Canada: Termination / Dismissal (Part 3 Of 6)

First presented at a Client Employment Seminar

TERMINATION DEFINED

According to the Employment Standards Act, one's employment is terminated if the employer:

  • Dismisses or stops employing an employee;
  • Constructively dismisses an employee, and in response the employee resigns; or
  • Lays-off an employee for a period that is longer than a temporary lay-off.

(I) Dismissal for Just Cause

An employee can be dismissed for just cause if he/she is guilty of...

  • Serious misconduct;
  • Habitual neglect of duty or incompetence;
  • Conduct incompatible with his/her duties;
  • Conduct that is prejudicial to the employer's business; or
  • Willful disobedience to the employer's orders in a matter of substance.1

The employer is the party who alleges just cause; as such, the employer bears the onus of proof thereof. There is a high threshold for proving cause. If this threshold can be met, the employer has the right to terminate the employee forthwith and without further obligation.

The test for Just Cause

When determining if there was just cause for termination, the court considers the following factors:

  1. The nature and extent of the employee's misconduct; and
  2. Whether the employer can prove the employee committed the misconduct alleged.2

If the employer is able to prove the conduct, the court will then consider the surrounding circumstances and determine whether the dismissal was justified. This could include the age of the employee, their employment history, seniority in the current role, and their roles and duties.3

How many incidents are necessary to give rise to Just Cause?

One incident of insubordination may be sufficient to justify a summary dismissal. This would only be the case if the employer can show that the employee willfully disobeyed a lawful and reasonable policy or order, and that this act of disobedience involved a matter of importance that resulted in the destruction of the relationship between the employer and employee. In making such a determination, it is necessary to consider the complete context of the employment relationship, including the characteristics and circumstances of the employer and employee.4

In other cases, there has not been one specific incident of insubordination that resulted in a fundamental breach of the employer-employee relationship. In these cases, it is necessary to consider the cumulative misconduct of the employee to determine if there was sufficient cause for dismissal.

Cumulative Misconduct and Progressive Discipline

Dismissal based on cumulative conduct has TWO aspects:

  1. Two or more wrongs are worse than one: A court is entitled to take into account the cumulative effect of an employee's conduct in determining whether the dismissal was justified.
  2. The impugned conduct shares a common element: A court must ask whether the misconduct, taken together, demonstrates that the employee is gravely deficient in some quality needed to do the core of his/her job.5 Unsuitability for the basic job is a significant criterion for summary dismissal.6

Before a court will find that a dismissal is justified on the basis of cumulative misconduct, consideration will be given to the following factors:

  • Warnings given to the employee;
  • Warning signs that the employee is failing to meet the level of job performance required;
  • Written warnings, and a reasonable amount of time to correct the performance; and
  • Prior discipline for similar actions.

There is no absolute rule that an employer must provide written warning before summarily dismissing an employee for just cause.7 Whether a warning and an opportunity to improve is necessary to justify a summary dismissal will depend on the circumstances and nature of the misconduct. Where incidents, each in themselves, are serious, a written or oral warning may not be a necessary precursor to termination.

An employer must progressively discipline and warn an employee of sub-standard behaviour prior to summarily dismissing them.

(II) Dismissal without Cause

When dismissing an employee without cause, the employer may elect between the following options:

  1. Providing "working notice" to the employee; or
  2. Ending the working relationship immediately by paying compensation in lieu of notice.

The quantum of compensation is based on the pay and benefits that the employee would have earned during the required notice period. Dismissal without cause and without sufficient notice, or pay in lieu of notice, is wrongful dismissal.

Mitigation

When an employment contract specifies a notice period, the parties have essentially opted out of the common law reasonable notice regime. As such, the common law principle of mitigation does not apply, unless there is an express intention to the contrary. Unless an employment contract expressly requires mitigation, an employee does not have the duty to mitigate his/her losses, and is entitled to the full amount set out in the employment contract.8

Notice Requirements

Minimum notice under the Employment Standards Act, 2000 is the equivalent to one week's pay per year of employment, to a total of eight weeks pay. For more information on this, please see the Notice Handout.

(III) Constructive Dismissal

Constructive dismissal occurs when an employer makes a change to a fundamental term of the employment contract and imposes that change unilaterally upon the employee. The employee may treat the contract as having been repudiated and sue for damages for wrongful dismissal.

Workplace Harassment

The Ontario Court of Appeal recently considered the law of constructive dismissal and clarified when workplace harassment will constitute a constructive dismissal. In particular, the Court of Appeal highlighted the following:

  • The plaintiff bears the onus of establishing a claim of poisoned workplace. There must be evidence that, to an objective reasonable bystander, would support the conclusion that a poisoned workplace environment had been created;
  • A poisoned workplace is not created, as a matter of law, unless serious wrongful behaviour, sufficient to create a hostile or intolerable work environment is persistent or repeated; and
  • The test for establishing constructive dismissal is whether a reasonable person in the same situation as the employee would have felt that the essential terms of the employment contract were substantially changed.9

In Lloyd v Imperial Parking Ltd., the court held that "[a] fundamental implied term of any employment relationship is that the employer will treat the employee with civility, decency, respect, and dignity."10 The exact standard that the employer must meet depends on the particular work environment. If the standard is breached, the employee can claim that there has been a constructive dismissal.

Employer's Duty re: Toxic Work Environment

An employer's failure to prevent an intolerable or toxic work environment caused by the abusive or harassing behaviour of co-workers constitutes constructive dismissal.

In Stamos v. Annuity Research & Marketing Service Ltd., the Ontario Superior Court held that an employer has a duty to "not treat an employee in a manner that renders competent work performance impossible or continued employment intolerable."11 Further, an employer also has a broader responsibility to "ensure that the work environment does not otherwise become so hostile, embarrassing or forbidding as to have the same effect... An employer's failure to prevent the harassment of an employee by co-employees is an obvious breach of this duty, and has been held to be capable of amounting to constructive dismissal."12

However, in Danielisz v. Hercules Forwarding Inc., the British Columbia Supreme Court expressed disapproval of a claim for constructive dismissal on the basis of negative treatment where the plaintiff was an active participant in the creation of the toxic work environment.13 The court found that although the working environment was "unpleasant," the plaintiff had made no efforts to improve it before alleging constructive dismissal. Further, the plaintiff had engaged in poisoning the work environment.

Go to Part 4 - Notice

Footnotes

1. R. v. Arthurs, Ex p. Port Arthur Shipbuilding Co., 1967 (Ont.C.A.).

2. McKinley v. BC Tel., [2001] S.C.C. 38.

3. New Perspective on Canadian Employment Law.

4. Supra note 2.

5. Poliquin v. Devon Canada Corp., 2009 CarswellAltaq 903 (Alta. C.A.) at 73.

6. Ibid.

7. Leach v. Canadian Blood Services, [2005] 5 W.W.R. 668.

8. Bowes v. Goss Powers Products Ltd., 2012 Ont. C.A.

9. General Motors of Canada Limited v Johnson, 2013 Ont. C.A. 502.

10. 1996 CanLII 10543 (A.B.Q.B.), [1996] A.J. No. 1087 (QL) (Q.B.).

11. 2002 CanLII 49618 (ON SC).

12. 2002 CanLII 49618 (ON SC).

13. 2012 B.C.S.C. 155.

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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