Employer trumped up reasons for dismissal in order to get rid of employee
An Ontario company must pay a short-term employee more than $250,000 for bad-faith conduct in concocting unfounded allegations of just cause when tensions arose over an adjustment to the price of the sale of the employee’s business to the company.
Alan Gordon sold the assets of his own business to Altus Group on Nov. 1, 2008. Altus hired him to continue in his position with a written employment contract for a three-year term, though there was a provision for termination with specified payouts if it was without cause.
The sale agreement also provided for an adjustment of the price by February 2010, based on the performance of the business following the transaction.
As the deadline for adjusting the sale price approached, tensions increased. Gordon felt Altus was cheating him because it was indicating its calculations showed less money would be paid to him in the price adjustment. Gordon gave notice he was going to activate the arbitration clause in the sale contract.
Altus claimed Gordon began speaking to senior staff in what the company considered “very derogatory terms” and he swore to the point where others found it hard to work with him. It also became aware of Gordon’s potential conflict of interest in lending money to a company with which Altus was doing business — contrary to provisions in the employee handbook — but Gordon claimed his manager told him he could continue with the loan as long as he didn't involve himself in the transaction. However, the manager denied giving permission to Gordon.
Altus also learned Gordon employed a staff member who had been charged with fraud and felt Gordon had misled it on the nature of the charges. Gordon said the charges were within the employee’s family and the issue had been a family dispute.
The company also claimed it felt Gordon wasn’t productive, which made it more difficult to deal with his unpleasant behaviour.
In late March 2010, Altus terminated Gordon’s employment. Because the company alleged it had cause for dismissal, it didn’t provide any compensation or notice. Gordon filed a wrongful dismissal complaint. In addition to his arguments regarding the conflict of interest issue and the fraud charges, he also argued swearing was common at the worksite and, while he did swear frequently, he denied doing it excessively in the presence of senior management.
The court found the staff member charged with fraud resigned three weeks after starting work and, though she may have retained some involvement with Altus, there was no evidence of any harm to the company. The court accepted Gordon’s claim he believed the charges were a family issue.
The court also found Altus had a pattern of minimizing swearing “by anyone except Alan Gordon.” Though there was evidence swearing was common, the company’s witnesses claimed they didn’t swear at other people while Gordon frequently did. However, Gordon was never reprimanded or warned about the use of profane language and there was no record of his excessive swearing, said the court. In addition, Gordon addressed the conflict of interest regarding the loan and the manager cleared it.
The court found that when Gordon gave notice of arbitration in the sale price dispute, Altus wanted to end the employment contract without paying severance by creating allegations of just cause. However, “there had been no process of providing warnings to Alan Gordon with written directions to improve,” said the court.
The court determined Altus failed to follow the progressive discipline process in its employee handbook. With no cause for dismissal, Gordon was entitled to the severance provided for in his contract — nine months’ pay plus three weeks for every year of service. Since Gordon worked for Altus for 17 months, his entitlement was $168,845.
