Case demonstrates 'high bar' employers must meet when attempting to establish dismissal with cause and after-acquired cause, says employment lawyer
The Ontario Superior Court of Justice recently dismissed an employer’s attempt to establish after-acquired cause — even though it found the employee in question had committed a serious breach of conduct.
The employee had been working for BMO Nesbitt Burns for 23 years when she was terminated without cause in 2018. She initiated a wrongful dismissal claim shortly thereafter, which BMO contested.
During the discovery stage of the proceedings, it was discovered that prior to her termination, the employee, an investment advisor, had copied thousands of emails containing confidential client information onto a USB device and taken it to her home office.
Establishing just cause for dismissal a ‘high bar’
Upon that discovery, BMO amended its Statement of Defence, alleging after-acquired cause as by removing confidential material from the work premises breached its employee Code of Conduct.
However, the court did not agree, and decided in favour of the employee, awarding her 24 months’ notice and damages for lost commissions.
Rudy Ticzon, associate with Koskie Minsky in Toronto, says this decision is an important demonstration of the “high bar” employers must meet when attempting to establish dismissal with cause and after-acquired cause.
“You have to look at the overall employment relationship, not just at the time of termination, but during the entire employment period of the employee,” he says.
The employee at BMO started her employment in 1994, and over the 23 years of her employment, had not committed another misconduct, which the court took into consideration – it is a point that employers also need to consider when terminating an employee with cause, Ticzon says.
“You have to look at the actions and the employment records of this employee, and determine: ‘Do you have sufficient evidence that the misconduct, the latest misconduct that you are alleging, is so serious that it would give rise to just cause?’” he says.
“In this case, if the employee used the information that was downloaded on that USB device, and shared that with others, that would have likely made it so serious that it could have affected the business of BMO Nesbitt burns, and then it would give rise to a breakdown in the employment relationship.”
Did misconduct amount to a breakdown in the employment relationship?
Previously to her termination the employee had expressed concern over a performance assessment she had received that outlined an inappropriate communication style and use of an assistant, among other things, and prescribed corrective measures.
BMO terminated her without notice or cause, because of “restructuring”, according to court documents, and the cause of her termination was submitted to the Investment Industry Regulatory Organization as “dismissed in good standing” due to “Job Elimination”.
Emails were sent the same day to colleagues and clients informing them that the employee was no longer with Nesbitt Burns.
“[The employee] was understandably upset as a result of being terminated. She was devastated that her client relationships were gone overnight and she was concerned about looking ‘guilty’ in front of clients for no reason,” the court wrote in its decision.
The court found that although the employee had breached the Code of Conduct which mandated a strict rule around protecting client confidentiality, she had not intended misconduct but rather had suffered a lapse of judgement.
It also noted that the criticism of her performance may have been discriminatory, as the employee alleged.
Be specific when documenting reasons for termination
When terminating an employee with or without cause, Ticzon says, employers and HR managers should be very specific when documenting reasons, and making sure there is no way it could be construed as discriminatory.
“When employers make termination decisions without cause, they should clearly document the decision-making process to demonstrate that an employee's human rights protected grounds are not factors in the termination decision,” says Ticzon.
“Employers should have sufficient evidence to establish that an employee's poor performance was the reason for termination, and that poor performance was a valid non-discriminatory reason.”
Also, it is crucially important that employers keep their employment contracts up-to-date with current laws and regulations, and not use one-size-fits-all template contracts.
Employment contracts are the guideposts that define the employment relationship, he explains.
“Employment contracts continue to evolve, especially with provisions for cause, but the termination provisions are also evolving in law, so you really need to carefully draft an employment contract that is congruent also with your internal policies, or employee code of conduct, that will be helpful to you should you ever defend a wrongful dismissal claim from an employee,” he says.
“Employment contracts should always be tailored based on the specific employee’s duties and obligations, and also on their relationship to the employer and the employee’s relationship to their duties and responsibilities.”
