Friday 22 October 2021

Ontario’s Employers Have Just Cause to be Frustrated

This is an opinion piece and, yes, a bit of a rant.

Since the Ontario Court of Appeal’s decision in Waksdale v. Swegon North America Inc., 2020 ONCA 391, about which I blogged in my post Employment Law Isn’t Real, the Ontario Superior Court of Justice has taken an interest in ensuring drafters of employment contracts appreciate that there is fundamental difference between “just cause” at common law and “wilful misconduct” in Ontario Regulation 288/01, made pursuant to Ontario’s Employment Standards Act, 2000.

For example, in the recent decision in Steve Livshin, 2021 ONSC 6796 (CanLII), (released October 14, 2021,) Justice William Black writes,

“Just cause” is … as held in various cases, ... understood as a common law notion connoting a basis, from an employee’s performance or conduct, justifying termination of the employee’s employment without the need for advance notice.

As set out in various cases, “just cause” can be contrasted with the requirements of the ESA. Pursuant to O. Reg. 288/01, s. 2(1), para. 3, an employer can only withhold termination pay, severance pay and the continuation of relevant benefits in response to workplace conduct that amounts to “wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer”.

Justice is Black is absolutely correct, “just cause” is the phrase understood as a common law notion connoting a basis justifying termination of the employee’s employment without the need for advance notice. And the reason that understanding exists is because that is exactly how the court almost invariably uses the phrase. In fact, I would submit, the court has only recently started parsing the wording between “just cause” and “wilful misconduct” for the purpose of striking down employment agreements; not to provide employees who might have otherwise been entitled to statutory termination pay a greater benefit.

And that is really my problem. In its reasons for decision, the court almost invariably uses the phrase “just cause” or “cause” to define a situation in which the employer is excused from providing a dismissed employee with notice of termination of employment or payment in lieu. It almost never uses (until recently) the phrase “wilful misconduct.”

If the court is going to be particular about how parties draft their employment agreements, it could at least use the language expected in its own writing.

To begin, I agree with everything the court has said about the need for employers to draft agreements that comply with Ontario’s employment standards legislation. I take no issue with that requirement and same reflects longstanding Supreme Court authority, namely Machtinger.

But here’s the problem, the words “wilful misconfuct” don’t even appear in the Employment Standards Act, they’re buried in the regulations. Technically, cabinet could amend the regulation tomorrow and change the wording on us either making Ontario’s employer’s lives easier, by changing the words “wilful misconduct” to “just cause”, or way more challenging by changing the words to something no employer presently has in its employment agreement, unless by fluke.

Worse, I would submit, is the fact that almost invariably when an employee claims wrongful dismissal in a “cause” case, the defence provided by the employer is that it had “cause” to terminate the employment relationship. Rarely, and I mean rarely, does the court parse that wording to determine whether the employee was dismissed “for cause” but is, notwithstanding such finding, entitled to the receipt of statutory termination pay. The 2011 case of Oosterbosch v. FAG Aerospace Inc. , 2011 ONSC 1538 (CanLII) is one of those rare cases, and the only one I can name where the court went to the trouble of finding “cause”, but then went on to award the plaintiff his statutory termination pay because his conduct did not rise to wilful misconduct.

I submit that Oosterbosch was correctly decided. Moreover, I submit that where employees are terminated without notice or pay in lieu and elect to sue for wrongful dismissal, it is incumbent on the court, if it finds that the employer had “just cause” to terminate the employee, to then take the analysis one step further and resolve whether the employee was also guilty of “wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.”

As explained by Justice Jessica Kimmel in her reasons for decision in Attzs v. Saputo Dairy Products Canada G.P., 2020 ONSC 5512 (CanLII):

The level of dishonesty that would have to be established to disentitle [the employee] to his Employment Standards Act, 2000 notice is even a higher threshold than of “subjective intent, almost akin to a special intent in criminal law.” (Plester v. Polyone Canada Inc., 2011 ONSC 6068, at para. 56, aff’d 2013 ONCA 47; see also Oosterbosch v. FAB Aerospace Inc., 2011 ONSC 1538, at para. 19).

I am just not seeing that in “cause” cases, although maybe I am missing it.

I should also clarify, I have zero doubt that Ontario’s judiciary takes its job very, very seriously. I also have no doubt that the decision of whether an employee should suffer the “capital punishment” of employment law is a decision not easily taken by most judges, in the majority of cases.

But, as above, if the court is going to be critical of how drafters of contracts elect to use words in its agreements, then it would be appreciated if the court would be equally judicious in its own wording and approach.

Finally, to those members of the judiciary who read this blog, I, of course, do not mean you.

About Me

Sean P. Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer practicing with Kelly Santini LLP. For 2.5 years he was in-house legal counsel providing employment law advice to one of Canada’s largest corporations. He has also been a part-time professor at Algonquin College teaching Trial Advocacy for Paralegals and Small Claims Court Practice.

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As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation. It is always prudent to seek professional legal advice before making any decisions with respect to your own case.

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