Friday, April 1, 2011

Different Standards of Misconduct Justifying Termination

Quite often, even those well-versed in employment law will speak of the standard of misconduct justifying termination as if it is one, uniform standard. It is easy to blur the distinction between "just cause" at common law (which would remove an entitlement to reasonable notice), misconduct justifying termination without notice under the Employment Standards Act, 2000, and misconduct which would render a person ineligible for EI benefits. The first distinction is between "just cause" and ESA misconduct - "wilful misconduct, disobedience or wilful neglect of duty".

Traditionally, the question on a wrongful dismissal action (where liability is in dispute) is whether or not there is "just cause", and the analysis ends there. But the Ontario Labour Relations Board has developed a line of jurisprudence suggesting that there is a difference in the two tests:
In addition to proving that the misconduct is serious, the employer must demonstrate, and this is the aspect of the standard which distinguishes it from ‘just cause’, that the conduct complained of is ‘wilful’.
Similarly, a recent case from the Superior Court of Justice finds the same distinction: In Oosterbosch v. FAG Aerospace Inc., Justice Haines held that there was just cause, but the threshold for ESA misconduct was not met, so the employee was awarded statutory notice and severance:
[19] A person is reckless when he engages in conduct without regard for the outcome or consequences. Notwithstanding the number of infractions recorded I do not see that the conduct of the plaintiff rises to that level. He was undoubtedly careless and the persistence of that carelessness justified his dismissal. I would not, however, characterize his offending behaviour as “wilful misconduct, disobedience or wilful neglect of duty” that would disentitle him to receipt of termination and severance payments under the provisions of the Employment Standards Act, 2000.
I'm watching to see if there is an appeal.

Then there is the Employment Insurance Act, which disqualifies claimants who lost employment "because of their misconduct". Does this line up with common law "just cause"? The answer to that would appear to be No. In 1999, the Ontario Court of Appeal released their decision in Minott v. O'Shanter, a wrongful dismissal case.

By way of background, the employee had applied for EI benefits and been refused on the basis that his termination resulted from misconduct. He appealed the decision to the Board of Referees and the employer did not participate in the process, but he lost the appeal anyways. The employer then argued that the employee was estopped (barred) from re-litigating the issue in a wrongful dismissal action.

The Court of Appeal held that there were two central problems with this argument. First, because the employer didn't participate in the process before the Board of Referees, the issue hadn't been decided as between the employer and the employee. Secondly, because the Board of Referees hadn't made specific evidentiary findings, it was difficult to say that the issue being argued was the same.

The Court of Appeal also raised concerns in that the EI adjudication process is much more summary with less money at stake than in a Court proceeding, and there seemed to be a fairness concern if a finding in a quick low-stakes EI proceedings would later bind the parties in a longer higher-stakes proceeding with greater procedural protections.

Contrast this to Korenberg v. Global Wood Concepts, a 2005 judgment by Justice Harvison Young (former Queen's Law dean): In this case, the employer had appealed the EI Umpire's decision to the Board of Referees and lost, with the Board of Referees concluding that there was no misconduct. The employee then sued in wrongful dismissal, and the employer tried to allege just cause. The Court distinguished Minott on the basis that the employer was arguing the same misconduct that the Board of Referees found hadn't occurred. The employer had participated in the EI process in this instance, and thus was simply trying to relitigate the issue of the misconduct, and was estopped from doing so.


This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

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