Fire Fairly: How Doing It Wrong Can Cost A Pretty Penny (to the tune of $50k)
Believe it or not, there is both a right way, and a wrong way, to fire somebody.
The right way does not mean that terminations are easy. In fact, they can be one of the hardest parts of any manager’s role. While firing a troublesome employee may make things easier on the business, any possible relief is still tempered by the fact that there is a person on the other end who’s likely just had the proverbial rug pulled out from under them.
I’ve spoken in previous posts about the legal definition of ‘just cause.’ Cause (as it’s often shortened to) does not just mean that an employer had any reason to fire an employee, and so they did so. Just cause, according to the law, is a high threshold reserved for exceptionally bad employee conduct (such as theft), which if proven may take the employer off the hook for paying out reasonable notice.
There are, of course, a few catches here. First, a 'cause case' is incredibly difficult to prove. While most employers may believe that they're terminating an employee for cause, their legal team may advise early on that the termination was not in fact for ‘just cause’ under the legal standard, and any legal claim of just cause may be abandoned quickly, which is not uncommon. Also, there is case law that says that unless the employee’s conduct was completely over the top, then the employer still owes them their legal minimum standards of termination pay and possibly severance pay under the Employment Standards Act, 2000 (“ESA”).
So, what happens when you allege just cause even if there wasn’t any, bungle a workplace investigation, and then deny any legally-owing payments causing a former employee to have to sell his house? Well, let’s take a look at an example…
In the recent case of Morison v. Ergo-Industrial Seating Systems Inc., 2016 ONSC 6725, Tom Morison was a 58-year-old furniture salesman who had worked for the company for give or take 8 years (there was debate over whether he was an independent contractor for the first two). He was terminated in the Fall of 2012 via phone call, where he was offered 5 months’ notice, including one month of working notice (continuing to work for the employer in order to earn his notice pay). That’s where the trouble started.
Mr. Morison was awarded at trial reasonable notice for 12 months, which after deductions worked out to just under $100,000. Morison had also made a claim for aggravated damages, which are damages that stem from the actual manner of dismissal. In other words, there may be additional damages available for the hurt that was incurred because of the way someone was fired, but the Court held that was not the case here. The Court reasoned, “Here, the evidence of mental distress caused by the manner of dismissal cannot be dissociated from the usual anguish and stress resulting from having one’s employment terminated.”
Yet it’s Mr. Morison’s claim for punitive damages where things take an interesting turn. Punitive damages are exactly that – they’re intended to punish the employer for conduct that “is reprehensible, “malicious, oppressive and high-handed”, and “a marked departure from ordinary standards of decent behaviour.” It has to be a punishment, and it has to be for what the law calls ‘an independently actionable wrong,’ or something above and beyond just a wrongful termination. In this case, the Employer’s breach of their duty of good faith fit that bill.
In this particular case, the Employer did a whole host of things wrong. The telephone call terminating the employee did not comply with the ESA’s requirement to provide written notice. The employer refused to pay Mr. Morison his termination pay owing under the ESA until months after he was terminated, which put Mr. Morison in a position of financial hardship that required dipping into his savings and being forced to sell his house. Not only that, but the Employer knew he was struggling, and still did not oblige.
The Court found that the Employer was only arguing that they had cause to fire Mr. Morison as a course of strategy, in order to avoid making these payments. While they accused Mr. Morison of poor performance in his conduct, there was no evidence that there were any performance issues, nor that the Employer had investigated any perceived issues. Furthermore, the Employer withheld issuing Mr. Morison his Record of Employment (ROE) for two months after he was terminated, putting him in an even worse position. For all of these wrongdoings, Mr. Morison was awarded an additional $50,000 in punitive damages.
There are lessons from this case for both employers and employees. Terminations can be emotional for employers as well, whether it’s a beloved long-service employee who has committed a serious error, or a poor-performing employee who has put a business under great strain, it’s never an easy process for either side. That said, there are ways that an employer can get it right.
The most important, of course, is to consult an employment lawyer. An employment lawyer can help review the original employment contract to see what the employee had agreed to upon termination, and assess if that contract would survive a legal challenge. Additionally, employment lawyers are trained to help with termination planning, from drafting the letters to the employees to making sure any offer issued is fair, reasonable, and covers the employer’s legal requirements. A lawyer can also offer advice on logistics, such as how and when to deliver a termination letter, who should be present in the meeting, and the proper steps to take to send an employee home safely. Finally, as the case above demonstrates, an employment lawyer can help the employer determine if there really is ‘just cause’ to terminate the employee, or if terminating them without cause is the smarter way to go in the circumstances.
For employees, this case is a great lesson in not accepting poor treatment at face value. While most employees (those covered under the ESA) can be terminated at any time for any reason, the employer has to take certain steps in order for the termination to be lawful. Furthermore, Courts are not afraid to punish employers for poor behaviour, especially when it injures an employee’s chance of success going forward into a new position. An employment lawyer can help employees assess the fairness of a termination offer, and whether an employer is offering everything the employee should be entitled to under the circumstances. If not, an employment lawyer can help the employee pursue the appropriate legal remedy.
The bottom line is that employers may have the right to terminate employees, but they have to do it with some forethought, acting fairly and equitably in order to avoid serious legal consequences.