deliberate. The employer must show that the employee purposefully engaged in conduct that he or she knew to be serious misconduct. It is, to put it colloquially, being bad on purpose.

Dziecielski v. Lighting Dimensions Inc., 2012 ONSC 1877 (CanLII)

The Law – Just Cause

[34] The relevant principles of law are not in dispute.

The Investigation

[35] While there is no obligation on the employer to conduct a particular type of investigation before deciding to dismiss with cause, the onus is clearly on the employer to have regard to all the facts necessary for a full and fair understanding of what occurred. In other words, the employee has no procedural rights in the employer’s investigation, but the employer must make a decision on the basis of all of the relevant facts and considerations. (Porta v. Weyerhaeuser Canada Ltd., 2001 BCSC 1480)

A Single Isolated Event

[36] Normally, a single and isolated incident will not be sufficient cause to dismiss a long service employee, particularly one with a clean disciplinary and performance record. The one single event must be particularly egregious to justify dismissal with cause. Depending on the severity of the misconduct however, one act or incident may justify termination of employment. (McKinley v. BC Tel, 2001 SCC 38)

Intoxication

[37] Intoxication at work does not automatically justify termination. Again, the circumstances of the intoxication and the nature of the work in question will provide part of the context that must be considered by the employer. Where for example the job requires drinking alcohol with potential clients, intoxication alone should not be sufficient to establish cause. On the other hand an aircraft pilot who is intoxicated before a flight may be dismissed with cause due to the relationship between the conduct and the essential features of the work. (Birchall v. Canadian Helicopter Ltd. 1998 CarswellBC 3161 and MacDonald v Northern Breweries Ltd. 1989 CarswellOnt 3273)

A Contextual Analysis

[38] Essentially, there must be a contextual analysis of all of the circumstances to permit an assessment of whether the penalty is proportional to the misconduct and undermines the employment relationship. If the penalty is overly harsh, it will not amount to cause even in the face of an admission of wrong doing.

[39] In the Law of Summary Dismissal in Canada (Toronto: Canada Law Book, 2011) at paragraph 13:210 the late learned Justice of this court, R.S. Echlin provided an excellent summary of factors which should be considered to determine whether an employee’s misconduct justifies dismissal:

The following factors are relevant to a determination as to whether an employee’s misconduct justifies dismissal:

• whether the employee was guilty of serious misconduct;

• whether the employee’s impugned behaviour or act was merely conduct with which the employer disagreed, or “trifling causes”, rather than transgressions or misconduct which any reasonable person could not overlook;

• whether the employee’s misconduct was inconsistent with or prejudicial to the employer’s business, and therefore in breach of an implied term of the employment agreement;

• whether the employee’s misconduct was in breach of an express provision of the employment agreement; and

• whether the misconduct merely reflects the employee’s poor judgment or inadvertence.

In the case of criminal conduct, the following factors are relevant:

• whether the employee was culpable for the alleged criminal conduct, or misconduct of a criminal nature;

• whether the conduct was prejudicial or inimical to the employer’s legitimate business interests;

• whether the conduct was in breach of the implied duty of fidelity, or fiduciary duty, or an express condition of employment, and therefore in breach of the employment agreement;

• whether there is evidence of actual harm or evidence substantiating potential harm to the employer.

Musoni v. Logitek Technology Ltd., 2012 ONSC 6782 (CanLII)

[5] The Plaintiff’s employment was terminated, without cause, by written notice on March 6, 2008. That notice was accompanied by a cheque payable to the Plaintiff in the amount of $1,804.38, which was described in the notice as “a final settlement and which includes 2 weeks notice pay.” The written notice, together with two weeks’ pay, complied with the Defendant’s requirements under sections 54 and 57 of the Employment Standards Act, S.O. 2000, c. 41.

[14] The Plaintiff may have valid observations about his treatment by the Defendant. It is apparent that he genuinely feels that he was mistreated. However, from an employment law point of view none of these complaints have any cogency. Much as the Defendant may have wanted to dismiss him with cause, the Plaintiff was dismissed without cause and was paid what was owed to him for that dismissal.

[15] Had the Plaintiff been rightly dismissed with cause, there would have been no pay in lieu of notice owing to him. Had he been wrongfully dismissed – i.e. without notice or cause for dismissal – he would have been owed pay in lieu of notice as provided for in the Employment Agreement and in the Employment Standards Act. Either way, he would not have done better than what he actually received from the Defendant – pay in lieu of notice precisely as stipulated in the Employment Agreement and in the legislation.

McNevan v. AmeriCredit Corp., 2008 ONCA 846 (CanLII)

[11] On July 4, 2002, the date of McNevan's first annual performance review, the vice-president of the company told McNevan that he was fired, effective immediately. He was given a letter offering three months' salary. The letter contained a paragraph stating: "We would ask that you indicate acceptance of this offer by signing and returning one copy of this letter and the enclosed Release to me. You are encouraged to obtain independent legal advice prior to signing these documents." The letter went on to thank McNevan for his contributions to the company and to wish him success in his future endeavours.

[17] The trial judge considered the factors outlined in Bardal v. Globe & Mail Ltd., 1960 CanLII 294 (ON SC), (1960) O.J. No. 149, 24 D.L.R. (2d) 140 (H.C.J.) as relevant in determining the reasonable notice period in wrongful dismissal cases. The trial judge found there to be a dearth of similar employment available in McNevan's chosen field of automotive finance. He noted that McNevan was a manager with a major degree of responsibility and the emotional satisfaction that McNevan experienced from his work. He also observed that McNevan was 44 years old at the time of termination and still had a considerable period of time left in a normal work life.

[18] After considering the traditional Bardal factors, the trial judge identified AmeriCredit's "corporate culture" as being one of sharing information, promoting open communication and providing regular performance feedback to its employees. He noted that McNevan had not received "any indication whatsoever from his superiors that his job performance was unsatisfactory" and therefore he "had no opportunity to change, modify, improve or make inquiries of areas where he apparently was not fulfilling his role". Further, while there was no holding out that McNevan's position would be long-term, the trial judge found that it would have been reasonable for him to assume that his position was secure given the experience that he brought to the position and the success he had achieved during the year he was with the company.

[19] The trial judge held that, in all of these circumstances, particularly in the light of the corporate culture, an extended notice period of six months was justified. [page464] (2) The "Wallace extensions"

[23] The trial judge held that AmeriCredit's failure to warn and the manner of the dismissal was "misleading and insensitive". As a result, McNevan suffered increased emotional upset, trauma and anxiety. The notice period was therefore extended by three months.

[24] The trial judge then turned his attention to post- termination conduct -- the second so-called "Wallace factor". He found that AmeriCredit should have known that immediately after being fired, McNevan would be in a weakened emotional and economic position. Notwithstanding, the company failed to make reasonable efforts to ensure that a number of matters were properly handled.

[48] In Wallace, the Supreme Court of Canada held that bad faith conduct in the manner of dismissal is another factor that is [page469] properly compensated for by an addition to the notice period. While a dismissed employee is not entitled to compensation for injuries flowing from the fact of dismissal, employers ought to be held to an obligation of good faith and fair dealing in the manner of dismissal.

[49] At para. 98, the court explained that the standard that employers must meet when dismissing an employee is, at minimum, one of candour, reasonableness and honesty. Employers should refrain from engaging in conduct that is unfair or in bad faith such as being "untruthful, misleading or unduly insensitive".

[50] A trial judge's determination that an employer has engaged in bad faith conduct or unfair treatment during the dismissal process is based upon findings of fact. An appellate court will not interfere with those findings absent palpable and overriding error. If the trial judge erred in principle in awarding Wallace damages, however, the standard of review is correctness.