Another reason not to appeal an EI ruling

Because employer appealed, and lost, ruling that awarded worker EI benefits, it couldn’t claim it had just cause in wrongful dismissal lawsuit

Stuart Rudner
If an employer dismisses an employee for just cause, and an employment insurance officer, board or umpire decides she was not guilty of misconduct and is therefore entitled to benefits, should the employer appeal that decision? The answer is probably no.

In the recent case of Korenberg v. Global Wood Concepts Ltd., the Ontario Superior Court of Justice ruled an employer was precluded from alleging just cause in a wrongful dismissal action. The basis for this finding was the fact the employer had already lost an appeal of a decision to award employment insurance benefits to the worker. In awarding employment insurance benefits, the board of referees, and the umpire on appeal, said there was no “misconduct” that would disqualify the employee from benefits.

The court found the employer was estopped (a legal term meaning barred or precluded) from re-litigating the same issue in a different forum.

In the Aug. 3, 2005, issue of Canadian Employment Law Today, I addressed this issue and specifically referenced the case of Minott v. O’Shanter, in which the Ontario Court of Appeal found it would not be bound by an employment insurance decision regarding misconduct.

In particular, the Court of Appeal noted that while the employment insurance analysis addresses the narrow issue of whether there was “misconduct” on the part of the employee, the issue of just cause is much broader.

The judge in Korenberg acknowledged the Court of Appeal’s decision in Minott, but found that, in the case before him, the facts alleged to support just cause were the same as those in support of an allegation of misconduct in the employment insurance claim. In my submission, this approach is questionable. In Minott, the Court of Appeal was clear that:

“A finding that an employee has lost his job by reason of his own misconduct under s. 28(1) of the Unemployment Insurance Act is not the same question as whether his employer had just cause to fire him. Misconduct under the act cannot automatically be equated with just cause for dismissal at common law. Just cause for dismissal at common law demands a broader inquiry than the search for misconduct under the act.

“To decide whether an employer had just cause for dismissal, a court may have to take into account a host of considerations: the seriousness of the employee’s misconduct; whether the misconduct was an isolated incident; whether the employee received warnings; the employee’s length of service; how other employees were disciplined for similar incidents; and any mitigating considerations. Misconduct under the act focuses more narrowly on the employee’s actions that led to the dismissal.”

In other words, according to the Court of Appeal, the analysis of whether there was misconduct pursuant to the Employment Insurance Act is quite different than the analysis of whether just cause for termination existed. The same set of facts can result in a finding that misconduct existed, yet just cause for dismissal did not.

Having said that, it is important to note that at least one reason why the employer was prevented from alleging just cause in Korenberg is that it actively participated in the employment insurance claim, and had in fact appealed the original decision.

In order for the doctrine of estoppel 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.

If the employer had not taken part in the employment insurance proceedings, its argument that it should not be bound by the resulting decision would have been stronger. In fact, the judge in Korenberg explicitly noted that: “An employer will not be bound by a decision of the board if it has not participated in that decision in any way,” and that “It is clear that the defendant would not be bound had it not participated in the board process at all.”

That is why, in my previous article, I concluded that unless an employer wants to be particularly vindictive, it is difficult to understand why it would bother to appeal a finding a former employee is entitled to employment insurance.

For more information see:

•Korenberg v. Global Wood Concepts Ltd., 2005 CarswellOnt 7152 (Ont. S.C.J.)

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

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