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Firing your employee for good reason may be more costly than you think

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There could be many good business reasons to fire an employee.  The employee was dishonest, had a bad attitude, failed to follow company policy, was insubordinate – from an employer’s perspective, there may be no question that the employment relationship must come to an end because of employee misconduct.

However, many employers are of the mistaken view that an employee’s misconduct is sufficient cause for dismissal without providing notice of termination or a severance package.  As an employment lawyer representing employers, what comes as a big surprise (and source of frustration) for many employers is that they may be required to pay a hefty severance package to a dismissed an employee who, in their view, was fired for ‘good reason’.

When is the nature and degree of the misconduct sufficient to warrant just cause for immediate dismissal? This is where the just cause conundrum lies—and the disconnect between the courtroom and the business reality of the workplace.

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The legal context

From a legal perspective, the answer depends on context and the individual circumstances of the employee.  The courts in Canada have described dismissal (without notice) to be the ‘capital punishment’ of employment law, and it is only when the employee’s conduct is ‘so grievous’ that the employer may lawfully dismiss for just cause and without the requirement to provide notice or severance.

In many instances, termination for just cause may be uncontroversial, for example, if the employee committed theft, fraud, or sexual harassment of a colleague.  Rarely in such cases would a court find that an employer did not have just cause.  However, it can be surprising that significant misconduct that most employers would never tolerate in the workplace has been held by the Courts not to warrant just cause for dismissal without notice or severance.

In the recent case of Shakur v. Mitchell Plastics, 2012 ONSC 1008, the plaintiff was formerly employed as a machine operator with Mitchell Plastics for four-and-a-half  years.  The plaintiff was dismissed for just cause following an incident in which he and a co-worker in question were engaged in trash talk on the shop floor. The verbal dispute escalated, and the plaintiff slapped the co-worker in the face with an open hand.  Upon termination, he was not provided with any notice or severance and later brought a suit against Mitchell Plastics for wrongful dismissal. The court stated in this case that it was difficult to see how the plaintiff’s actions amounted to just cause for immediate dismissal without notice. The court found in the plaintiff’s favour, and Mitchell Plastics was ordered to pay wrongful dismissal damages to the plaintiff.

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In another recent case involving a unionized workplace, Dryco Drywall Supplies Ltd. v Teamsters Local Union 213, 2013 CanLII 7695,  Dryco had dismissed  a foreman with 30 years’ service, after he set fire to his co-worker. The foreman took a lighter and set fire to some fabric hanging from the vest worn by his co-worker. He then extinguished the flame and laughed about it.  The co-worker was unaware that his vest had been set on fire.  The foreman then walked away believing that he fully extinguished the flame.  However, the safety vest set on fire. A customer saw flames half way up the employee’s back and smothered the flames with his hand. The customer suffered burns and blisters to his hands.  The labour arbitrator appointed to hear the case held that despite the foreman’s actions of setting his co-worker on fire, Dryco did not have sufficient cause for dismissal and Dryco was ordered to reinstate the foreman back to work.

A caution to employers 

Both examples serve as an important caution to employers that even very serious acts of misconduct in the work place may not be sufficient to constitute just cause for dismissal. In both cases, a contextual approach was considered, taking into account the employee’s individual circumstances.

Before dismissing an employee on the basis of just cause, employers should consider not just the misconduct in question, but all other relevant circumstances, including the employee’s length  of service, position, the presence of any prior discipline or warning, whether the conduct was an isolated incident, whether the employee had a reasonable excuse for the conduct, and whether a lesser sanction, such as a hefty suspension, might be sufficient to teach the employee a lesson.  This type of analysis at the outset might avoid contentious and costly litigation down the road.

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