Written on behalf of Peter McSherry

When a person has been dismissed from their employment, one of the first legal questions that arises is whether the termination was justifiable. In the event that the termination of employment was justified, then the terminated employee will not be unable to recover damages. If the termination was unjustified, however, then damages may be warranted. So, how do courts determine whether a termination is justified?

A general starting point involves reviewing the employment contract between the parties, if such a contract exists. Then, there must be a review of the “termination” provisions in order to determine how the parties defined “just cause termination” versus “no cause termination”. In circumstances where there is no employment contract, however, the parties will be guided by the common law to determine whether the behaviour that got the employee fired justified the termination.

Company Terminates Long-Term Employee for Dishonesty

In the recent Ontario Superior Court of Justice case of Lagala v Patene Building Supplies Ltd., the plaintiff employee, “SL”, had been the Health, Safety and Training Manager for the defendant (“Pantene”), for more than 13 years when Patene terminated her employment for cause on December 18, 2019. Patene based its decision to terminate SL’s employment on the fact that she had initiated a Workplace Safety and Insurance Board (“WSIB”) claim in respect of a fall in her employer’s parking lot at their Brantford facility in March 2019, but had failed to notify her employers of the WSIB claim until October 2019. The evidence demonstrated that SL had only advised her employer about the WSIB claim when sought her supervisor’s sign-off on her WSIB claim form, in accordance with WSIB requirements.

When Patene discovered that SL had been involved in a workplace accident that had given rise to a WSIB claim, the President of the company immediately undertook an investigation of the situation. His investigation culminated in the immediate termination of SL’s employment for the cause of “dishonesty, serious conflict of interest, breach of your fiduciary obligations and potentially fraudulent conduct”. In particular, the fact that SL had been the head of the health and safety department of her employer was a major contributing factor to the decision to terminate her employment. This was based on company policy directing that, in the event of an accident or injury on any company property, the person involved was required to immediately advise their direct supervisor. Given SL’s lapse in this respect, Patene felt that her firing was appropriate, warranted and justified.

On the other hand, SL contended that the only reason she had not reported the accident to the proper people at the proper time was that she was embarrassed, as the Health, Safety and Training Manager, to have been involved in such an accident.

Employee, Terminated for Dishonesty, Sues for Wrongful Termination

Following SL’s termination, she commenced a claim in which she sought damages for the wrongful termination of her employment. In her claim, she alleged that Patene had not had sufficient cause to justify her immediate termination, as a result of which, she argued, she was entitled to reasonable notice damages.

Does Employee Dishonesty Justify Termination of Employment?

While employee dishonesty may, in some circumstances, justify termination of employment, a court must consider the entire context within which the conduct occurred before it can draw any conclusions. Moreover, where misconduct of any kind is cited as the entire or a contributing reason for termination of employment, the court must engage in the following analysis:

1. Determine the nature and extent of the misconduct;
2. Consider the surrounding circumstances; and
3. Assess whether termination is a proportional response to the misconduct.

Application of the Legal Principles to the Facts of this Case

In this case, the Court reviewed the evidence with respect to the events of the day on which SL’s accidently purportedly occurred, and noted that SL had repeatedly lied about the incident. While SL now claimed that she had been too embarrassed to file a report with respect to the incident, she had also testified that she had immediately reported the slip and fall to the manager of the Brampton branch where the fall occurred. The Court determined that SL lied about having told anything to that manager and lied again when she stated she had been too embarrassed to file a report. Further, the Court was satisfied that SL’s failure to report the accident in any way until after the approval of her WSIB claim constituted a breach of the employer’s policies on accident reporting – a policy which SL herself was in charge of enforcing.

The fact that SL had delayed reporting her accident had also caused the employer to breach section 21(1) of the Workplace Safety and Insurance Act, which dictates that an employer must notify the WSIB of any accident at work within 3 days of the accident’s occurrence. As SL had failed to make a timely report to Patene, Patene, in turn, had failed to make a timely report to the WSIB, in violation of their policy and the associated legislation. The fact that SL herself was in charge of ensuring that Patene complied with all WSIB policies meant that she had placed herself in a conflict-of-interest position in that, as the victim of an accident, she would have a personal interest in obtaining benefits from the claim, while her employer would require a full investigation into the claim itself, “particularly given the inconsistencies in [SL’s] reporting”. Despite the Court’s finding in this respect, SL repeatedly denied the existence of any such conflict. The Court found that SL’s “failure to recognize and avoid this conflict is, in and of itself, a very significant factor in determining whether the Defendant’s decision to terminate the Plaintiff’s employment was justified”.

Employee’s Repeated Dishonesty Found to Justify Termination

During the President’s investigation into SL’s incident, he had interviewed SL and requested that she provide him with the entirety of her WSIB file during the interview. The Court found that, while SL had furnished her boss with her original application form and a Functional Abilities Form, she had neglected to provide him with the decision letter she had been provided by WSIB. SL failed to provide any reasonable explanation for this failure, which led the Court to find that “the only conclusion that I can reasonably draw from her failure to provide this letter… was that she was trying to conceal the letter from him. This failure to be truthful and accurate with her employer when asked to discuss the accident is part of the context I must consider. It is also an indication that the Plaintiff was engaged in a pattern of conduct, rather than merely a single moment when she demonstrated a lack of judgment”.

The court was satisfied that, “[w]hile the Plaintiff’s misconduct flows from one incident, it is not a one-off lapse in judgment.” Rather, SL had “engaged in a continuing pattern” of dishonesty such that her “misconduct, and her dishonesty when confronted with that misconduct, irretrievably destroyed her ability to carry out her employment responsibilities.” As such, Patene had had just cause to terminate SL’s employment and her lawsuit for wrongful termination was dismissed.

Contact Guelph Employment Lawyer Peter A. McSherry for Practical Legal Advice on Employment Terminations

If you have recently been wrongfully or constructively dismissed from your employment and are wondering whether you have been treated fairly, or whether your employment contract is valid, the law offices of Peter A McSherry can help. We have extensive experience helping clients address issues involving severance packages and contract interpretation, and ensure that our clients are positioned for the best possible outcome. Contact us today online or by telephone at 519-821-5465 to arrange a confidential consultation.