Boss says suspension,worker says dismissal

Whether or not an employer can suspend a non-unionized employee without pay is a foggy realm, but it’s starting to clear

Figuring out when it’s appropriate to suspend an employee without pay for misconduct isn’t easy.

Historically, the common law has followed the principle that in the absence of an express or implied term in an employment contract, it is not open to the employer to suspend an employee without pay as a means of disciplining the person for misconduct.

In the vast majority of cases, courts have determined that a disciplinary suspension amounts to a constructive dismissal. By suspending the employee from his duties, the employer has unilaterally and fundamentally changed a term or condition of the employment contract without providing the employee with reasonable notice of the change, thereby repudiating the contract.

Not surprisingly, if the right to suspend with or without pay is contained as an express term in a contract, or is specified in a company policy that has been properly accepted and incorporated into the terms and conditions of employment, courts have held employers are entitled to suspend employees for misconduct.

But courts have also been increasingly willing to find implied terms in employment contracts — such as policy manuals or accepted past practices — which allow discipline such as suspension. In doing so, the courts have considered the unique nature of the employer-employee relationship, recognizing that unlike a traditional commercial contract, the master and servant agreement is fluid.

Courts influenced by unionized workplaces

An employment contract between an employee and an employer often changes over time in accordance with circumstances and the conduct of the parties. Courts have also been influenced by unionized workplaces where progressive discipline and suspension are an accepted practice.

In Haldane v. Shelbar Enterprises Ltd., a 1999 decision, the Ontario Court of Appeal observed that adopting progressive discipline in a non-unionized workplace could be possible and appropriate:

“Having regard to the inclusion of progressive discipline powers in virtually all collective agreements, the flexibility which such an implied term would add to the employer-employee relationship and the incorporation into employment contracts as a matter of law of a provision requiring reasonable notice absence just cause for termination, a case could be made for implying a term providing for reasonable discipline into employment contracts… “

In McKinley v. BC Tel, a 2001 decision, the Supreme Court of Canada hinted that disciplinary measures short of dismissal may be appropriate in a non-unionized setting where an employee’s misconduct is not severe enough to justify dismissal but does warrant discipline:

“This is not to say there cannot be lesser sanctions (than dismissal) for less serious types of misconduct. For example, an employer may be justified in docking an employee’s pay for any loss incurred by a minor misuse of company property. This is one of several disciplinary measures an employer may take in these circumstances.

“Underlying the approach I propose is the principle of proportionality. An effective balance must be struck between the severity of an employee’s misconduct and the sanction imposed.”

Suspension without pay not always constructive dismissal

Following the Supreme Court’s suggestion in McKinley, some courts have determined that where the employer’s right to discipline is implied, whether in a policy manual or by accepted past practice, a suspension without pay will not amount to a constructive dismissal.

A few courts have held, even if the absence of an implied term allowing suspension, a short suspension with full pay and benefits isn’t enough to constitute a fundamental change to the terms and conditions of employment, particularly where the employee is junior.

But for senior employees this is less likely to be the case. A suspension with or without pay will generally affect a senior employee’s reputation in the eyes of subordinates to such an extent that it constitutes constructive dismissal.

Follow policy strictly, include a review mechanism

It is important to remember that in determining whether a suspension is fair, courts require employers to show they have carefully followed company policy when it comes to discipline.

In more than one recent case where the employer had substantially failed to follow its own suspension policy, it was not justified in suspending an employee for misconduct as the court found the discipline was not imposed in accordance with the terms under which it was allowed.

At least one court has held that employers that want to impose a suspension as a means of discipline in a non-unionized workplace are obliged to provide employees with a mechanism to have the decision to suspend reviewed. In Carscallen v. FRI Corp., a 2005 decision, the Ontario Superior Court stated:“In the unionized setting, employers and unions expressly bargain for suspension rights at the time of the formation of a collective agreement. Notably, most collective agreements containing the right to suspend also provide the employee with the right to grieve the fact or the nature of the suspension. The parties, of relatively even bargaining power, jointly determine that a monitoring process containing a contemporaneous right of appeal should accompany the employer’s disciplinary rights.

“In the white collar non-unionized setting, if a right of suspension is to be contracted for and upheld as fair and reasonable, a right of review must exist in the contract or policy akin to the unionized employee’s right to grieve. The supervisor imposing the discipline must not be permitted to be sole judge, jury and executioner. There must be an opportunity to have whatever penalty is imposed reviewed by another party. In the instance in which the CEO seeks to impose the discipline, a review might involve consultations with an independent HR professional.”

As a final cautionary note, despite recent recognition of the fluidity of the employment relationship, the willingness of courts to imply terms into any contract remains quite restrictive.

If an employer cannot point to cogent and substantive evidence of an implied right to impose a suspension (through evidence of accepted company policy or past practice) then the employer will not be permitted to suspend an employee for misconduct without repudiating the employment contract and being liable for damages for constructive dismissal.

Meghan McCreary is a labour and employment lawyer with MacPherson, Leslie & Tyerman LLP in Regina. She can be reached at (306) 347-8000 or [email protected].

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