Originally published Winter 2005
Employers often wonder whether it is possible to terminate an employee for repeated poor performance or carelessness where the breaches by the employee cover a range of activities, including breaches of company policy and performance issues. Often times, the employer is found by the Court to have failed to institute a proper regime of counseling and warnings sufficient to meet the high onus for a just cause termination where performance is the only issue. In Daley v. Depco International Inc.1, Mr. Justice Echlin of the Ontario Supreme Court of Justice, provides a reasoned analysis and approach that employers will find instructive for properly instituting and enforcing performance based discipline.
In this case, Depco instituted a five step disciplinary program including (1) counseling, (2) verbal warning, (3) written warning, (4) suspension, and (5) termination. Over the course of some 28 months, Depco proceeded through its disciplinary steps, which culminated in Mr. Daley’s termination. At trial, Depco relied on nine alleged incidents as sufficient grounds to constitute cumulative just cause. Mr. Justice Echlin, while not accepting all of the incidents as sufficiently proximate in time to form part of the progression of discipline and applying the employer’s policy requiring disciplinary action to be removed from the employee’s record after one year, found sufficient progressive discipline and warnings to uphold the just cause termination.
Noteworthy in considering the outcome of this case are the facts, including Mr. Daley’s age at termination (58 years) and his long service with the company (13 years), which are frequently mitigating factors the courts will rely upon in finding in favour of the employee and rejecting the employer’s just cause defence.
The Court considered only the five most recent incidents in arriving at its decision and in doing so, recognized the clear progression of discipline and warnings given by Depco. The Court also noted the employee was asked to acknowledge, but not necessarily admit to the violations. At paragraph 19, the Court held:
"This Court encourages employers to adopt clear and forthright disciplinary procedures and to apply them fairly. By clearly setting out employer expectations and creating a fair and clearly documented regime of discipline, fewer misunderstandings will occur. In short, such a process is more transparent."
The Court further stated:
"… it is the quality, not the similarity of the accumulated misconduct that is determinative of whether the employee has evinced an intention to no longer be bound by the employment contract."
The proof of the misconduct was, in this case, clearly established by the well documented file created by Depco during the course of its progressive discipline. The notifications to Mr. Daley referenced prior warnings and advised him of the next steps that might be taken if the behavior was not corrected. Mr. Justice Echlin endorsed and applied the reasons of Mr. Justice Iacobucci of the Supreme Court of Canada in the McKinley v. B.C. Tel decision. A contextual approach, in which each case is examined on its own facts and circumstances, was applied in assessing whether the nature and seriousness of the particular dishonesty was reconcilable with sustaining the employment relationship. Mr. Justice Echlin held:
"If all facts and circumstances are carefully examined in an analytical fashion, taking into account all of the relevant aspects of the employment relationship, a balanced result, fair to both parties, will be achieved."
While the incidents in the Depco case were substantial incidents, including a physical threat and altercation, threat to workplace safety, a production line stoppage and related damage, the Court found that the overall conduct clearly fell below the reasonable standard of conduct that Depco was entitled to expect of Mr. Daley. Further, it was the quality of the accumulated misconduct and Mr. Daley’s continued carelessness that showed an intention on his part to no longer be bound by the terms of his employment agreement, resulting in his repudiation of his employment contract with Depco. When Mr. Daley refused to improve his behavior after repeated warnings, Depco was within its rights to terminate his employment with just cause.
The lessons to be taken from Depco are:
- the importance of a clearly worded discipline program;
- strict adherence to the normal progression of discipline, unless the incident in question is so significant that the single incident alone would justify immediate dismissal for just cause;
- the importance of good documentation and follow-up in all progressive discipline matters;
- using reasonable judgment in the imposition of discipline; and
- providing clear warnings of the impact of a failure to improve behavior and in particular, warnings regarding the prospect of termination should the employee fail to improve.
If the employer’s approach is clear, well documented and provides reasonable discipline in the circumstances, it can properly terminate an employee for cumulative just cause.
Finally, of particular interest to employers with discipline policies that include provisions for removing discipline from an employee’s file after the passage of a certain length of time, is the Court’s interpretation of the Depco policy wording that expungement did not require "an incident free period". The lesson to employers is that the language of workplace policies will be strictly construed against employers, so it is important to review your policies regularly and make such changes (on notice to your employees) as necessary to ensure they will be enforceable.
1  O.J. No. 2675 (Sup. Ct).
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