Tuesday, March 22, 2011

Ontario Employment Law: Just Cause For Dismissal Doesn't Necessarily Amount to Wilful Misconduct

A finding of just cause for dismissal at common law does not automatically disqualify an employee from entitlement to statutory severance and termination benefiits under Ontario's Employment Standards Act, according to an important March 14, 2011 ruling of the Ontario Superior Court Ontario in Oosterbosch v. FAG Aerospace Inc.

In Oosterbach, a long term-employee was terminated by his employer based on its policy of progressive discipline, with termination being the last step of that process. Specifically, it was alleged that the machine operator- employee had engaged in a persistent pattern of careless misconduct over a period of approximately 1.5 years preceding his termination, despite having received a number of warnings and suspensions and numerous coaching and counselling sessions.

Among other infractions, the employer alleged the employee had falsified records and ran a number of pieces (to be used in the aerospace industry) that did not conform to prescribed specifications.

Justice Haines found that the employer had demonstrated "just cause" at common law for the termination of the Plaintiff's employment:
. . . In my view the persistence of the plaintiff's misconduct notwithstanding ongoing coaching sessions and warnings constitute a repudiation of the employment relationship. This conclusion is reinforced by the initiation of a further discipline investigation on March 28, 2008 for unsatisfactory work performance before the discipline process was concluded for the infraction on March 20 that resulted in the issuance of the fourth written warning.
Thus, the court found that the employee careless conduct disentitled him to reasonable notice of his termination at common law.

From this conclusion, one might expect that a finding of "wilful misconduct" under the Ontario Employment Standards Act, disentitling the employee to severance pay and termination pay, would inexorably follow.

But the court found otherwise, holding that his misconduct, while not to be condoned, did not rise to the required level of recklessness to meet the ESA's "“wilful misconduct, disobedience or wilful neglect of duty” test:
A person is reckless when he engages in conduct without regard for the outcome or consequences. Notwithstanding the number of infractions recorded I do not see that the conduct of the plaintiff rises to that level. He was undoubtedly careless and the persistence of that carelessness justified his dismissal. I would not, however, characterize his offending behaviour as "wilful misconduct, disobedience or wilful neglect of duty" that would disentitle him to receipt of termination and severance payments under the provisions of the Employment Standards Act, 2000.
This case is a significant employment law decision for a number of reasons:
  • It establishes that a finding of "just cause" at common law will not always equate to "wilful misconduct" under Ontario Employment Standards Act.
  • It reminds us that as the threshold for establishing "just cause" is a high one, numerous written warnings and counselling sessions will likely be required before any such finding is made, particularly with regard to a long-term employee.
  • It establishes that an employer's progressive discipline system is not dispositive of a "just cause" finding. Whether or not an employer had "just cause" is a legal question which requires a contextual analysis.
The ruling appears to mandate a two-pronged analysis in assessing termination "for cause." Firstly, consideration must be given to whether the impugned behaviour meets the traditionally high "just cause" threshold.

If it does, while there will be no common law entitlement to pay in lieu of notice, a second enquiry must then occur as to whether the even more stringent "wilful misconduct" standard under the ESA has been met.

If this ruling survives appeal, it it provides a ray of hope for employees who are terminated for cause.

As Stikeman Elliot's Randall Boessenkool noted in an article today, "This case is a precedent which should concern employers."

(HT: Michael Fitzgibbon's recent article on this ruling.)

- Garry J. Wise and Robert Tanha, Toronto

Visit our Toronto Law Firm website: www.wiselaw.net

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