Just Cause for Dismissal: Is One Incident Enough?

Is one incident of dishonesty just cause for dismissal?  What if it involves a long-serving employee?  This was the issue that was decided recently by the B.C. Court of Appeal in  Steel v. Coast Capital Savings Credit Union.  

The plaintiff, Susan Steel, was a help desk analyst.  She had been employed by the Credit Union for 21 years.  In 2008, the plaintiff accessed the personal folder of a manager.  The manager kept a folder for assigning parking spaces and the plaintiff wanted to check her status.  She was caught because the manager was accessing the folder at the very same time.  She was confronted and admitted her misconduct.  She also acknowledged that she did not have authorization.

At trial, the judge reviewed the case law, focusing on the Supreme Court of Canada’s landmark decision in McKinley v. B.C. Tel (2001) SCC 38. The court dismissed the case and found that Ms Steel had been dismissed for just cause.  The plaintiff appealed to the B.C. Court of Appeal.

By a 2-1 majority decision, the B.C. Court of Appeal upheld the trial court decision and dismissed the appeal.  As the Court of Appeal put it, “McKinley requires courts to apply a contextual analysis to determine whether employee misconduct amounts to just cause for dismissal….Following McKinley, a single act of dishonesty as a matter of law no longer gives an employer an absolute right to dismissal its employee.”

However, the Court of Appeal also noted that “a single act of misconduct can justify dismissal if the misconduct is of a sufficient character to cause the irreparable breakdown of the employment relationship.”

The majority of the court held that a breach of privacy was such a fundamental obligation in this type of employment position that the plaintiff’s action could be seen as causing a “fundamental breakdown of the employment relationship.”

In dissenting reasons, Justice Donald included this sentence:  “What is absent from the trial judge’s reasons is an explanation why a single instance of a breach of the privacy rules should end a 21 year career….The record does not show deceit, fraud, theft or stealth.  The misconduct was serious, as the judge found, but her analysis of the proportionality of the penalty left out a vital factor.”  Justice Donald would have allowed the appeal and remitted the case to the trial judge for an assessment of damages.

The McKinley decision has been cited many times and has been interpreted in different ways.  In some cases, it has been used to help dismissed plaintiffs obtain damages where many people might find the results to be puzzling and overly sympathetic.  In other cases, courts have limited the application of McKinley to minor or more limited instances of dishonesty or misconduct.

Ultimately, each judge applies his or own sense of “proportion” and reasonableness.  Here two appellate court judges held that one instance of this type of dishonesty was cause for dismissal, whereas one judge disagreed.

For plaintiffs and for employers these are risky cases.  They are fact driven.  But they also depend on sensibilities of the particular judge hearing the case as well as the appellate court panel that might hear the case if it is appealed.

For Susan Steel, this was a very costly and time consuming ordeal.  The Court of Appeal decision was released in 2015, some seven years after Ms Steel was dismissed.  Ultimately, she has been awarded nothing after 21 years of employment and may well have incurred significant legal fees.  The case is a reminder of the high stakes of pursuing just cause litigation where an undisputed instance of improper conduct is involved.

 

Key Employment Law Cases of 2014

Another year has passed and that means it is time to reflect back and consider some developments in employment law that we witnessed in 2014.  It was not an earth shattering year in the employment law field in Canada.  There were certainly many decisions reached across the country dealing with wrongful dismissal, breach of human rights, non-competition covenants and a range of other topics.  But the number of decisions that really changed the law was limited.  That being said, I have highlighted a few cases and other employment law developments that are worth summarizing.  I have provided the links to my original blog articles where they are cases that I wrote about.

1.  Ghomeshi and the CBC

This case is not completely over since there is a still a potential labour arbitration pending.  Moreover, the case was not adjudicated.  It was settled.  However, it created a great deal of discussion in the employment law world and for that reason it is worth including.  What are the key points to think about?

A.  Unionized employees will have an incredibly difficult time launching wrongful dismissal or other employment law related cases in the court system.  The proper venue for these cases is labour arbitration hearings.  For the most part, dismissed unionized employees must file a grievance.

B.  Egregious personal conduct, even off-hours conduct, can be cause for dismissal, particularly if at least some of it spills over into the workplace or into workplace related events.  Employers will need to pay careful attention to allegations of improper personal conduct and should address and deal with these matters before they become unmanageable.

C.  Taking an extremely aggressive approach to employment law litigation is simply not always the best strategy for plaintiffs.

There may still be more on this in 2015 as Canadians follow Ghomeshi’s criminal proceedings and his labour arbitration case.  The high profile nature of the dispute warrants its inclusion on a list of interesting developments.

2.  Boucher v. Wal-mart

The Ontario Court of Appeal awarded more than $400,000 to an employee who had been subjected to humiliating treatment in the workplace.  It is still rare in Canada to see these types of awards.  Although the amount of the trial judgment was reduced considerably, this case is still a significant weapon in the arsenal of decisions upon which abused employees and their counsel will rely.  It remains to be seen whether large scale punitive and aggravated damages become more commonplace in Canada.  Employees facing humiliating workplace conduct and bullying bosses have additional legal options to consider in light of this decision.

3.  AG Canada v. Johnstone

In this key case, the Federal Court of Appeal looked at the issue of “family status” under human rights legislation and concluded that family status includes childcare responsibilities and similar family care obligations.  This means that an employee with childcare responsibilities may, in certain circumstances, be entitled to protection and accommodation under applicable human rights legislation.  The Court set out a number of criteria that must be met and tried to make it clear that not every employee with some child care responsibilities will be able to request accommodation.  However, many employers are trying to deal with the issues pro-actively and are finding ways to accommodate the needs of employees with child care and elderly care responsibilities.

4.  Jan Wong and the Globe and Mail

Although I originally discussed this in 2013, the adjudicator’s decision was upheld in 2014 and Jan Wong was left facing a significant award as well as an award of legal costs.  The case illustrates a few points:

A.  The difficulty of proceeding in any kind of dispute in a unionized workplace without the backing and support of the union;

B.  The seriousness of confidentiality provisions in a settlement.  Employees who sign confidentiality provisions in settlements with their former employers can expect to face repercussions if they breach these provisions.  In some cases, a breach can mean a requirement to pay back to the employer the full amount of the original settlement.

5.  Fulawka v. Bank of Nova Scotia (Originally 2012 Ontario CA)

The Bank of Nova Scotia reached a settlement of a class action lawsuit with a group of bank employees claiming entitlement to overtime pay.  This settlement means that as many as 16,000 employees of the Bank of Nova Scotia could be entitled to overtime pay for overtime hours worked during the time period 2000 to 2013.  The affected employees were required to submit their claims by October 2014.  The case is a significant illustration of the availability of class actions to deal with widespread policies of large employers that may affect many different employees.  It is also which has caused employers and employees to examine their overtime hours and overtime policies.  Just because an employee is paid a salary does not mean that the employee can be required to work uncompensated overtime hours.

 

2014 Blog Posts – Selected Highlights

As well as they the key cases and issues set out above, I have highlighted a few of my blog posts from the past year.  In case you missed any of these, you might find them interesting:

1.  Hollander v. Tiger Courier Inc. (Sask C.A.)

It was not considered wrongful dismissal where a package of marijuana was delivered to an employee at his workplace.    The employee claimed that he knew nothing about the pot and that it wasn’t his…Fascinating reading.

2.  Rhebergen v. Creston Veterinary Clinic (B.C.C.A.)

The B.C. Court of Appeal upheld a very onerous non-compete provision for a veterinarian.  The clause prohibited a vet from setting up a practice within 25 miles of her employer’s clinic, for a period of 3 years.  It included huge financial penalties that would become payable in the event of a breach.  Surprisingly, the B.C. Court of Appeal upheld this clause.

3.  Steps to Take When You Are Fired

In this blog post, I have set out some things to consider when facing a dismissal situation.

4.  Are Employment Contracts Negotiable?

This post deals with aspects of employment contracts that can and should be negotiated.

5.  Poisoned Work Environment?  Not in this Restaurant.

Discussion of a recent Ontario Human Rights Tribunal decision addressing allegations of a poisoned work environment.

 

For 2015, I will aim to put up one or two new posts a month and I hope to send out an email update quarterly, or so.

 

Wishing everyone a Happy New Year.

Less Money for Dismissal in Tough Economic Times?

Should a dismissed employee be entitled to less severance when the employer is facing tough economic times?  This was the question facing an Ontario Superior Court judge recently in Gristey v. Emke Schaab Climatecare Inc, a case released on March 20, 2014.  According to the trial court judge, the answer was yes.

The plaintiff had worked in residential gas installation for 12 years for the defendant.  He was earning an income of approximately $55,000 annually, though it fluctuated depending on the availability of work.  He was dismissed after 12 years of service on a “without cause” basis.  A number of other employees were also dismissed at the time.

At the time of dismissal, the defendant offered to pay the plaintiff a total of 8 weeks’ pay, which was the minimum that would have been owed under the Ontario Employment Standards Act.  It asked for a signed release.  The plaintiff refused and brought a claim for wrongful dismissal.  The defendant paid out the 8 weeks’ pay.

At trial, the defendant argued that business was slow.  It took the position that the plaintiff would have have worked a very small number of hours if he had not been dismissed and that his damages would have been reduced to a very nominal amount.  The trial judge rejected the argument that there was sufficient evidence to draw this conclusion.  In other words, the court concluded that the plaintiff still would have earned an income if he had not been dismissed.

However, the trial judge expressly accounted for tough economic times in assessing the notice period.  First, the judge concluded that the appropriate notice period should have been 12 months.  This is probably a reasonable conclusion, based on all of the common law factors.  The plaintiff was 52 when he was dismissed.  Looking at all of the common law factors, including length of service, position, age, availability of comparable work and other relevant factors, a 12 month award would have made sense.

Justice Conlan then proceeded to reduce the plaintiff’s award by four months’ pay because of the “market and economic health of the [defendant]” at the time of dismissal.  In doing so, the court relied on the decision of Bohemier v. Storwal International, (1982) CanLii 1764 (Ont S.C.J.), a decision that had been affirmed by the Ontario Court of Appeal in 1983.

The Bohemier decision held that a notice period should be fair to both the employee and the employer.  However, as it has been interpreted subsequently by other court decisions, it did not say that the plaintiff’s notice period should be eviscerated because the employer is facing tough economic times.  In fact, if times are really tough, the dismissed employee will have a more difficult time finding alternate employment and could require a longer notice period.

It may be that Justice Conlan was swayed in this particular case by the fact that the plaintiff’s hours fluctuated and there might have been less work over the notice period.  Or perhaps the court was not fully convinced of the plaintiff’s mitigation efforts, even though the court expressly concluded that the plaintiff had mitigated his damages satisfactorily.  In any case, the court concluded that 12 months’ severance was too much for the plaintiff and reduced it to 8 months, expressly relying on the fact that the defendant was facing difficult economic times.

It remains to be seen whether the plaintiff will appeal this decision.  the amount at stake would be approximately $20,000.  There could also be significant legal costs at stake, depending on what types of offers to settle, if any, were exchanged between the parties before the trial.  The Ontario Court of Appeal does not like to “tinker” with notice periods if they are in a “reasonable range.”  However, the plaintiff could try arguing that the court made an error in principle by placing an overly significant emphasis on the economic challenges facing the defendant.

If this decision stands, it would be a very helpful piece of ammunition for defendants facing tough times.  Defendants can use this argument to limit severance liability in tough economic times.

For plaintiffs, it can be a real double whammy.  The employee is let go in difficult economic times, where it may well take longer to find work. Then the plaintiff faces a reduced notice period because of those same difficult economic times.  There seems to be a problem with this logic…

We will watch to see what happens with this case and how (if at all) it is applied.

Wrongful Dismissal and Association Employees

Wrongful Dismissal and Associations

Can members of staff associations sue their empl0yers for wrongful dismissal?  According to the B.C. Court of Appeal, the answer is no if there is a valid employment agreement in place and a recognized association.

In the case of Ferrari v. University of British Columbia, the employee had been an Asset and Material Management Supervisor, working for the University of British Columbia.  At the time he was promoted to this supervisory position, he signed an employment agreement.  The agreement included a term that the employee must become a member of the AAPS (Association of Administrative and Professional Staff), which would be the bargaining agent for certain managerial level employees.  AAPS had grievance and arbitration agreements in place with UBC.

In 2010, Mr. Ferrari’s employment was terminated, allegedly for just cause as a result of “fraudulent use and sale of University vehicles.”  Mr. Ferrari denied these allegations and contacted AAPS to file a grievance.  AAPS decided that it would not proceed with a grievance or take the matter to arbitration.  AAPS felt that there was no reasonable prospect of success.  Mr. Ferrari was therefore left without a remedy.  So he filed a wrongful dismissal lawsuit against UBC in the B.C. Supreme Court.

B.C. Supreme Court Decision

UBC brought a motion to stay the proceedings, which would effectively terminate Mr. Ferrari’s lawsuit.  UBC was successful.  The B.C. court held that there was a valid arbitration agreement in place, and Mr. Ferrari was stuck with it even if the association (AAPS) did not take the matter through the process.  The court recognized that since the association was not actually a union, Mr. Ferrari could not complaint to the Labour Relations Board about unfair representation.  Nevertheless, the B.C. court stayed the action and noted that Mr. Ferrari would have the option of bringing a lawsuit against the association for failing in its duty to represent or for breach of fiduciary duty.  The court did not comment on the likelihood of success of either of these types of actions, which would probably be very slim.

B.C. Court of Appeal

Mr. Ferrari appealed to the B.C. Court of Appeal.  He argued that he should not have been treated as a “party” to an arbitration agreement since he had no control over the process and his case was never taken to arbitration.  He also argued that it would run counter to the interests of justice to deny him any kind of remedy.

The Court of Appeal dismissed the appeal for the following reasons:

1.  It held that Mr. Ferrari was a party to the arbitration agreement since his employment agreement incorporated the arbitration agreement by reference.  In other words, this was similar to the situation involving a collective agreement in a unionized context.  Mr. Ferrari had turned over all of his rights of representation to AAPS when he signed the employment agreement.  Ouch!.

2.  While the Court of Appeal speculated that there may be a deficiency int he AAPS by-laws, that would be a matter between Mr. Ferrari and AAPS and would not involve UBC.  In other words, Mr. Ferrari was stuck with the arbitration clause even though AAPS decided not to take the case to arbitration.  The B.C. Court of Appeal reviewed numerous cases in this area, primarily in the unionized context, and concluded that an employee who is represented by an exclusive bargaining unit in this type of situation is simply out of luck if the association will not proceed.  The only remedy is a claim for unfair representation against the association, where the employee must prove that the association has acted in a manner that is “arbitrary, discriminatory or in bad faith.”    Here is the court’s conclusion on this point:

“By accepting employment in an AAPS position, Mr. Ferrari agreed to appoint AAPS his exclusive bargaining agent with the power to decide whether to advance, settle or arbitrate grievances….”

and

“As between Mr. Ferrari and AAPS, it may well be that the Association’s bylaws are inadequate to ensure the necessary scrutiny of the decision not to proceed with his grievance.  However, that is not an issue that arises between Mr. Ferrari and UBC such that Mr. Ferrari should cease to be bound by the arbitration clause.”

Finally the court concluded that “it is well recognized in the history of labour relations that the model of exclusive representation of employees by their association or union carries with it a correlative transfer of authority over the grievance process subject only to the association’s duty of fair representation.”

Conclusion:

This case illustrates the problems with the “exclusive jurisdiction model” of labour relations in Canada in unionized workplaces.  When the union or association is supportive of the employee, the employee has a chance to be reinstated and is provided with representation at no charge.  This can be great and it can sometimes provide a much better remedy than an employee would have had under Canadian common law.

If, however, the union or association chooses not to proceed with a grievance, the employee is left without any real remedy.

The argument that an employee has the alternative of suing the association for “failure to represent” or for “breach of fiduciary duty” is quite unconvincing.  Employees have a very low rate of success in these types of cases, whether at common law or brought as “unfair representation” cases in labour boards across the country.  More often than not, these types of proceedings simply cause the dismissed employee to incur legal fees without getting anywhere.

A dismissed employee should have the right to file a wrongful dismissal lawsuit if the union or association will not proceed or if the employee would prefer this approach.  Given the huge significance of a person’s employment, people should have the right to fight a dismissal decision and to decide how far they wish to go in that fight.  There are many countries in the world in which unionization does not deprive employees of the right to advance their case, even without union backing.

Employers argue that this subjects them to the potential of a multiplicity of proceedings.  While that is true, the Canadian legal system has cost sanctions for lawsuits that are unsuccessful.  There is a balance here between the employer’s right to avoid inconvenience and the fact that employee is left without a remedy when dismissed from a long service position.

Unions and associations also oppose this approach, since they wish to have exclusive control over the bargaining process, relations with the employer and their own costs.  But if the union is not obligated to take the case forward and will not permit the employee to take it forward, this exclusive jurisdiction is useless to some employees, at a time when they most need this support and representation.

The B.C. Court of Appeal decision likely reflects the law as it exists in Canada today.  But maybe it is time for the Supreme Court to revisit this matter and look at other alternatives to “exclusive representation,” particularly in situations involving employees left without real remedies.

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