In a recent court case called Austin v. Kitsumkalum First Nation, a court penalized an employer for its conduct in responding to an employer’s resignation. In particular, the court awarded the employee additional wrongful dismissal compensation (beyond a severance package compensation) for its unfair decision to allege just cause for dismissal.
What Happened in this Case?
After a career spanning 14 years with the employer in a senior position, the employee informed the employer that she intended to resign from her job nearly 1 year in advance. The employer ignored the resignation letter until nearly 4 months later, when it informed the employee that it was terminating her employment because “her services are no longer required.”
As a result, the employee commenced a wrongful dismissal claim, seeking sought damages (compensation) for the loss of her employment for the balance of the resignation period she was prepared to work, plus five months’ loss of health benefits and a claim for punitive and aggravated damages for the employer’s unfair decision to terminate her employment.
In its statement of defence, the employer alleged for the first time that it had just cause for dismissal based on the following reasons:
- The employee received a government grant that authorized using capital costs “other than small repairs or renovations to support the participation of persons with disabilities,” from which she used $4,600 to perform for repairs in her home (creating a student art studio)
- The employee kept some of the employer’s property, including a hard drive, a paddle, a salmon panel, and a laptop that belonged to the band.
- The employer claimed the employee improperly sought reimbursement expenses not related to her job, such as staff gifts and lunches (even though it never raised these issues with the employee previously and there was no applicable policy or guideline for expense reimbursement)
- The employer claimed that the worker had demonstrated instances of “disruptive and combative conduct towards others” (although she was never previously disciplined or warned about her conduct during her employment)
What Did the Court Decide?
After hearing the evidence, the court concluded it was not “satisfied” that the employer proven it had just cause for dismissal. As a result, it found the employee was wrongful dismissed, and awarded her $18,647. Just as importantly, the court also awarded the employee an additional $15,000 in aggravated damages.
In its reasons, the court held that the employer’s unproven allegation of just cause was a “a desperate attempt… to retroactively create some cause” in response to the employee’s decision to sue for wrongful dismissal following the termination. It also emphasized the following points:
- the employer knew about the renovations, expenses and expenditures and had previously reimbursed and tacitly approved them. They specifically allowed these expenditures to happen and paid for them. As such, it was unfair for the employer to “now, only after litigation was commenced, they seem to want to retroactively make allegations that the expenditures were somehow inappropriate, when in fact they were cutting cheques for these expenditures at the time.” The court also stated the following:
“There is no formal written policy about incurring expenditures and reimbursement. There is no suggestion prior to litigation being commenced that somehow this plaintiff had done anything inappropriate, and to me it simply strikes as a desperate attempt by a defendant to retroactively create some cause.”
- The Employer expressed no concern about any disruptive behaviour by the employee until after she commenced her wrongful dismissal litigation; and
- While there was a bona fide (legitimate) dispute about two items in the employee’s possession, once the dispute was resolved, the employee returned the items to the employer.
After reviewing the facts of the case, the court found the employer’s conduct was unfair and deserving of additional compensation for the employee. However, the court declined to make a punitive damage award to the employee as that she failed to meet the high standard required, because she did not show that in the conduct of the wrongful dismissal litigation she was treated by her former employer in an exceedingly difficult and disreputable manner)
Instead, the court awarded the employee aggravated damages of $15,000, based on the following factors:
- The employer engaged in conduct during the course of the wrongful dismissal that was unfair and in bad faith, including unfounded allegations in its Statement of Defence suggesting she engaged in criminal behaviour, theft, dishonesty and fraud; and
- The manner of dismissal caused the employee mental distress, anxiety, embarrassment, humiliation, insomnia and the worsening of her overall mood and disposition (especially since everyone knew about her dismissal in her small community)
Lessons for Employers
This court decision should make it clear to employers that if they retroactively make unfounded allegations of just cause as a response (or unfair tactic) to an employee’s decision to challenge their termination as a wrongful dismissal, a court may not take kindly to what it views as unfair and vindictive behaviour – especially allegations that could reasonably be interpreted as suggesting that an employee engaged in criminal behaviour, theft, dishonesty, or fraud.
Similarly, this court decision also demonstrates that employers should have proper documentation in place to support a legitimate allegation of just cause (which should never be fabricated to intimidate an employee’s wrongful dismissal claim). For instance, the employer in this case never warned or disciplined the employee for the alleged wrongdoing in later accused her of in responding to the wrongful dismissal claim, nor did could it point to any previous issues with her performance or conduct.
Accordingly, without evidence of prior warnings, discipline or instances where they had previously raised these with the employee in order to support a defence of just cause, the employer had a very tall task in asserting just cause for dismissal. In fact, even though an employer can assert “after-acquired cause” for dismissal, those are reserved for the most egregious of employee behaviour – which the employer could not prove was justified in this case. Put simply, employers should not respond to a wrongful dismissal case by employing the “kitchen sink approach” and digging up anything they could possibly to paint the employer in a bad light and support a defence of just cause for dismissal. In the vast majority of cases, the courts will see right through such tactics as unfair and deserving of punishment.
Contact Our Ontario Wrongful Dismissal Lawyer
If you are an employer and believe that you have grounds for just cause for dismissal of one of your employees, or an employee who has been accused of just cause for dismissal and want to find out if you have a valid case of wrongful dismissal or an entitlement to a severance package, our experienced employment lawyer at Bune Law can help. Contact us by phone 647-822-5492 or fill out the contact form to to the side. We would be happy to assist in your employment law matter as quickly as possible.
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