Scope of last chance agreements

How far can an agreement go in stipulating what will result in dismissal?

Stuart Rudner

Question: Can a last chance agreement stipulate that any misconduct, regardless of whether it’s similar to past misconduct, will result in dismissal?

Answer: Last chance agreements are one of the specific issues that I address in my book, You're Fired! Just Cause for Dismissal in Canada. As is discussed at great length in the book, whether or not summary dismissal is appropriate will depend upon not only the specific misconduct in question, but a number of factors which will include the employee’s history of employment, disciplinary history, nature of her position, and response when confronted. While disciplinary history will be a factor, it is not the only factor. Ultimately, a court or arbitrator will attempt to determine whether the relationship has been irreparably harmed, in light of all the relevant circumstances.

Last chance agreements are typically entered into in situations where just cause for dismissal already exists, but the employee is being offered a “last chance” to keep her job. In exchange, the employee agrees that any future transgressions will result in summary dismissal. For that reason, courts and arbitrators are often willing to concede some of the discretion which they normally retain and agree that any future transgression will be sufficient to warrant summary dismissal. That said, every case must be looked at based upon its own particular circumstances, and trivial transgressions, or transgressions that occur years after the last chance agreement was entered into, may not warrant summary dismissal, despite the existence of the last chance agreement.

Like zero-tolerance policies, last chance agreements do not automatically mean that employers should proceed to summary dismissal without considering the circumstances and obtaining appropriate legal advice. A court will be attempting to determine whether the relationship has been irreparably harmed, and many factors will be taken into account. That can be the case even where there is a last chance agreement, though that will typically lower the threshold for summary dismissal.

Stuart Rudner is a founding partner of Rudner MacDonald LLP, a Toronto-based employment law firm. He is the author of You’re Fired: Just Cause for Dismissal in Canada, published by Carswell, a Thomson Reuters business. He can be reached at srudner@rudnermacdonald.com.

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