Should employers appeal EI rulings?

If an agent rules an employee fired for cause is entitled to employment insurance benefits, could it hurt the employer in a wrongful dismissal suit?
By Stuart Rudner
|hrreporter.com|Last Updated: 09/14/2006

A situation recently came to my attention where an employer in Ontario had finally dismissed a particularly difficult employee after years of inappropriate behaviour. The employer had given this employee numerous warnings and ultimately terminated his employment for cause.

Not surprisingly, a letter from the employee’s lawyer followed and, when no settlement could be reached, litigation was commenced based upon a claim of wrongful dismissal.

In the meantime, the former employee applied for employment insurance. The issue facing the insurance agent was whether the employment relationship had been severed due to the employee’s misconduct, since the

Employment Insurance Act

provides that in such a case the employee’s entitlement to benefits can be denied or reduced.

The agent decided, based upon a minimal amount of information, that there was not sufficient misconduct to deny employment insurance benefits to the former employee. As is typical, the decision did not refer to any findings of fact or consideration of the situation — it simply contained a conclusion.

The employer can appeal such a decision. The question that arose, then, is whether it should. Fundamental to this decision was the question of whether the agent’s finding that there was not sufficient misconduct to deny employment insurance benefits would somehow impact upon the defence of the ongoing wrongful dismissal action.

In other words, could this former employee refer to the employment insurance agent’s decision — that there was not sufficient misconduct to deny employment insurance benefits — in court, and would the court be bound by such a finding?

At law, the relevant concepts are the doctrines of

res judicata

or issue estoppel. The purpose of these doctrines, essentially, is to avoid having parties litigate the same issues repeatedly.

If the parties have addressed the same issue and a final decision has been reached, the losing party should not be allowed to try again in a different forum. In order for the doctrine to apply, the courts have created a three-pronged test:

•the same issue must have been decided in the previous proceeding;

•the previous proceeding must have resulted in a final decision; and

•the parties in the previous proceeding must have been the same as in the current proceeding.

Even where all three prongs of the test are met, the courts retain a residual discretion not to apply the doctrine, but to consider the issue anew. The issue of whether the decision of an employment insurance agent, or a board of referees (where the agent’s decision is appealed) will lead to a finding of estoppel has been considered in numerous cases, with different results.

For example, where there was an issue of constructive dismissal, it has been found the doctrine can apply, as the same issue would be before a court. However, if the court action raises other issues, the parties are not precluded from disputing them.

In 1999 the Ontario Court of Appeal considered the specific issue of how a determination on the existence, or lack, of misconduct would impact upon a defence of just cause. In

Minott v. O’Shanter Development Co.

, the court found the question of whether there had been misconduct, for the purpose of determining employment insurance eligibility, is a different question than whether the employer had just cause to terminate the employment relationship.

The court found the issue of just cause involves a much broader investigation and analysis and the court should not be bound by a finding which narrowly considered the issue of “misconduct” under the

Employment Standards Act

.

As a result, an employer facing such a situation may have little reason to appeal the employment insurance agent’s finding, although it should be noted that in at least one case, the court has considered a party’s failure to appeal as a factor supporting the application of the estoppel doctrine. This was, however, only one factor to be considered, and in that case, the court ultimately found that estoppel would not apply.

Given the above, unless an employer wants to be particularly vindictive, it is difficult to understand why they would bother to appeal a finding that their former employee is entitled to employment insurance. After all, it doesn’t come out of their pocket.

For more information see:

Minott v. O’Shanter Development Co.

, 1999 CarswellOnt 1, 40 C.C.E.L. (2d) 1 (Ont. C.A.)

Stuart Rudner practices commercial litigation and employment law with Miller Thomson LLP’s Toronto office. He can be reached at (416) 595-8672 or by e-mail at srudner@millerthomson.ca.


This article was provided courtesy of Canadian Employment Law Today, a sister publication to Canadian HR Reporter that focuses on employment law issues from a business perspective. For more information visit www.employmentlawtoday.com.

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