WHAT IS JUST CAUSE?

When can an employee simply be shown the door?

My last post was about notice or pay lieu of reasonable notice, which employers must provide to employees if their employment is terminated without cause. However, what if there exists just cause for termination?

According to the common law, just cause may relieve an employer from having to provide an employee with notice or pay in lieu of notice of termination (however, earned wages, vacation pay and pension benefits may still be due and owing).

Canadian courts have referred to just cause as “the capital punishment crime of employment law"[1] and for good reason. In addition to being denied working notice or termination pay, an employee who has been dismissed for cause could:

• be denied Employment Insurance benefits, 
• find it difficult to become re-employed, and
• suffer a serious psychological blow, which, in some cases, can lead to medical problems.
  

Not surprisingly, the burden of proving just cause to the court's satisfaction falls on the employer’s shoulders.

Since Canada did away with actual capital punishment in the criminal law context long ago, it should come as no surprise that its civil courts will “sentence” employees to the employment law equivalent only in the most extreme circumstances. This area of the law is challenging for employers, especially because there are few hard and fast rules. Consider the following cases:

•       Poor performance, generally speaking, in absence of clear performance standards, a history of progressive discipline, written warnings and employer guidance and support will not constitute just cause. [2]
•        In considering whether a dismissal for just cause is warranted for reasons of dishonesty, the Supreme Court of Canada “favour[s] an analytical framework that examines each case on its own particular facts and circumstances."[3] Accordingly, while dishonesty in the form of intentional embezzlement of money would likely be considered just cause, this is not the case where an employee with a long and excellent performance record recklessly misrepresents his expenses. [4]
•       As for criminal behaviour outside the workplace, while purchasing small amounts of marijuana from a fellow employee at home might not constitute just cause[5], the situation may be different if an employee is criminally charged with possession of child pornography.[6]
•        An employer may wish to think twice before dismissing an employee with body odour -- even if employed as a fragrance demonstrator.[7]
•        Engaging in harassing and threatening behaviour with one’s co-workers and using foul language may not constitute just cause in certain circumstances.[8]
•        Even when an employer may be able to establish just cause according to the common law, that may not be enough to characterize an employer’s offending conduct as “wilful misconduct, disobedience or wilful neglect of duty” for the purposes of provincial minimum standards legislation such as Ontario’s Employment Standards Act. This occurred in a recent decision where a worker had been disciplined for taking extended breaks, arriving late, shoddy workmanship and where he had a careless attitude towards his misconduct despite numerous coaching sessions. The Court held that the employee should still receive his entitlements under the Act even if he is denied common law damages for wrongful dismissal.[9]

Employers and employees also need to be aware that there may be applicable human rights legislation and contractual considerations that can come into play.  These can further restrict an employer’s ability to terminate an employee for just cause.

Employers should take care not to unwittingly become the target of wrongful dismissal litigation should they improperly dismiss an employee for cause. Not only can the plaintiff employee potentially walk away with a judgment for lost wages and legal costs, where an employer unsuccessfully alleges just cause the employee may be awarded additional damages, such as for mental distress. This is not surprising when one considers the potential harm to an employee who is dismissed for cause.

Employers and employees require the assistance of experienced employment lawyers when navigating through the just cause minefield.  Employers should speak with counsel before firing an employee for alleged cause or even before disciplining him or her for perceived misconduct. Similarly, employees who are fired for cause, suspended, given warnings or even placed on performance improvement plans should quickly seek legal advice.

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[1] Echlin J.  as cited in Tong v. Home Depot of Canada Inc. (2004), 38 C.C.E.L. (3d) 59 (Ont. S.C.J.) at para. 1.

[2] Wood v. Canadian Marconi Co. (1995), 9 C.C.E.L. (2d) 174 (Ont. Div. Ct.) and Russell v. Molson Breweries (Ontario) Ltd. (1995), 8 C.C.E.L. (2d) 277 (Ont. Gen. Div.).

[3] Mc Kinley v. BC Tel (2001), 9 C.C.E.L. (3d) 167 (S.C.C.) at para. 57.

[4] Leitner v. Wyeth Canada, 2010 CarswellOnt 456 (S.C.J.).

[5] Rhodes v. Zehrmart Limited, [1986] O.J. No. 2631 rev’d [1986] O.J. No. 2631 (Div. Ct.).

[6] Kelly v. Linamar Corp., [2006] O.J. No. 4899 (S.C.J.).

[7] Bagnall v. Calvin Klein Cosmetics (Canada) Ltd. (1994), 5 C.C.E.L. (2d) 261.

[8] Poulos v. Toronto  & Region Conservation For The Living City, 2009 CarswellOnt 8989 (S.C.J.).

[9] Oosterbosch v. FAG Aerospace Inc., 2011 CarswellOnt 1702 (S.C.J.).

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