Canada: The Uphill Battle For Just Cause And The Consequences That Flow

Is it just cause if an employee admits to falsifying data? The answer is - maybe. The ongoing debate about when employee misconduct is severe enough to constitute just cause just became more complex as a result of a recent Court decision.
 
In Fernandes v. Peel Educational & Tutorial Services Limited c.o.b. Mississauga Private School 2014 ONSC 6506, the Court ruled that a private school did not have just cause to terminate a teacher who admitted to falsifying student’s grades. In this case, Fernandes submitted student midterm marks in 2009 that were obviously inaccurate because he allotted grades for student presentations that had not yet been completed. Fernandes was asked to resubmit the grades twice. Both times, Fernandes resubmitted the same grades and initially denied that the grades were inaccurate. The school administrators met with Fernandes on three separate occasions to review the grades. In the third meeting, Fernandes admitted to falsifying the grades after which the school terminated Fernandes’ employment.
 
In this case, somewhat unbelievably and despite the fact that the Court ruled that Fernandes “[did] an incompetent job of assessing his students, marking his students, and recording those marks,” “gave incorrect marks,” “lied to his employer,” and “admitted to falsifying marks on students’ records,” the Court ruled that the school did not have just cause. The Court found that prior to 2009, Fernandes had been a “well-regarded” teacher of ten years. Further, the Court was persuaded by the fact that the school allowed the incorrect grades to be sent out to the students and their parents while the school investigated Fernandes’ misconduct over a six-week period. This meant, in the Court’s view, that the school did not view the incorrect grades as being that serious. Lastly, the Court found that Fernandes admitting to the misconduct, albeit late in the process, was a mitigating factor. Taken together, the Court ruled that “the punishment outweighs the seriousness of the infraction.” The Court awarded Fernandes 12 months of pay in lieu of notice for wrongful dismissal (approximately $52,000).
 
In addition to damages for wrongful dismissal, the school in this case was also found liable for the value of Fernandes’ lost long-term disability benefits. Because the school terminated Fernandes for just cause, his benefit coverage was terminated immediately. During what would have been the common law notice period, Fernandes became disabled and unable to work, a fact accepted by the Court based on expert evidence given at the trial. The Court found that but for the termination for just cause, Fernandes would have applied and qualified for long-term disability benefits during the notice period. Consequently, the Court found the school liable for long-term disability benefits to age 65. Fernandes was 62 years old at the time, meaning the school was liable for long-term disability benefits for a three-year period. The Court did not rule on the specific amount of the benefits and required further submissions from counsel on this point following the trial.
 
It seems incredible that admitted dishonesty (with obvious implications to the school’s reputation) was not enough in this case. The outcome here is a stark reminder that even with very serious employee misconduct, just cause is never a “slam dunk.” When faced with a decision about whether to terminate for just cause, employers must remember that the Court views it differently. The Court takes a “contextual approach,” not a hard line. The Court will not view misconduct in isolation. It will look at all relevant factors, including whether the employee has a relatively unblemished record, how seriously the employer treated the incident, the thoroughness of the employer’s investigation, whether the employee had a fair opportunity to explain his or her actions, and whether the employee showed remorse. An employer should pre-emptively review any decision about termination for just cause in the same manner, including whether to terminate benefits.
 
It remains to be seen if this case will be appealed and if the Court of Appeal views Fernandes’ misconduct in the same light. The Cassels Brock team will keep an eye on the developments in this case and updates will be reported in future elerts.

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