Canada: The Capital Punishment Of Employment Law

Last Updated: May 16 2014
Article by Brian A. Grosman

Termination for justifiable cause without notice and without severance has been called the "capital punishment of employment law".  The unfortunate employee departs with nothing but a bad name and an uncertain future.  The departing employee is entitled to be informed, usually in writing, of the specific nature of the conduct or misconduct that led to her termination without compensation and nothing more.

Corporate employers too often believe that perceived misconduct and one or two warning letters to "pull up your socks or else" will do the trick.  Employers may be very unhappy with the performance of a particular employee and yet be without justification for termination for cause.  Even poor performers can argue legitimately that it takes two to tango, and that the employer did not properly supervise, mentor, or encourage the employee to perform more adequately.  In some cases, the expectation of the employer is not met because the employer has not communicated explicitly to the employee what is to be expected from him or her.

Employment lawyers are delighted when a terminated employee shows up with a letter indicating termination for cause based upon performance issues.  The lawyer rubs his hands in glee because he knows in all likelihood the termination for justifiable cause will not stand up in court and the employee will not only receive appropriate severance payment but may be successful in his/her claim for punitive and other damages.

The boss may be too quick to determine that cause exists for the termination of an employee who is irritating or even irresponsible.  In most cases, the business-like approach is to consult with an experienced employment lawyer who brings not only knowledge of the relevant law, but his objectivity and experience to bear on what otherwise might be a purely emotional reaction to perceived incompetence or insubordination.  Before an employer makes the allegation that employment ought to be terminated for justifiable cause, such an employer should keep in mind the recent case of Ogden vs. Canadian Imperial Bank of Commerce, a decision of the British Columbia Court of February 24, 2014.

In this case, the plaintiff, Ms. Ogden, age 41 worked for CIBC for seven (7) years. During that term she built a portfolio of high networth clients, primarily comprised of Chinese immigrants.  She was a high performer and had been praised for her performance on a number of occasions.

Ms. Ogden was terminated for justifiable cause in March of 2011.  The Bank alleged that she had breached its conflict of interest policy when she accepted certain wire transfers from third parties in China into her personal account and directed a transfer of those funds to a client.  She testified that she may have made a poor judgment call when faced with an urgent request but that her conduct did not justify termination for cause from her position at the Bank.

The Bank on the other hand took the position that the wire transfer was merely the culminating incident in a number of incidents where the plaintiff had been warned of her deficiencies and advised to correct her behavior.  The Bank argued that in light of these warnings, they had "cumulative" cause to terminate her employment without compensation.

The British Columbia, Supreme Court felt otherwise.  In the plaintiff's wrongful dismissal action for damages, the Court held that the defendant CIBC did not have justifiable cause for dismissal of the plaintiff ,Ogden.  The Court reviewed the warning letters and felt that they were either unjustified or did not breach the Bank's code of conduct.  The wire transfer incident on its own, did not provide justifiable cause for the plaintiff's dismissal.  The Bank alleged that the plaintiff had engaged in a conflict of interest.  The Court felt otherwise and held "no actual conflict of interest occurred, the plaintiff did not benefit from the wire transfers, and no harm resulted to the defendant from the incident."  The Court also found that her dismissal was communicated to her in a "cavalier, high-handed and insensitive manner, and was designed to end the plaintiff's career and to ensure that the defendant Bank retained the entirety of her client portfolio."

The plaintiff, Ogden claimed not only damage for wrongful dismissal but aggravated damages as well.  The Court and the parties agreed to assess damages at a later date.

The case presents a lesson to be learned by employers who are prepared, without careful consideration and advice, to terminate the employment of an individual based on justifiable cause.  Capital punishment should not be applied to an employee unless there has been a careful assessment by the employer, based on legal advice, that there are indeed clear grounds for termination of employment for justifiable cause.

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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