Wrongful dismissal

 

Dismissal of unionized employees

Legislation governing employees who are member of a trade union or employee association whose terms and conditions of employment are covered by a collective agreement provides a statutory safeguard against wrongful dismissal. A common feature found collective agreements and in labour relations legislation across Canada is a provision requiring the collective agreement to require an employer to have “just and reasonable cause” or “just cause” for discipline or dismissal of the employee.

For example, Section 84(1) of the BC Labour Relations Code provides as follows.

Every collective agreement must contain a provision governing dismissal or discipline of an employee bound by the agreement, and that or another provision must require that the employer have a just and reasonable cause for dismissal or discipline of an employee, but this section does not prohibit the parties to a collective agreement from including in it a different provision for employment of certain employees on a probationary basis.

Section 142(2) of the Alberta Labour Relations Code provides as follows.

If an arbitrator, arbitration board or other body determines that an employee has been discharged or otherwise disciplined by an employer for cause and the collective agreement does not contain a specific penalty for the infraction that is the subject‑matter of the arbitration, the arbitrator, arbitration board or other body may substitute some other penalty for the discharge or discipline that to the arbitrator, arbitration board or other body seems just and reasonable in all the circumstances.

Section 60(2) of the Canada Labour Code provides as follows.

Where an arbitrator or arbitration board determines that an employee has been discharged or disciplined by an employer for cause and the collective agreement does not contain a specific penalty for the infraction that is the subject of the arbitration, the arbitrator or arbitration board has power to substitute for the discharge or discipline such other penalty as to the arbitrator or arbitration board seems just and reasonable in the circumstances.

What constitutes “just cause” varies from case to case depending on a variety of factors such as the nature of the misconduct, the length of service, the employee’s disciplinary record, whether the misconduct occurred in the spur of the moment as opposed to being carefully planned and premeditated, whether the employee made an admission of wrong-doing and made a timely apology to the employer, among other things.

Just cause can consist of both blameworthy misconduct, e.g., theft, insubordination, falsification of records, poor work performance and non-blameworthy conduct, e.g., innocent absenteeism that is excessive, inability to perform the required duties of the job.

 

Progressive discipline

Discipline in the employment context is intended to be educational, not punitive. Therefore, disciplinary penalties ought to be proportionate to the gravity of the misconduct. According to the theory of progressive discipline there exists a continuum ranging from an oral warning, to written reprimand, to a short suspension without pay, a longer suspension and ultimately dismissal.  While following progressive discipline is the expected norm, it is not required for the most serious employment offences or where the employee has a well established disciplinary record, in which case the employer may rely upon misconduct that itself might not justify dismissal, but it is the last “straw.”

Employer must prove “just cause”

The employer bears the onus to prove on the balance of probabilities both that a) it has just and reasonable cause to discipline an employee; and also that it has just and reasonable cause to impose the particular disciplinary penalty imposed.

However, even where the employer has proven that it has just and reasonable cause to impose discipline, an arbitrator may consider several mitigating factors to reduce the disciplinary penalty chosen by the employer.

 

Wrongful dismissal of non-unionized employees

An employer has the right to terminate an employee’s employment under the common law either:
a) for cause without notice and without payment of severance pay; or
b) without cause upon giving the employee “reasonable notice” or “payment of reasonable notice.”

However, the employer’s obligation to provide “reasonable notice” or “pay in lieu of reasonable notice” may be modified by a written employment contract. Accordingly, if an employee has a written employment contract, it must be examined closely to determine whether or not a non-unionized employee is entitled to “reasonable notice.” The employment contract may or may not be in the form that an employee would identify as a written contract. It may be in the form of a letter containing an offer of employment that the employee signed at the commencement of the employment relationship. In some instances, the employment contract will limit the notice to which a dismissed employee is entitled to “termination pay” under minimum employment standards legislation.

Reasonable notice or pay in lieu of reasonable notice

In Ansari v BC Hydro & Power Authority, 2 BCLR (2d) 33 (BCSC), Chief Justice McEacheran (as he then was) explained an employer’s obligation to provide an employee with reasonable notice of termination as follows.

[11] The underlining principle which arises out of the law of master and servant (as they were called at common law) is that, absent contractual provisions, the master who terminates the employment of a servant must give reasonable notice and, upon doing so, he is not required to compensate the servant in any way. If the master does not give reasonable notice, then the law requires him to compensate the servant by an award of damages that is intended to put the servant in the position he would be in if he had received proper notice. In the assessment of these damages, the recovery of lost income is not limited to salary, but includes other benefits incidental to the employment being terminated.

“Reasonable notice” includes, but is not limited to, “termination pay” under minimum employment standards legislation. There is no universal definition of “reasonable notice.” The case is replete with judges’ statements that there is no rule that reasonable notice is one month for every year of service. Instead, judges determine the amount of damages that an employer must pay to a former employee by considering a number of factors each particular case.   In Bardal v Globe & Mail, Chief Justice McRuer held as follows.

There can be no catalogue laid down as to what is reasonable notice in particular classes of cases. The reasonableness of the notice must be decided with reference to each particular case, having regard to the character of the employment, the length of service of the servant, the age of the servant and the availability of similar employment, having regard to the experience, training and qualifications of the servant.

While there are other factors in addition to the ones enumerated in the Bardal case, supra, in the Ansari case, supra, Chief Justice McEacheran, for his part, identified the following factors as the “most important” ones:

a) character of the employment;
b)  the length of service;
c)  the age of the employee at the date of termination and the availability of similar employment; and
d) having regard to the experience, training and qualifications of the employee.

It is also widely recognized that there is a “rough upper limit” or a “glass ceiling” of 24 months reasonable notice.

Since the amount of damages for wrongful dismissal varies depending on an one’s personal circumstances, an individual who has been dismissed either for alleged “cause” or one who has been dismissed “without reasonable notice” or “pay in lieu of reasonable notice” is wisely advised to seek legal advice prior to signing a release and before accepting the employer’s settlement offer. Make sure to bring to your lawyer a copy of your employment contract and/or your offer of employment, as well as the letter of termination and any proposed release.

For more detailed information about the range of damages and remedies available in a claim for wrongful dismissal click here.

Duty to avoid loss

The common law imposes a duty to mitigate upon a wrongfully dismissed employee. In Red Deer College v Michaels, the majority of Supreme Court of Canada recognized that a wrongfully dismissed employee owed a duty to mitigate.

In short, a wronged plaintiff is entitled to recover damages for the losses he has suffered but the extent of those losses may depend on whether he has taken reasonable steps to avoid their unreasonable accumulation.

The duty to mitigate requires an employee who has been dismissed “without cause” and “without reasonable notice” to take all steps that a “reasonable person” would take to avoid or minimize their loss.

While the former employer is the party that must prove that the employee breached the duty to mitigate, if the wrongfully dismissed employee fails to make a reasonable effort to mitigate their loss the trial judge may decrease the award of damages for pay in lieu of reasonable notice.

An individual who has been wrongfully dismissed and who is contemplating making a clam for payment of damages as a result of the former employer’s failure to provide  “reasonable notice” is wisely advised to seek legal advice about what reasonable steps they should take to mitigate their damages.

For more detailed information about the duty to mitigate click here.

One of the first steps in fulfilling the duty to mitigate is to make a claim for Employment Insurance benefits (EI Claim). For further information about Employment Insurance, continue to our Employment Insurance webpage.

 

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