Occasionally some employers use an allegation of cause which
they know to be unsupportable, or worse, untrue, as leverage to
"encourage" a dismissed employee to settle a potential
wrongful dismissal claim on terms that are favourable to the
employer. While this can be a successful, although ethically
questionable strategy, it can also backfire if the employer elects
to rely on the unsupported or false allegations following the
commencement of legal proceedings.
CANLII and Westlaw are littered with tales cautioning against
this course of action. It is common for judges to punish
employers for making unsupported or false allegations of
cause. Usually the punishment is in the form of a longer
notice period. However, there are other options available to
a judge and which can have significant adverse financial
consequences for the employer.
Aside from, or in addition to, awarding a lengthy notice period,
a judge could award damages for:
mental distress caused by the false
aggravated, exemplary or punitive
defamation if the allegations are
untrue and have been communicated to people other than the
loss of competitive advantage;
The list above is in no way a comprehensive overview of the
claims which could be asserted against an employer. There are
many other claims which could be made by creative plaintiff's
The Take Away
An employer should only assert cause where it is reasonably
confident that it has some evidence to support its
allegation. This is particularly true where the grounds for
cause are based on alleged criminal behaviour or moral turpitude as
courts are usually more offended when employers raise these types
of allegations but are unable to support
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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