Employee engages in wilful misconduct; termination for cause upheld

Exclusive to Canadian HR Reporter from Rudner Law.

In the recent decision of Park v Costco Wholesale Canada Ltd. the Ontario Superior Court of Justice found that the employer had met the standard to prove both just cause at common law and wilful misconduct under the Ontario Employment Standards Act, 2000 (ESA).

This is a welcome decision for employers and is instructive on when wilful misconduct will be established.

To establish just cause for dismissal at common law, employers must be able to prove that the employee's misconduct was serious enough to lead to the total breakdown of the employment relationship, evaluated in the full context of the surrounding circumstances. Under the ESA, an employee will not be entitled to notice/termination pay or severance pay where they engage in "wilful misconduct, disobedience or wilful neglect of duty that is not trivial and that has not been condoned by the employer", which Ontario courts have confirmed represents a higher standard than that for just cause at common law.

This means that while an employer may have just cause to dismiss an employee at common law, the employer may still have to pay termination pay and severance pay (if applicable) under the ESA.

Previous case law - Render

This was the outcome in the 2022 decision of Render v. ThyssenKrupp Elevator (Canada) Limited. As we wrote about, in this case the employee was dismissed for cause after he slapped a female co-worker on her buttocks. At trial, the court determined that termination for cause was justified. The employee appealed on several grounds, including that he was entitled to compensation under the ESA.

The Ontario Court of Appeal agreed with the employee, finding that although his misconduct clearly warranted cause termination at common law, it did not rise to the level of wilful misconduct required to displace his entitlements under the ESA. Specifically, the court found that the employee's misconduct was not pre-planned, but had occurred in the heat of the moment.

The decision in Render left many employers with the impression that wilful misconduct was a virtually impossible standard to meet, as the court made it clear that it required not only that the employee engaged in the misconduct intentionally, but that it was premeditated. The decision in Park demonstrates that although the standard is very high, it is by no means impossible to meet.

Background - Park

In Park, the employee had 20 years of service and held a management position at the time of his dismissal. In late 2014, the employee had created a website which allowed users within his department to share files with one another. There was no dispute that the website was the property of the employer.

In 2015, the employee was transferred to another department at his request. After the transfer, his former manager emailed him requesting access to the website. The following day, the employee deleted the website and replied to this email indicating that he had done so as no one had expressed interest in using it.

The general merchandise manager replied to the employee and advised that he needed to seek permission from his buyer before deleting items from the system that other people had the ability to use. This appeared to incense the employee, who replied with a number of inflammatory comments, including "exactly how many times should I be asking for an update, can I not trust my managers to be able to get back to me in a timely manner and not ignore my requests?" as well as "I shouldn't always have to babysit and always have to do the follow-up".

Later that day, the employer let the employee know that it had been able to restore the website. Just prior to receiving this email, the employee deleted the website a second time, first from his computer and then from the recycling bin. The employee claimed that he did not realize the website had been restored, but thought that perhaps he had not deleted it properly the first time.

Findings of the court

The court had little difficulty concluding that the employee's misconduct had irreparably damaged the employment relationship and justified the termination of his employment for just cause. It found that the employee had engaged in four discrete and deliberate acts of misconduct:

1. The employee had deleted the website after receiving his manager's email.
2. The employee's initial email response was misleading in that it did not communicate that he had deleted the website in response to his manager's email, but instead suggested that he had deleted the site at some point in the past because no one had gotten back to him on whether they wanted to use it.
3. The employee's second email response was insubordinate and disrespectful.
4. The employee deleted the website a second time. In addition, the court noted that the employee had misled Service Canada about the second deletion, alleging that the employer may have "hacked" his account.

In finding that this misconduct also met the threshold for wilful misconduct under the ESA, the court referred to Render and confirmed that the employee's behaviour could "only be described as intentional and deliberate". It was clear that the employee had intentionally deleted the website, twice, with the express purpose of preventing his employer from being able to access it because he was angry that they had not shown interest in the website sooner. The emails were also written and sent intentionally. This was not conduct that was "merely careless, thoughtless or inadvertent" but reflected an employee who was "being bad on purpose".

Key take-aways

Park confirms that employees can be dismissed without notice when misconduct otherwise warranting just cause dismissal is also intentional and deliberate. However, employers must keep in mind that Park does not lower the standard for wilful misconduct and this remains a high bar to meet. A single incident of misconduct, particularly an incident that occurs in the heat of the moment, is unlikely to result in an employee forfeiting their minimum entitlements under the ESA.

Employers should always speak with an employment lawyer before proceeding with a dismissal for cause to ensure this is done correctly and in a manner that insulates the employer from the risk of a court awarding additional damages.

Brittany A. Taylor is a partner at Rudner Law in Toronto. She can be reached at (416) 864-8500 or [email protected].