Misconduct on last-chance agreements (Toughest HR Question)

Can these agreements stipulate further misconduct will result in dismissal?
By Brian Johnston
|Canadian HR Reporter|Last Updated: 02/22/2016

Question: Can a last-chance agreement stipulate that any type of further misconduct will result in dismissal, or does the misconduct leading to dismissal have to be related to that leading to the last-chance agreement?


Answer: Yes. The terms of a last-chance agreement (LCA) must be clear so it is easy to identify when there has been a contravention. Where the LCA stipulates the types of misconduct that will lead to dismissal, termination for such misconduct will likely be upheld, whether or not related to the behaviour leading to the LCA.


However, where the wording about the misconduct that will lead to termination is vague, an arbitrator may interpret this as intended only to apply to misconduct related to the behaviour leading to the LCA.


In Potash Corporation of Saskatchewan (Allan Division) and United Steel Workers, Local 7689, an LCA was put in place for an employee with alcohol addiction. It stipulated the employee was required to abstain from alcohol and illegal drug use, and if he did not, his employment would be terminated. When the employee tested positive for marijuana, his employment was terminated.


The union argued the termination should be overturned because drug use was not related to the purpose of the LCA, which was to address the employee’s alcohol addiction.


The arbitrator held that the terms of the LCA were clear and specific, and both the union and employee had agreed to the termination of employment for illegal drug use. Recognizing that the agreement only occurred as an alternative to termination, the arbitrator said the union and employee could have refused to sign if they believed the terms were too harsh, and pursued a termination grievance instead. The breach of the LCA was significant misconduct, warranting termination.


While there are exceptional cases where a termination may be found to be excessive, in this case, “given the lead up to the (LCA) and the understanding of the parties, it is not justifiable to go behind the terms of the agreement,” said the arbitrator.


Contrast this with the finding in Luscar Ltd. v. I.U.O.E., Local 115, where the arbitrator interpreted the more general wording that “any further misconduct” meant only misconduct related to the original behaviour that led to the employee’s last chance.


In Luscar, a last-chance letter had been given to the employee after aggressive and threatening behaviour towards colleagues. It stated, “Any further misconduct will result in termination of your employment.”


The employee was terminated after failing to use his safety glasses, a breach of company policy.


Although the employer argued the term “any further misconduct” was intended to mean misconduct of any type, the arbitrator interpreted the words as “any further similar misconduct.” The arbitrator found dismissal for the safety infringement was not justified based on the last-chance language.


Obviously, the key to an enforceable LCA is the parties agree on what misconduct will result in dismissal, and this is set out clearly.


For more information see:

•Potash Corporation of Saskatchewan (Allan Division) and United Steel Workers, Local 7689 (Dec. 17, 2013), D. Ish – Arb. (Sask. Arb.).

•Luscar Ltd. v. I.U.O.E., Local 115, 2001 CarswellBC 3617 (B.C. Arb.).


Brian Johnston is a partner at Stewart McKelvey in Halifax. He can be reached at (902) 420-3374 or bjohnston@stewartmckelvey.com.

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