As an employer, it may seem tempting to fire an employee who is underperforming or causing workplace issues. In fact, terminating their employment might seem like the quickest fix, but in most cases, it may not be true – especially in an employment termination for cause.
In Ontario, employers have an important tool at their disposal whenever they intend to rely on an employee’s misconduct or poor performance as reasons for termination for cause: progressive discipline. In this Ontario employment blog, we dive into why progressive discipline should be in every employer’s tool shed when dealing with employee performance or conduct issues, which through the help of an experienced Ontario employment lawyer, can save you time, money, and workplace legal issues (including wrongful dismissal claims).
What is Progressive Discipline?
Many courts have insisted that, except in the case of misconduct so egregious or serious that it precludes continuing the employment relationship, employees are entitled to progressive discipline in the form of a clear warning and a reasonable opportunity to mend their ways. An employer cannot treat matters of which it was previously aware, but which it never brought to the employee’s attention, as cumulative cause for dismissal (this is referred to in law as “condonation”). As such, a termination without prior warning is usually found to be wrongful, even in the absence of a formal progressive discipline policy established by the employer, and the assertion of cause is even less likely to be upheld where the employer has a stated progressive discipline policy but has failed to follow it prior to dismissal. In fact, in situations where an employer has explicit policies that call for progressive discipline, the sequential steps spelled out in those policies can be bypassed only in instances of serious misconduct such that summary dismissal is the only reasonable option.
However, while in most cases, progressive discipline and/or providing employees with prior warnings will still be required for employers to successfully defend a wrongful dismissal claim, if an employee engages in a number of incidents of misconduct in a short period of time, an employer’s failure to provide prior discipline may not necessarily be fatal to upholding a termination for cause. In a few cases, the courts have considered the entire factual circumstances surrounding an employee’s alleged conduct, and concluded that incidents of misconduct should not be viewed in a vacuum. In fact, in circumstances where an employee operates with managerial authority with little oversight, a higher degree of honesty, loyalty and good faith to the employer may be required, which more often than not could result in significant penalties for misconduct.
Case in Point
In a wrongful dismissal claim, the court in Goruk v. Greater Barrie Chamber of Commerce, 2021 ONSC 5005 upheld an employer’s decision to terminate a long-serving employee for just cause. This case specifically stands out for the rate fact that the employee had no prior discipline. Moreover, the incidents the employer relied on to build a successful defence for wrongful dismissal would not, generally speaking, warrant or justify a termination for cause in most cases.
What Happened in This Wrongful Dismissal Case?
A long-time Executive Director (17 years) at a non-profit organization was fired for allegedly tampering with finances. The issues arose in the last 18 months of her employment and included unauthorized actions, such as diverting funds, taking vacation pay instead of vacation days, and getting an unapproved raise to which she was not eligible. After placing the employee on a suspension, the board investigated and terminated her citing 15 reasons, though the main focus seems to be financial misconduct.
The Decision
After the wrongful dismissal litigation, the court ruled the Executive Director was a fiduciary due to her limited oversight and discretionary power. This means she had a legal obligation to act in the employer’s best interests, including honesty, loyalty, and avoiding conflicts of interest.
The court reviewed the reasons for termination and found two key issues: altering a bank document and failing to correct an unauthorized raise. While neither was major on its own, the court focused on the dishonesty involved. Additionally, the employee’s lack of cooperation and overall poor judgment in recent months contributed to the termination being justified.
The court concluded that “any one of the incidents of malfeasance or the exercise of poor judgment would not […] be sufficient to support a termination for cause” but “taken together they do”. Given the importance of honesty, faith and trust in the employee’s role, the court found that the employee’s immediate termination was justified. The court found that the employee’s conduct also met the standard of wilful misconduct under the Ontario Employment Standards Act, 2000.
The court acknowledged that each issue on its own wouldn’t justify firing, but combined, they showed a pattern of dishonesty and poor judgment. Since the Executive Director’s role relied heavily on trust, termination was warranted. The court also found her actions met the legal definition of wilful misconduct.
What is a Dismissal for Just Cause?
Ontario employment law recognizes the right of an employer to dismiss an employee summarily where the employer has “just cause” for terminating the employment relationship. Generally, the legal test for employers to justify a termination for cause determining whether the employee’s misconduct was sufficiently serious that it struck at the heart of the employment relationship. To answer that question, the court must:
1. determine the nature and extent of the misconduct;
2. consider the surrounding circumstances; and
3. decide whether dismissal was warranted.
If you are facing a wrongful termination for cause (or are an employer who needs an employer defence lawyer for a wrongful dismissal claim), call an Ontario wrongful dismissal employment lawyer to review your employment contract, negotiate severance package, and carefully review and discuss your specific circumstances leading up to your termination of employment. Most importantly, an employment lawyer can help with calculating severance pay and, if necessary, help negotiate a severance package with your employer on your behalf.
If you are an employer or employee needing to speak with an experienced Ontario wrongful dismissal lawyer to discuss your options and next steps on how to deal with workplace issues, call Bune Law, employment law firm in Toronto. You will review and get guidance on your severance package before you agree to sign any termination documents, and help ensure that your severance package is fair and reasonable.