The last column discussed the need for employers to practice progressive discipline. That concept means employees should be fired – that is, summarily dismissed without notice or pay – as a last resort and only where clearly justified. In this column, we look at some decisions which demonstrate how hard it can be to fire an employee for even egregious misconduct under Canadian law.
The McKinley v BC Tel Doctrine
The Supreme Court of Canada set the bar high for firing misconduct about 15 years ago in its decision in McKinley v BC Tel  2 SCR 161, 2001 SCC 38 (CanLII) http://canlii.ca/t/521q. This decision was profiled several years ago in this column. The Supreme Court of Canada ruled that the context of the misconduct and its impact on the employment relationship must be considered when determining just cause for dismissal. In giving a pass to dishonest employees, this case forced judges and arbitrators in summary dismissal cases today to conclude that the misconduct must show that “the employment relationship could no longer viably subsist.” The McKinley doctrine still challenges employers who believe they have serious cause to fire a worker. …firing is always a business risk. Paying generous salary and benefits in lieu of reasonable notice may be a wiser employer strategy.
Bad Behaviour Excused
In Soplet v. Bank of Nova Scotia, 2007 CanLII 47145 (CA LA), http://canlii.ca/t/1tknq, an employee admitted to buying marijuana from a co-worker on the work premises. After a suspension and subsequent investigation, he was dismissed without pay. The adjudicator referred to McKinley and analyzed the contextual proportionality of the dismissal. He noted:
- there was no damage done to the reputation of the bank;
- there was no financial or operational compromise to the bank’s functions;
- the employee could be rehabilitated (it was a one-time offence); and
- the record of performance was exemplary.
The adjudicator found no cause for summary dismissal and awarded damages.
In Cook v Universal Coach Line (2006), Eric Cook, a bus driver with a bus load of passengers, failed a roadside blood alcohol test. While he was being held by police for almost three weeks due to an alleged parole violation, his employer dismissed Cook without reviewing the facts The Ontario Labour Relations Board said it was not clear Patel was aware profanity was against company regulations and also found that the exchange was an isolated incident in otherwise good performance …with him. The adjudicator was not convinced this employer-employee relationship was broken, and noted Cook’s clean record of employment, and the absence of a progressive discipline program. He reinstated Cook from the time of his decision. In this case, illegal purchase and consumption of intoxicants while working was not sufficient cause to fire the worker.
Sexual misconduct at work often turns out to be not enough reason alone to fire someone in Canada. Mark Payne, a bank branch manager in Woodstock, Ontario, engaged in consensual sex with the assistant branch manager, both on and off the bank premises. The woman later complained that Payne was stalking her. After investigating, the employer fired Payne. The adjudicator reversed the dismissal and ordered Payne to be reinstated by BMO. While the matter was serious and could have negatively impacted the employer, the adjudicator said the actual impact was minimal and cited a lack of progressive discipline to rehabilitate Payne. The Federal Court of Appeal unanimously agreed with the arbitrator but ordered damages in lieu of reinstatement. In the end, BMO was ordered to pay Payne ten months salary and benefits and about $74,000 of his legal costs: Payne v Bank of Montreal, 2013 FCA 33 (CanLII) http://canlii.ca/t/fw1vr (merits decision); 2014 CanLII 18861 (ON LA) http://canlii.ca/t/g6kqq (costs decision).
James Burgess admitted to accessing pornographic material at work several times. The employer warned him about this behaviour. Later, when other Internet usage violations continued, Burgess was fired. The adjudicator disagreed and awarded Burgess damages for his dismissal because the employer’s warning about future discipline was ambiguous. The employer should have emphasized to Burgess that he was on his last chance. The adjudicator in Burgess v Halifax Grain Elevator Ltd. (2005) also viewed the subsequent (non-pornographic) Internet violations as not serious. These two cases show that misconduct of a sexual nature, even in violation of company rules, may alone not be enough to fire the worker.
What about verbal or physical altercations? Ravindra Patel told his boss “you’re a fucking idiot” and said “fuck you” five or six times during a verbal exchange on the company shop floor. The Ontario Labour Relations Board said it was not clear Patel was aware profanity was against company regulations and also found that the exchange was an isolated incident in otherwise good performance: Patel v Welsh Industrial Manufacturing Inc., 2008 CanLII 14086 (ON LRB) http://canlii.ca/t/1wdwz. This was insufficient cause for dismissal and Patel was awarded eight weeks pay and benefits.
Mr. Phanlouvong punched and bloodied the nose of a co-worker after a heated verbal exchange. After interviewing witnesses, Phanlouvong was fired. Again, the Ontario Superior Court of Justice said the incident was an isolated case of misconduct and the employer should have considered reasonable alternative disciplinary measures. It awarded Phanlouvong over $45,000 in damages: Phanlouvong v Northfield Metal Products, 2014 ONSC 6585 http://canlii.ca/t/gf9p0.
In the previous two cases the altercations were between workers in the same company. In Ditchburn v. Landis & Gyr Powers Ltd., 1997 CanLII 1500 (ON CA) http://canlii.ca/t/6hb5, the 27-year employee attacked and drew serious blood from a customer at a strip club. Nevertheless, the Ontario Supreme Court found the employer did not adequately support its employee who had an otherwise exemplary record. The Ontario Court of Appeal agreed that beating up the customer in this case was not a firing offence. In the end, the combative employee received almost $200,000 in damages, $15,000 for mental distress he suffered for being fired and most of his costs incurred in suing his employer.
On the topic of “summary dismissal,” eighteen years ago the Supreme Court summarily dismissed the doctrine of “near cause” in employment law in Dowling v Halifax,  1 SCR 22, 1998 CanLII 834 http://canlii.ca/t/1fqwm, confirming an “all or nothing” approach to bad behaviour at work. Employers either have adequate cause to fire an employee or they don’t and must pay out the full notice period. The Court unanimously said “[w]e do not accept any argument relating to near cause”. …misconduct of a sexual nature, even in violation of company rules, may alone not be enough to fire the worker.
The law does not exhaustively lay down what constitutes sufficient grounds to fire a worker. Employers must act quickly on the realities before them. Fired employees suffer greater stigma than notice employees and are more likely to challenge the firing. Years later, even in clear cases of serious employee misconduct, a judge can easily take a view sympathetic to the employee, who enjoys the benefit of the doubt. Therefore, firing is always a business risk. Paying generous salary and benefits in lieu of reasonable notice may be a wiser employer strategy.
We can harvest other lessons from these cases. Bad employee behaviour is likely not sufficient cause for firing where:
- it was a single, isolated incident;
- the behaviour was only bad and not egregious by prevailing social standards;
- the employer’s expectations and what constitutes dismissible behaviour were not clearly communicated;
- no specific warning was issued that future failure to meet these standards would end in dismissal;
- employee had a long record of good performance;
- the employee was not given a reasonable opportunity to rehabilitate;
- the bad behaviour was ignored in the past; and
- progressive discipline was not attempted.