Ontario employers may well be aware that when it comes to terminating an employee for cause, i.e., without notice or payment in lieu of notice, there are two standards to consider. One standard is found in the common law, and provides broader grounds for cause, while the other standard is statutory and requires “wilful misconduct” on the employee’s part. What is wilful misconduct and when can employers truly terminate an employee without any notice or pay-in-lieu thereof?
Common Law v. Statute
The common law standard for cause termination requires that the employee’s conduct is such that it “strikes at the heart of the employment relationship” meaning that it would be unreasonable to expect the employer to continue employing the employee. Because the penalty is severe – disentitlement to common law notice – the employer must be prepared to balance the factors to determine whether immediate termination for cause is a reasonable penalty.
If an employee’s conduct meets the common law standard, then the employee may be disentitled from common law reasonable notice. However, this does not mean that the employee is automatically disentitled from notice or severance under the Employment Standards Act, 2000 (“ESA”) as well.
For an employee to lose their ESA entitlements, the employee needs to commit “wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.” We discussed the issue of condonation in a previous blog post, and in this post we will focus on “wilfulness” which emphasises the subjective intention of the employee.
A recent case at the Ontario Court of Appeal, Render v. ThyssenKrupp Elevator (Canada) Limited, 2022 ONCA 31, will help illustrate the principles.
What happened?
The Plaintiff, Mr. Render, was a manager at ThyssenKurpp Canada for nearly twenty years. Prior to his termination the plaintiff slapped a co-worker, a woman, on the buttocks. This was in response to a joke made regarding the Plaintiff’s height by the complainant. The slap was forceful and caused shock to the complainant. The matter was investigated, and the Plaintiff was terminated for cause without payment of any notice.
The trial judge found that the slap was unacceptable conduct in the workplace that breached the anti-harassment policy put in place by the company. It was sufficiently egregious to warrant summary dismissal under the policy. The Plaintiff did not express any remorse during the trial. The trial judge found that termination without notice was appropriate in the circumstances.
Court of Appeal
The Ontario Court of Appeal agreed with the trial judge on the question of just cause under the common law but disagreed with the trial judge on the point of wilful misconduct under the Ontario ESA. Justice Feldman quoted an earlier case and provided a helpful analysis of the distinction between common law just cause and wilful misconduct under the ESA:
- The test for wilful misconduct sets a higher standard that the test for just cause.
- If an employee’s actions are “careless, thoughtless, heedless, or inadvertent […] no matter how serious”, those actions will not meet the standard. Essentially, the employee must have been “bad on purpose” to meet the standard.
- Wilful misconduct involves assessing the subjective intent of the individual while just cause is a more objective endeavour looking at the circumstances and not the intention of the employee.
Justice Feldman found that the employee’s conduct was not pre-planned, the slap was a reaction in the “heat of the moment in reaction to a slight.” Although this would permit a termination for just cause under the common law, wrote Feldman, it is not sufficient to deprive the employee of statutory termination entitlements. The Plaintiff was therefore entitled to 8 weeks of pay in lieu of notice under the ESA.
Takeaways
While the outcome may be surprising to some employers given the facts, it is entirely consistent with the principles at play. The ESA has set a higher standard than the common law, and given the language of the statute, “wilfulness”, employers should always be considering misconduct from a dual perspective. Just because conduct is sufficient to disentitle an employee from common law notice, will not mean that the same conduct is sufficient to disentitle them from ESA notice (or ESA severance, which was not argued in the above case).
Employers should ensure they keep good employee records, and that they note the surrounding circumstances of any misconduct prior to deciding on termination. Had the defendant in this matter considered the difference between common law and statutory principles, they may have well avoided a costly lawsuit that went all the way to the Court of Appeal.
If you have any questions about terminations, or about employment law, human rights, workplace investigations, human resources, or immigration law, please contact Bridge Legal & HR Solutions at 647-794-5442 or at admin@bridgelegalhr.ca, we are here to bridge the gaps for you.
