Every Canadian province has its own employment standards legislation that imposes minimum standard entitlements on the termination of employment. Where an employee has not signed a written agreement limiting termination entitlements to these minimums, or to some greater specific amount of notice or severance, the common law (except in Quebec) implies the employee is entitled to reasonable notice (or pay instead) on a termination without cause.
Many employers assume if they have just cause for termination, they won’t have to pay the fired worker statutory minimum notice and severance pay. This is not necessarily the case.
A recent decision by the Ontario Superior Court reminds us, in very clear terms, of three important cautions for employers wishing to assert just cause — the last of which deals squarely with possible differences between statutory and common law standards.
In Oosterbosch v. FAG Aerospace Inc., the employee had worked for almost nine years when the employer, a manufacturer of precision bearings for the aerospace industry, terminated his employment without notice and alleged just cause.
In this employer’s particular industry, “precision and quality control are essential since the failure of such parts can be catastrophic,” said the court, and it was in this context it assessed the employee’s “failures” and the employer’s system of progressive discipline.
The employer’s system was exemplary in its structure and application, requiring supervisors to first investigate infractions with the employee and a representative of the employee committee.
An investigation could result in no action being taken, a coaching or counselling session or, where warranted, a written warning. A third written warning would carry a minimum two-day suspension and four written warnings within any 12-month period would result in dismissal.
The worker received four written warnings within a period of less than six months for the following conduct:
• He produced 30 pieces over 1.5 hours that did not meet specifications and were unusable due to a defect that should have been noticed after the production of one or two.
• He fell asleep in his truck after he took a significantly extended meal break (something he had been counselled for several times in the past).
• He was late without explanation five times in a period of 12 months.
• He produced 77 non-conforming pieces, having failed to properly set or check the specified measurements, having admittedly misread both the blueprint and measuring device.
In assessing whether the accumulated evidence supported an allegation of just cause, the court considered the employer’s policy of progressive discipline, finding: “Although the (worker’s) dismissal following receipt of four written warnings within a year complies with that policy, it does not necessarily follow that there was justification for his termination at law. Just cause at common law requires proof of misconduct that constitutes a repudiation of the employment relationship.”
The persistence of the employee’s misconduct, notwithstanding ongoing coaching sessions and warnings, was sufficient to constitute a repudiation of the employment relationship, amounting to just cause at common law, found the court.
The employee argued the evidence was, nonetheless, insufficient to preclude him for receiving his statutory minimum entitlements. While the employee’s sustained course of casual and careless conduct was inconsistent with the continuation of his employment, his conduct was still not sufficient to constitute “wilful misconduct,” said the court.
“Notwithstanding the number of infractions recorded, I do not see that the conduct of the (worker) rises to that level. He was undoubtedly careless and the persistence of that carelessness justified his dismissal. I would not, however, characterize his offending behaviour as ‘wilful misconduct, disobedience or wilful neglect of duty’ that would disentitle him to receipt of termination and severance payments under the provisions of the Employment Standards Act, 2000,” said the court.
The employee was awarded his minimum statutory entitlements which, under Ontario’s regime, amounted to about $25,000.
Tips for employers: 3 important cautions
Oosterbosch reminds employers of the following important cautions:
• Having and consistently applying a good system of progressive discipline may often be a pre-condition to successfully asserting cause, but it is not necessarily enough to justify a termination for cause.
• Proving just cause requires sufficient evidence to demonstrate an employee has repudiated the employment relationship. Without a very serious incident of misconduct or dishonesty, this will usually demand proof of repeated warnings and counselling sessions.
• Just because an employer may successfully prove just cause at common law does not mean the evidence will be sufficient to prove the type of “wilful misconduct, disobedience or neglect of duty” required by statute to disentitle an employee to minimum statutory termination entitlements.
While employers may successfully assert just cause at common law, they may be surprised to learn in some cases the employee will still be entitled to statutory minimum notice and severance pay. It is important to be familiar with provincial employment standards legislation and to know the difference between conduct warranting just cause and misconduct that rules out statutory termination pay.
For more information see:
•Oosterbosch v. FAG Aerospace Inc., 2011 CarswellOnt 1702 (Ont. S.C.J.).
Peter Straszynski practises labour relations and employment law at Torkin Manes in Toronto. He can be reached at (416) 777-5447 or email@example.com.