Firing an employee for cause most serious allegation employer can make, leaving no room for error and critical need for proof
In the employment realm, being terminated for cause is like being charged with murder — it is the most serious allegation an employer can make. The very phrase “for cause” means, unequivocally, there is a reason underlying the discharge. For an employer making this allegation, it is critical to have proof behind these words.
The seminal 1967 case U.S.W.A. v. Port Arthur Shipbuilding Co. provides some clarity on just cause. In that case, the Ontario Court of Appeal said:
“If an employee has been guilty of serious misconduct, habitual neglect of duty, incompetence or conduct incompatible with his duties or prejudicial to the employer’s business, or if he has been guilty of wilful disobedience to the employer’s orders on a matter of substance, the law recognizes the employer’s right summarily to dismiss the delinquent employee.”
The meaning of just cause has been shaped over time, largely because of the willingness of the Supreme Court of Canada to better understand the employment relationship. The highest court in the land has demonstrated an appreciation for the “special relationship” and “unique characteristics” of the employment contract and the power imbalance between employer and employee.
In 2001, the Supreme Court of Canada advocated a new, more balanced approach in assessing just cause in McKinley v. B.C. Tel.
“An effective balance must be struck between the severity of an employee’s misconduct and the sanction imposed,” the court said. “The importance of this balance is better understood by considering the sense of identity and self-worth individuals frequently derive from their employment.”
The message from the Supreme Court was clear — the punishment must fit the crime.
No warning before termination for misconduct
Unfortunately, many employers fail to look before they leap to a just-cause allegation. In doing so, they may fail to follow their own progressive discipline policies. In such cases, the courts are unlikely to be sympathetic to the employer, as was the case in Beard v. Suite Collections Canada Inc.
Sean Beard was the manager of legal collections at Suite Collections for almost four years until he was terminated after being accused of making racist and sexist slurs, sexually harassing a subordinate, breaching the Tenant Protection Act and failing to perform his duties.
After a review of the evidence, the Ontario Superior Court of Justice found only some of the accusations were legitimate: the slurs, the loss of at least one possible business opportunity and a breach of the company’s e-mail policy. The court took particular note of the fact that:
• in the case of the racial slurs, an employee overheard a conversation Beard had with an unknown party;
• there was no evidence e-mail policy was enforced; and
• although Beard did not follow up on at least one business opportunity, he was generally regarded by his employer as a diligent worker and the precise reasons for failing to follow up on the business opportunity were not canvassed at trial.
The court considered Leach v. Canadian Blood Services, where the Alberta Court of Queen’s Bench held that the circumstances and the nature of the misconduct determine whether a warning and an opportunity to improve is necessary to justify summary dismissal.
In Tse v. Trow Consulting Engineers Ltd., the court accepted that notification or a warning can be made in the form of an employer policy manual if it complies with the proper standards.
And, in Kane v. University of British Columbia, the Supreme Court of Canada held that a “high standard of justice is required when the right to continue in one’s profession or employment is at stake.”
The court in Beard said the employer had no solid evidence of the allegations used to justify dismissal.
“While I find the behaviour of Mr. Beard to be inappropriate, particularly given his role as a supervisor, he should have been given a clear warning this behaviour was unacceptable and would not be tolerated,” said the court.
Suite Collections was ordered to pay Beard three months’ salary in lieu of notice and the court awarded him $10,000 in costs. The decision was upheld by the Ontario Divisional Court.
Progressive discipline and documentation
Documentation of performance issues, neglect of duty, misconduct or disobedience is the only way to convince a court of these issues. However, simple documentation of the problems is insufficient. To rely on the documents to prove cause, they must contain certain elements.
A progressive discipline plan will ensure the employee has sufficient time to improve. The employer should warn the employee to follow the policy, outline the problem, communicate the company’s standards and what, if any, steps should be taken to improve performance. The employee must also be provided with reasonable time to improve and be given a warning that, if he does not improve, he could be terminated for cause.
Annual performance reviews are helpful, but they must clearly indicate any problems. Merely rating an employee as average will not assist in a cause allegation. The employer must take proper steps to indicate the employee is completely incompetent or guilty of some offence. The employee’s incompetence must also be brought to his attention and he must understand what must be done to improve.
Cause requires compelling circumstances
Former Chief Justice Robert Dickson of the Supreme Court of Canada pointed out the importance of work in Reference re Public Service Employee Relations Act (Alberta), which is often quoted in employment cases:
“Work is one of the most fundamental aspects in a person’s life, providing the individual with a means of financial support and, as importantly, a contributory role in society. A person’s employment is an essential component of his or her sense of identity, self-worth and emotional well-being.”
Knowing the company no longer wants an employee can be a shock to his self-esteem and being terminated for cause can increase the bitterness. In some instances, the immediate termination of an employee for cause is warranted. However, these types of cases tend to involve a more compelling set of circumstances. To terminate an employee for cause, an employer should exercise discretion and stay in accordance with company policy, since the courts may not agree with its manner of thinking.
For more information see:
•U.S.W.A. v. Port Arthur Shipbuilding Co., 1967 CarswellOnt 135 (Ont. C.A.).
•McKinley v. BC Tel, 2001 CarswellBC 1335 (S.C.C.).
•Beard v. Suite Collections Canada Inc. , 2008 CarswellOnt 4222 (Ont. Div. Ct.).
•Leach v. Canadian Blood Services, 2001 CarswellAlta 173 (Alta. Q.B.).
•Tse v. Trow Consulting Engineers Ltd., 1995 CarswellOnt 795 (Ont. Gen. Div.).
•Kane v. University of British Columbia, 1980 CarswellBC 1 (S.C.C.).
•Reference re Public Service Employee Relations Act (Alberta), 1987 CarswellAlta 580 (S.C.C.).
Natalie C. MacDonald is a partner with Grosman, Grosman and Gale, a Toronto firm that specializes in employment law. She can be reached at (416) 364-9599 or [email protected].
The seminal 1967 case U.S.W.A. v. Port Arthur Shipbuilding Co. provides some clarity on just cause. In that case, the Ontario Court of Appeal said:
“If an employee has been guilty of serious misconduct, habitual neglect of duty, incompetence or conduct incompatible with his duties or prejudicial to the employer’s business, or if he has been guilty of wilful disobedience to the employer’s orders on a matter of substance, the law recognizes the employer’s right summarily to dismiss the delinquent employee.”
The meaning of just cause has been shaped over time, largely because of the willingness of the Supreme Court of Canada to better understand the employment relationship. The highest court in the land has demonstrated an appreciation for the “special relationship” and “unique characteristics” of the employment contract and the power imbalance between employer and employee.
In 2001, the Supreme Court of Canada advocated a new, more balanced approach in assessing just cause in McKinley v. B.C. Tel.
“An effective balance must be struck between the severity of an employee’s misconduct and the sanction imposed,” the court said. “The importance of this balance is better understood by considering the sense of identity and self-worth individuals frequently derive from their employment.”
The message from the Supreme Court was clear — the punishment must fit the crime.
No warning before termination for misconduct
Unfortunately, many employers fail to look before they leap to a just-cause allegation. In doing so, they may fail to follow their own progressive discipline policies. In such cases, the courts are unlikely to be sympathetic to the employer, as was the case in Beard v. Suite Collections Canada Inc.
Sean Beard was the manager of legal collections at Suite Collections for almost four years until he was terminated after being accused of making racist and sexist slurs, sexually harassing a subordinate, breaching the Tenant Protection Act and failing to perform his duties.
After a review of the evidence, the Ontario Superior Court of Justice found only some of the accusations were legitimate: the slurs, the loss of at least one possible business opportunity and a breach of the company’s e-mail policy. The court took particular note of the fact that:
• in the case of the racial slurs, an employee overheard a conversation Beard had with an unknown party;
• there was no evidence e-mail policy was enforced; and
• although Beard did not follow up on at least one business opportunity, he was generally regarded by his employer as a diligent worker and the precise reasons for failing to follow up on the business opportunity were not canvassed at trial.
The court considered Leach v. Canadian Blood Services, where the Alberta Court of Queen’s Bench held that the circumstances and the nature of the misconduct determine whether a warning and an opportunity to improve is necessary to justify summary dismissal.
In Tse v. Trow Consulting Engineers Ltd., the court accepted that notification or a warning can be made in the form of an employer policy manual if it complies with the proper standards.
And, in Kane v. University of British Columbia, the Supreme Court of Canada held that a “high standard of justice is required when the right to continue in one’s profession or employment is at stake.”
The court in Beard said the employer had no solid evidence of the allegations used to justify dismissal.
“While I find the behaviour of Mr. Beard to be inappropriate, particularly given his role as a supervisor, he should have been given a clear warning this behaviour was unacceptable and would not be tolerated,” said the court.
Suite Collections was ordered to pay Beard three months’ salary in lieu of notice and the court awarded him $10,000 in costs. The decision was upheld by the Ontario Divisional Court.
Progressive discipline and documentation
Documentation of performance issues, neglect of duty, misconduct or disobedience is the only way to convince a court of these issues. However, simple documentation of the problems is insufficient. To rely on the documents to prove cause, they must contain certain elements.
A progressive discipline plan will ensure the employee has sufficient time to improve. The employer should warn the employee to follow the policy, outline the problem, communicate the company’s standards and what, if any, steps should be taken to improve performance. The employee must also be provided with reasonable time to improve and be given a warning that, if he does not improve, he could be terminated for cause.
Annual performance reviews are helpful, but they must clearly indicate any problems. Merely rating an employee as average will not assist in a cause allegation. The employer must take proper steps to indicate the employee is completely incompetent or guilty of some offence. The employee’s incompetence must also be brought to his attention and he must understand what must be done to improve.
Cause requires compelling circumstances
Former Chief Justice Robert Dickson of the Supreme Court of Canada pointed out the importance of work in Reference re Public Service Employee Relations Act (Alberta), which is often quoted in employment cases:
“Work is one of the most fundamental aspects in a person’s life, providing the individual with a means of financial support and, as importantly, a contributory role in society. A person’s employment is an essential component of his or her sense of identity, self-worth and emotional well-being.”
Knowing the company no longer wants an employee can be a shock to his self-esteem and being terminated for cause can increase the bitterness. In some instances, the immediate termination of an employee for cause is warranted. However, these types of cases tend to involve a more compelling set of circumstances. To terminate an employee for cause, an employer should exercise discretion and stay in accordance with company policy, since the courts may not agree with its manner of thinking.
For more information see:
•U.S.W.A. v. Port Arthur Shipbuilding Co., 1967 CarswellOnt 135 (Ont. C.A.).
•McKinley v. BC Tel, 2001 CarswellBC 1335 (S.C.C.).
•Beard v. Suite Collections Canada Inc. , 2008 CarswellOnt 4222 (Ont. Div. Ct.).
•Leach v. Canadian Blood Services, 2001 CarswellAlta 173 (Alta. Q.B.).
•Tse v. Trow Consulting Engineers Ltd., 1995 CarswellOnt 795 (Ont. Gen. Div.).
•Kane v. University of British Columbia, 1980 CarswellBC 1 (S.C.C.).
•Reference re Public Service Employee Relations Act (Alberta), 1987 CarswellAlta 580 (S.C.C.).
Natalie C. MacDonald is a partner with Grosman, Grosman and Gale, a Toronto firm that specializes in employment law. She can be reached at (416) 364-9599 or [email protected].
