THIS MANNER OF ATTEMPTING TO REDUCE THE (OFTEN
HIGH) FINANCIAL COST OF TERMINATIONS HAS, HOWEVER,
BEEN INCREASINGLY BACKFIRING FOR THOSE EMPLOYERS.
THE ONSC’S DECISION IN ALTUS
In the view of the ONSC, the Company
decided to end the employment relationship
because Gordon triggered the
arbitration clause in the purchase and
sale agreement, and therefore “conjured
up” allegations of misconduct by Gordon
to support an untenable position of just
cause. The ONSC held that Gordon had
in fact been dismissed without cause and
was therefore entitled to a payment of
slightly less than one year’s salary in accordance
with the termination clause in
the employment contract.
In addition to the contractual termination
payment, the ONSC held that
Gordon was entitled to extraordinary
damages in the amount of $100,000
to sanction the Company for its “terrible
conduct.” The ONSC held that this
was warranted because the Company got
“mean and cheap” in coming up with an
“unfounded allegation to fire” Gordon.
LESSONS FOR EMPLOYERS
The ONSC’s decision in Altus contains
four key lessons for employers to follow in
order to avoid similar extraordinary damages
awards:
1. Implement a progressive discipline
policy.
2. Apply the progressive discipline policy
when it is warranted.
3. Do not allege just cause without a clear
and viable basis for doing so.
4. Include enforceable termination clauses
in employment contracts that reduce
the financial obligations to employees
upon termination without cause.
The Company in Altus would have benefitted
from these lessons. The Company
had an employee handbook that contained
a progressive discipline policy. However,
the Company did not use the policy in
legal words
Hire a Canadian Registered Safety Professional
(CRSP)®
to protect your most important resources
Increasing health and safety hazards in the workplace, mounting
occupational incidents means that your organization cannot
afford anything less than a Canadian Registered Safety
Professional (CRSP) ®.
A CRSP ® offers in-depth knowledge of OHS principles and
practices and applies this knowledge to develop systems in order
to achieve optimum control over hazards
in your workplace.
Visit www.bcrsp.ca
to learn more or
to advertise to hire a CRSP ®.
Board of
Canadian
Registered
Safety
Professionals
Gordon’s case. As the ONSC suggested in
its decision, if the Company had progressively
disciplined Gordon, it may not have
been liable for punitive damages.
Employers should always follow their
progressive discipline policies and provide
written warnings and any escalation of
discipline along with instructions for improvement
to employees who misbehave.
Not only does this approach maximize the
chances that the employee will improve,
it also creates a written record of misconduct
that the employer can rely on in the
event that it later sees fit to terminate for
just cause.
The threshold for just cause is very high
in Canada. Employers should only terminate
for just cause when a single instance
of employee misconduct is sufficiently egregious
or after progressive discipline for less
severe but repeated misconduct. An employer
does not, however, need to be certain
that it has just cause to avoid extraordinary
damages awards; the employer must simply
be able to reasonably justify a just cause
position.
If an employer seeks to dismiss an
employee whose contract includes a termination
clause, the employer may terminate
on a without cause basis and pay out only
the contractual termination entitlement,
which can be as low as the minimum
standards legislated by the Employment
Standards Act, 2000. When in doubt regarding
whether just cause exists, payment
of a contractual termination entitlement
carries much less risk than termination for
cause, as it greatly reduces the risk of costly
litigation and a possible extraordinary damages
award. n
Joel Smith is a lawyer with Williams HR
Law.
HRPATODAY.CA ❚ JANUARY 2016 ❚ 17
