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CANADIAN HR LAW
Feb 11, 2014

The high cost of rushing to judgment

No matter how digusting the conduct, employers must take time to objectively investigate before taking action
    
By Stuart Rudner

A recent wrongful dismissal case provides yet another example of why employers need to pause and investigate before rushing to judgment and firing an employee.

In Ludchen v. Stelcrete Industries Ltd.,  the employee was accused of calling his bosses “cheap f---ing Jews.” Not surprisingly, he was summarily dismissed. However, a judge found the evidence of the alleged wrongdoing was weak and could not justify dismissal for cause, the capital punishment of employment law.

At the time of termination, Richard Ludchen was a plant superintendent for Stelcrete, and had worked for them since January 1997, working his way up the corporate ladder to superintendent. He had supervisory and managerial duties including the ability to hire, dismiss and discipline those under him.

When the Ontario government introduced Family Day a few years ago, Stelcrete chose not to give its employees that day off since it already provided an equal or greater benefit by providing other paid holidays. When the plaintiff learned of this, Ludchen allegedly reacted angrily, referring to the owners as “cheap f---ing Jews” in front of several other employees.

Coincidentally, a private investigator was working undercover at the plant at the time, investigating alleged employee drug use. The investigator reported the anti-Semitic outburst to the director of HR and the general manager.

The employer was, understandably, quite upset. No independent investigation was undertaken, and Ludchen was dismissed for cause within days. In response, Ludchen asked if there was something he could do to make the situation better, but was told there wasn’t. Soon after, Ludchen called the director of HR, acknowledged his wrongdoing, and offered to write a letter of apology to the owners. He was told it would not get him his job back.

A month later, the investigator filed a report in which she wrote that Ludchen made anti-Semitic remarks on other occasions. At trial, the investigator testified that he “freaked out” when told about Family Day, throwing a garbage can and slamming a door while everyone on his shift heard his comments. Conversely, in his evidence, Ludchen said there were only three people in his office when he received the news, and he told them he wasn’t happy about it. He completely denied making any anti-Semitic comments.

The lack of an investigation, and the investigator’s poor credibility ultimately did the company in. The court found the investigator’s evidence was inconsistent and presented with a questionable demeanour. Among other things, the court found it difficult to accept that she had heard Ludchen make anti-Semitic remarks in the past but never said anything about it. The evidence that “everyone” heard his comments was contradicted by other employees, and the court found, ultimately, that the investigator was not a reliable witness. As well, the evidence was not that she heard the anti-Semitic comments, but that she heard other employees talking about it.

The court was critical of the company for relying upon questionable evidence to summarily dismiss a good employee without properly investigating the allegations or giving the accused an opportunity to respond. As I have repeatedly stated, in other blog posts and when I advise employers, it is critical that any allegation of misconduct be thoroughly and fairly investigated. Such an investigation must include providing the employee with a chance to defend themselves again the allegations.

The court found that summary dismissal was not warranted and awarded Ludchen 12 months’ pay in lieu of notice, although it declined to award any damages for bad faith damages.

The lesson for employers is clear: no matter how upsetting the alleged conduct of an employee may  be, you must take the time to objectively investigate the allegations before  taking action. Furthermore, any misconduct must be considered in the context of the entire employment relationship when assessing whether just cause for dismissal exists. Otherwise, employers expose themselves to substantial liability.

    
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