ROE reason for dismissal: Risks of getting it wrong

What happens when an employee disagrees with the stated reason for dismissal?

Colin Gibson

Question: If an employee disputes the reason for her dismissal, what should the employer put on the Record of Employment (ROE)? If the reason on the ROE is found to be wrong, what are the potential consequences for the employer?

Answer: Under the federal Employment Insurance Regulations, an employer is required to complete and file a Record of Employment (ROE) when an employee has an interruption of earnings. An interruption of earnings occurs when an employee has had, or is anticipated to have, seven consecutive calendar days with no work and no insurable earnings from the employer, or when an employee’s salary falls below 60 per cent of her regular weekly earnings for reasons such as illness, injury, pregnancy or the need to care for an ill family member.

Employment and Social Development Canada (ESDC) uses the information in an ROE to determine whether an employee who has experienced an interruption of earnings is eligible to receive Employment Insurance (EI) benefits, what the benefit amount will be, and how long the person will be eligible to receive those benefits.

The Employment Insurance Act provides benefits to employees who have experienced an interruption in earnings for reasons beyond the employee’s control. An employee who resigns without just cause, or who is dismissed for misconduct, will be disqualified from collecting EI.

When an employer completes an ROE, it must enter a code showing the reason for the interruption in earnings. Code “E” is to be used if the employee has quit. If the employee has been dismissed, EDSC asks employers to use Code “M” (dismissal), unless the employee has been laid off for lack of work. It is good practice to insert a brief explanation in Block 18 (comments) regarding the reason for the dismissal.

If an employee disputes the reason provided by the employer for issuing the ROE, EDSC will make inquiries and then issue a ruling on the employee’s entitlement to receive EI benefits. For example, if the employer claims the employee has quit, the employee may be able to establish to EDSC’s satisfaction that the employer initiated the termination, or that the employee had just cause for resigning. EDSC’s decision may be appealed to the Social Security Tribunal of Canada.

Generally speaking, an employer will not face liability for submitting an ROE that is inaccurate, as long as it attempted in good faith to complete the document correctly. For example, if the employer had reasonable grounds to claim that the employee resigned or was dismissed for misconduct, it should not be held liable or penalized if EDSC or the Social Security Tribunal later reaches a different conclusion.

However, there are some situations where an employer can get into trouble for filing a ROE that is not correct. The Canada Employment Insurance Commission has the authority to impose a penalty if it is established that the employer provided information on an ROE that was false or misleading. In Canada (Attorney General) v. Gates, the Federal Court of Appeal ruled that for such a penalty to be justified, the employer must have known the information was false or misleading.

Similarly, employers should be mindful of their common law obligation to act in good faith when they terminate an employment relationship, and must avoid using the ROE as a bad faith tactic at or around the time of dismissal. Otherwise, the employer may be exposed to liability.

In Johnson v. Marine Roofing Repair & Maintenance Service (2003) Ltd., for example, the employer was held liable for $10,000 in aggravated damages for indicating that it would state on the ROE that the employee was dismissed without cause, but only if the employee accepted the employer’s severance offer. In Perrett v. Harrison Galleries, the employer took four months to issue the employee’s ROE, delaying her ability to obtain EI benefits. The court ruled that the employer’s conduct was an aggravating circumstance that entitled the employee to increased wrongful dismissal damages.

EDSC publishes step-by-step instructions for employers on its website, on how to complete a Record of Employment. Consulting this resource may assist an employer in avoiding liability for completing a ROE inaccurately.

For more information see:

• Canada (Attorney General) v. Gates, 1995 CarswellNat 678 (Fed. C.A.).

• Johnson v. Marine Roofing Repair & Maintenance Service (2003) Ltd., 2015 CarswellBC 787 (B.C. S.C.).

• Perrett v. Harrison Galleries, 2001 CarswellBC 3133 (B.C. S.C.).

Colin Gibson is a partner with Harris and Company in Vancouver. He can be reached at (604) 891-2212 or [email protected]

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