Tuesday, March 11, 2014

The Condonation Defence: Firing the Condoner

There's an ongoing wrongful dismissal action against the Bank of Nova Scotia by a former Mortgage Development Manager, Mr. Payzant.

I've had some dealings with banks.  The impression among bank employees, at least, is that dismissals tend to result only from fraud or theft of some sort - i.e. if you get fired from a bank, those who know you were fired will presume that you must have been padding your own pockets.

In my own experience, this is not necessarily true; however, most of the dismissals I have seen from major banks have involved allegations of just cause.  Mr. Payzant's case is no different:  His dismissal resulted from a complaint to the Office of the President dealing some some of Payzant's mortgage files.

The nature of the irregularities isn't clear to me on the reported decisions, but it's probably not the case that there's any pocket-lining going on here, given that it appears that Mr. Payzant is making a 'condonation' argument.

What is Condonation?

Condonation is a fancy way of saying that the employer had tolerated and accepted the conduct with which it now takes issue.

When misconduct comes to the attention of an employer, the employer must decide in a timely fashion how to address it.  If the employer doesn't take any action to show the employee that the conduct is unacceptable (i.e. discipline), then the employer is taken to have 'condoned' the behaviour.

For example, suppose you're an employer, and you discover that an employee is engaging in serious misconduct.  One or two instances of it might justify termination, but you can't afford to lose the employee right now, so you sit on it, and don't raise the issue with him for a prolonged period.  This has two effects:  Firstly, and most simply, you can't just bring the issue out of the woodwork a year later when work has slowed down and you don't need him anymore.  Secondly, and perhaps more shockingly, you have tacitly sent a message to the employee that this conduct is acceptable, and you will be unable to discipline him even for subsequent similar actions, without first clarifying expectations.

In this way, condonation basically acts as a justification for actions which would ordinarily be considered serious misconduct.  "I've been doing this for years, and the employer never had a problem with it before.  How can they fire me for it now?"

The Payzant Case

There's a recent decision from the Superior Court of Justice on the Payzant case, with Mr. Payzant wanting, among other things, access to the dismissal file for his former supervisor.

You see, Mr. Payzant was fired in May 2009.  He commenced litigation, and eventually proceeded with examinations for discovery of the supervisor on June 28, 2011, and again on May 10, 2012.

Three weeks later, according to Justice Gauthier's decision, Scotiabank dismissed the supervisor.

Payzant argues that the examination for discovery made it clear that the supervisor had known about and condoned the conduct now alleged to constitute just cause, and infers that the Bank fired her because of it.

It's a logical narrative:  Senior management at the bank finds out that Payzant is doing something they consider inappropriate, so they fire him.  They later find out that Payzant's manager was 'in on it', so they fire her too.  If that's what happened, then the dismissal file may indeed support Payzant's contention that his conduct was condoned; therefore the court ordered disclosure of the file.

The problem, for the Bank, is 'chain of command':  To Mr. Payzant, his direct supervisor represented management of the bank.  And therefore, if she was 'in on it', then, generally speaking, that means that Mr. Payzant is justified in saying "My employer allowed me to do this."  (The exception would arise in a case where the employee and the supervisor were conspiring against the employer's interests.)

In a way, it's a 'big fish' analysis - you're better off being able to get rid of the supervisors and managers who aren't doing their jobs, rather than their subordinates who aren't being properly managed.  (As well, you'll typically find more benefit to proving just cause of a senior employee as opposed to a junior one.)

However, the reality is that there are a lot of well-meaning supervisors and managers, for a lot of institutional employers, who simply don't know how to manage people - who avoid the tough conversations, who want to keep a friendly relationship with subordinates, etc.  The natural inclination among HR and management is to regard these 'soft touch' managers as being a lesser evil, whereas the real problem is the trouble employees they're failing to discipline.  I might disagree with that analysis, myself.

I have a friend working in HR for a major institutional employer, who once told me about a 'problem employee' who, among other things, ran a small internet sales business, and attended to the business while at work, on the employer's time and the employer's equipment, including trying to sell to co-workers in the office.  Not only did the employee's manager fail to address the issue, but the manager actually bought from the employee while at work.  That's a big problem.  Of course, running a side business in your own time will generally be quite acceptable, and a sales pitch in the lunchroom might well be acceptable, too, but there are boundaries.  The employee in question failed to recognize the boundaries, and with early intervention and guidance might well have been brought to respect these boundaries.  Instead, the manager ignored and participated in the violation of appropriate boundaries, and the misconduct grew in scope, creating a larger disruption in the workplace, to the point that the employer eventually decided to be rid of this employee - not for cause, naturally, because of the condonation by the manager.

So, because the manager failed to manage, the employee's out of a job, the employer has to provide pay in lieu of notice, there are recruitment and training expenses to incur, and the rest of the department is shorthanded until a replacement is found and brought up to speed.  Everybody loses.

I've said this before:  Managers don't have to be mean.  Bullying isn't the same as managing.  But to properly manage employees, one has to be willing to have the hard conversations, and maintain a professional demeanour.  It's a tough balance to strike.


Update, March 26, 2014:  I have been contacted by in-house counsel for Scotiabank, and advised that, notwithstanding the court's decision indicating that the supervisor in question was dismissed, this is "not the case" and that, rather, she "resigned from employment with the Bank for reasons unrelated to Mr. Payzant's action against the Bank."

I'm not in a position to assess the accuracy of the competing positions between the judge's comments and those of Scotiabank.  In general, I take a judge's statements at face value, but in this case the factual question of whether or not she was dismissed doesn't appear to have been squarely contested.  The plaintiff alleged that she was dismissed, and it looks like Scotiabank's position at the hearing was to broadly state that the end of her employment is inherently irrelevant, without providing any details of how they came to part ways.  Which is kind of understandable, since the whole motion was about whether or not Scotiabank should be required to produce details of the termination of the employment relationship in any event.


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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