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The recent decision in Drake v. Blach (PDF) in the Ontario
Superior Court provides a good example of how not to go
about firing an employee.
Background to the Case
The case involves an action for wrongful dismissal of a 46 year
old medical secretary against her former employer of more than 12
years – Dr. Blach. Ms. Drake had actually been working in
the same office and in the same position for about 20 years. She
spent the first seven years working for a different physician. For
most of the time she spent working for Dr. Blach, Ms. Drake was the
only employee in the office and the relationship was amicable. In
the last year though, relations went downhill.
At that time, Dr. Blach cut Ms. Drake's salary from $54,000
to $40,000, and scaled back other benefits such vacation days and
sick days. Months later, Dr. Blach terminated her employment in a
letter, which cited a number of "performance issues". The
letter gave Ms. Drake eight weeks notice during which she was
expected to continue working.
This case raises three main issues:
Constructive Dismissal
Constructive dismissal is a term used to describe situations in
which an employer essentially forces the employee to quit. Drake
did not argue constructive dismissal because she was actually
fired, but the judge stated that she could have. The sudden pay cut
from $54,000 to $40,000, which Dr. Blach attributed to an
accounting error, would have been enough for Drake to sue for
damages for constructive dismissal.
The judge further suggested that the other changes made to
Drake's working conditions during her last year could have also
satisfied a claim for constructive dismissal. These included no pay
when she was not needed, no compensation for sick days, and a
reduction to two weeks of vacation to be preferably taken when the
Dr. Blach took his own holidays.
Termination for Cause
Blach argued Drake had been fired for cause, even though the
termination letter gave her eight weeks notice. Terminating
employment for cause allows an employer to terminate without any
notice. As the judge in this case noted, termination for cause has
been described as "the capital punishment of employment
law."
Dismissing an employee for cause requires proof of very serious
misconduct, not just accusations. Dr. Blach listed several
performance issues that he claimed had arisen over Drake's last
year of employment. But he never documented any specific instances
and there was no written evidence of any discipline. As a result,
the judge rejected Blach's evidence and found that Drake had
been wrongfully dismissed.
Length of Employment
The last issue that came up was the length of Drake's
employment. The issue was whether she was entitled to damages for
the entire 20 years she had been working in the same office, or
only the 12 years she had been working for Dr. Blach.
The judge sided with Dr. Blach on this issue. Blach signed a new
lease when he took over the office. He never entered into any
agreement with the previous physician to take over the practice.
So, even though Drake's job effectively continued for 20 years,
Dr. Blach was only responsible to recognize the 12 years she had
been working for him. If there had been an agreement between the
two doctors, he could have been on the hook for severance pay in
respect of the full 20 years.
Employer Takeaway
Employers must appreciate the severity of firing an employee for
cause. It requires specific and well-documented incidents of
misbehaviour and discipline. Significant changes to employment
conditions like major pay cuts, or an accumulation of less serious
changes, can support a claim for constructive dismissal. Finally,
new business owners must be wary of assuming obligations to
employees when acquiring all or part of an existing business.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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