Justifying just cause

'There is no three-strikes rule, it's really driven by the circumstances': lawyer

Justifying just cause

You’re fired!

Not words that any employee wants to hear, and not words that most managers or HR professionals like to say. It’s not easy to terminate someone’s employment, but if an employee is responsible for serious misconduct or is doing a poor job, it’s understandable if the employer wants to take that action. However, even if the employer thinks it has good reason to dismiss an employee for just cause – thereby avoiding reasonable notice or pay in lieu – it’s not as easy as some might think.

Termination of employment is often referred to as the capital punishment of employment law, because of the consequences for the employee – loss of income, loss of status, and the loss of identity that comes with someone’s job or career. Given that much of Canadian employment law principles are focused on protecting employees and the power imbalance in the employment relationship, it’s not surprising that just cause is a high bar to prove.

“[Just-cause dismissal] is reserved for the gravest of offenses or the most serious misconduct by employees,” says Richard B. Johnson, co-founder and partner at Ascent Employment Law in Vancouver. “In order to make out just cause, the employer bears the legal obligation to show that there's been conduct by the employee that goes to the root of the employment relationship - it's got to be something that's significant and affects the relationship so much that there's no viable continuing relationship possible.”

When an employer is concerned about the misconduct or poor performance of an employee, it’s rare that dismissal is an option right off the bat. Essentially, there has to be a process in which the employee must be formally warned of the issues and given a reasonable opportunity to improve – a progressive discipline process that advances through warnings, possibly suspensions, and potentially termination.

But it all must be carefully documented to meet that high bar for just cause if it comes to that, according to Johnson.

“Unless you've documented the warnings in writing to the employee, you're going to have a hard time proving cause, because a court or employment standards is really going to want you to have done the warning in writing,” he says. “Giving people a clear enough description of what they've done wrong, how they've underperformed or what standards they aren’t meeting, and then a warning that their job is in jeopardy if they don't improve, is essential.

“A lot of employers come to us and say, ‘I've got [several] verbal warnings,’ but they've never documented it, so it likely wouldn't meet the threshold for cause because there's not enough evidence of those warnings and those performance issues.”

Number of warnings can vary

As far as how many warnings or coaching attempts are needed before getting to the point of termination of employment, it depends on the seriousness of the employee’s problems, says Johnson.

“There's this common misunderstanding that there's a three-strikes rule, so if you've told people three times that they're not doing a good job, that's enough for just cause,” he says. “And that's not true at law, there is no three-strikes rule. It's really driven by the circumstances.”

Those circumstances are also key to whether just cause is available, as such dismissals have to be proportionate to not only the seriousness of the misconduct, but also the employee’s position and service.

“[The case law] essentially says that the longer an employee is employed, the more leeway they get on their conduct, so if we're talking about misconduct issues, you may have a different approach if somebody's been with the company 30 years compared to six months,” says Johnson.

Reluctance to make formal warnings

Documenting misconduct and performance issues and providing written warnings can be particularly challenging for those who have to actually do it – usually HR professionals and managers.

“Human factors come into play, because a lot of people are okay with verbally saying something to an employee, but I think a lot of managers or HR people are uncomfortable with documenting things because it makes it more formalized,” says Johnson. “So they don't want to take that extra step for fear that it will create acrimony with the employee.

“But doesn't need to always be acrimonious - written guidance is important for transparency, but it is intended to also in good faith provide an indication of what the employee is doing wrong, and hopefully give them some clarity on how they can correct their behavior,” he adds.

One of the most common mistakes Johnson sees employers making that hampers their ability to assert just cause stems from that reluctance, leading to not addressing issues in a timely manner.

“If an employer knows of employee misconduct and doesn’t move on it within a reasonable timeframe, they could risk condoning that behavior so that it's not really actionable for discipline,” he says. “If somebody does something wrong and then you let two months go by, it's not fair to come back and then say, ‘Wait a second, you did something wrong last August?’”

Severance pay a mistake

Another mistake Johnson encounters is providing severance pay to an employee who’s been given repeated warnings and the employer just wants them gone, but it then wants to claim the dismissal was for cause.

“Just cause, by-and large, is a use-it-or-lose-it concept, meaning that employers either need to assert cause at the time of dismissal or they lose their opportunity to do so after the fact - unless they discover misconduct they didn't know about at the time of the dismissal that you can go back and assert what's called after-acquired cause,” he says.

“But you can't terminate, give severance, and then go back and say, ‘We're changing our minds and, given what we know, we're going to rely on that for cause now.’”

As many employers have discovered to their dismay, the consequences of such errors can be significant, particularly if an employer tries to assert just cause without having enough to prove its case.

“There has to be a good-faith basis on an assertion of cause because it's a pretty strong indictment on an employee and the courts have recognized that it strikes to the core of the employment relationship,” says Johnson. “So if you assert just cause in bad faith or for a tactical advantage, you can be found liable for additional damages – bad-faith damages, aggravated damages - and the courts are getting pretty quick to see those tactical maneuvers for what they are.”

Serious consequences

Johnson also points out that it’s important to remember that when an employer asserts just cause, it’s not only denying severance pay to the employee, but it’s also filling out a record of employment that indicates a just-cause termination that can result in a denial of employment insurance to the employee. As a result, just cause should be reserved for only the most serious of cases, he says.

Working towards just-cause dismissals is an exercise in patience, adds Johnson.

“In most cases, you’re going to have a process to be followed, notices to be given, and the opportunity for the employee to improve,” he says. “And then get a really good disciplinary letter, one that passes muster, and have that in your HR files, because you can fill it in with the various things that you will use in terms of misconduct or performance issues, but it will have the touchstone issues that a lawyer will need when defending a just-cause termination.

“And once you've got your proverbial ducks in a row, it's time to move either move on discipline when things happen, or move on to termination if you feel you've given enough warnings or something is serious enough.”

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