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5. Wrongful Dismissal and Just Cause

(a) Overview

. General

In contrast to statutory employment law [ie. the Employment Standards Act (ESA) and others], employment "common law" is relatively (and refreshingly) simple and straightforward - and is almost entirely contained within the civil court action of "wrongful dismissal".

In this "overview" discussion I set out some basic law and themes that I will examine in more detail below. The goal of this is to put the reader in an informed frame of mind about any potential wrongful dismissal action that they may be considering - an assessment which many have to make in a context fraught with the immediate anger, shock and financial limitation that accompanies a job termination.

. Reinstatement

The very first matter to address is the issue of any "right" to the job that has just been lost, or "reinstatement". It has long been the common law view that the courts will not consider such a remedy. This position grows primarily from related law in the field of injunctions, which has as a principle that it will not normally enforce contracts of personal service as to do so is akin to forcing association which is undesired by at least one party. The courts - as they so often do with so many legal claims - prefer to reduce the matter to one of money.

That said, there are at least three statutory areas where reinstatement is either expressly or implicitly available.

The first of these is under the ESA, as an administrative remedy for a narrow class of "reprisal-type" contraventions by the employer. These include such employer behaviour as retaliation by an employer for employee efforts to enforce their rights, as well as some specific ESA contraventions which the law views as particularly reprehensible: abuse of statutory leave rights, lie detector protections, and retail business holiday rules. Reprisal-type remedies are discussed more fully in Ch.9, s.2.

The second is under the Ontario Human Right Code (HRC), which at s.45.2 reads:
On an application under section 34, the Tribunal may make one or more of the following orders if the Tribunal determines that a party to the application has infringed a right under Part I of another party to the application:


3. An order directing any party to the application to do anything that, in the opinion of the Tribunal, the party ought to do to promote compliance with this Act.
Historically, the administration of HRC law in Ontario has long been plagued with such profound institutional lethargy and avoidance, such that robust HRC remedies have seen little application.

The third is in situations governed by labour relations legislation - ie. unionzied workplaces, governed by specific negotiated collective agreements. It is beyond the scope of this Guide to explore labour relations law.

In all cases - as a practical matter - reinstatement is only likely to be considered in situations of large-scale industrial or governmental employment, where size of operations renders interpersonal conflicts avoidable.

. Wrongful Dismissal

The main principles of a wrongful dismissal action are structurally very similar to the ESA's termination notice and pay-in-lieu duties covered earlier in this chapter [(s.2), above] - which is no surprise as those ESA "minimum standards" themselves grew from the common law model. Both systems of law are premised on the employee right to "reasonable notice" before a termination occurs. Failing receipt of reasonable prior notice, the employee's (now) wrongful dismissal damages claim takes the form of "pay-in-lieu" payments for the period that notice was short or absent.

The main difference between ESA and common law notice entitlements is that the latter are almost always longer.

. Just Cause

Both systems of law admit of the employer defence of "just cause" to a wrongful dismissal claim, and the two standards of "just cause" are very similar - if not practically identical. The allegation of an employer that they in fact have "just cause" to dismiss an employee is the dominant litigation issue in employment cases.

The fact situations that can constitute "just cause" are many and defy precise elaboration. Employment law textbooks are often litanies of hundreds of case summaries categorized by fact situations and notice periods awarded.

I will not repeat that tedious task here but will try to characterize the "meta-issues" that the court cases embody, particularly the important impact of changing social attitudes on the historically class-based relationship of employer and employee.

. Res Judicata

One often-overlooked consequence of the duality (actually, small multitude) of legal regimes that can impact on an employment termination is that of 'res judicata', also known as "issue estoppel" or "cause-of-action estoppel". These legal principles hold that an adjudication of a legal issue (or indeed the entire legal dispute) between parties, once litigated amongst themselves, is - subject to any available appeal or review rights - final. It is limited by the stipulation that it binds only the parties who were parties to the first adjudication.

Sounds simple and efficient enough. All parties have to do is 'fight it out' at the first available forum and then they have guidance on how to settle the whole matter between them.

The value of such a principle is high, especially for the now impoverished and freshly-terminated employee. Keep in mind that termination and just cause issues can arise in any (and all for that matter) of the following legal contexts, one or more of which is bound to be invoked in any given fact situation:
  • common law "wrongful dismissal" lawsuits;
  • ESA severance and "pay-in-lieu" termination claims;
  • employment insurance (EI) eligibility;
  • labour relations (union) grievance applications;
  • human rights employment discrimination claims;
  • workfare duty default (Ontario Works);
  • failure to realize available assets as a grounds of disentitlement (Ontario Works and ODSP);
  • private short-term and/or long-term disability (STD/LTD) programs.
Unfortunately, the courts have not seen fit to impose the res judicata principle robustly, finding that discrepancies in wording, purpose and function of the just cause determinations within the various areas justify having the issue re-litigated twice over and even more.

For instance, in assessing whether an unemployment insurance "misconduct" standard which applied to denied UI benefits) could be equated with that of common law "just cause", the court in Minott v O'Shanter Developments 168 DLR (4th) 270 (Ont CA, 1999) held that it did not, and so - in part - refused to apply res judicata to bar the employee's wrongful dismissal lawsuit. The UI court also pointed to the non-participation of the employer in the UI appeal process as a failure of the 'same parties' requirement of res judicata.

That said, clear differences do exist amongst the various "just cause" standards. For example, this is the ESA "definition" of just cause [Reg 288/01, .2]:
3. An employee who has been guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.
This standard is plainly harsher against the employer than the common law one (explained below), as it demands "wilfulness" (conscious intent), while the common law can be satisfied by simple, unintentional incompetence.

So the problem may lie at the legislative level as well. But it's still a problem. The result has been untold expense, confusion, uncertainty and the general impeding of accessible and affordable justice for all concered. Some of the tactical conundrums that this situation can give rise to are discussed in Ch.2: "Advocacy". See also my further comments in the Small Claims Court (Ontario) Guide: Ch.3: Jurisdiction see s.8 especially regarding the Rasanen case).

. Collateral Benefit Deductions

A theme which, like res judicata, also has its roots in the multitude of legal forums and programs which govern employment termination, is that of the deduction of "collateral benefits" from the ultimate wrongful dismissal damages award, and vice versa. This subject, also much overlooked in the textbooks, involves the issue of third party insurance and public benefit schemes which provide various forms of wage loss indemnification after a termination, both on a "fault" and "no-fault" basis. Unsurprisingly - success in achieving compensation from two (or more) different forums usually precipitates demands from somebody for reimbursement, often in the form of an 'overpayment' assessment.

While no doubt grateful for the existence of such schemes (most of which they pay for, directly or indirectly), the net effect of their existence for the wrongful dismissal plaintiff employee is that the potential for reimbusement or set-off must be factored into litigation calculations. Practically - they (and their legal counsel) are often acting as unpaid agents of subrogation for these (now) 'creditor' schemes.
Subrogation is the right of an insurer - once having paid out a claim for loss to the insured - to sue the one who caused the loss for reimbursement. It amounts essentially to the insurer taking an assignment of the right of action. Many of collateral benefit programs have direct contractual or statutory subrogation rights to pursue the wrongdoing employer directly. However these are rarely pursued by the benefits-provider directly, as they prefer to place the burden for this on the now financially-'challenged' employee.
These situations can arise in the wrongful dismissal context with the several insurance and compensation schemes that protect against income stream loss on termination. I list some of these here, noting that most of them are already listed above in relation to the res judicata problem. They are further discussed in (c), below ["Damage Reductions"]:
  • Employment Insurance (EI);
  • Ontario Works (welfare) and Ontario Disability Support Program (ODSP) [both require recipients to realize available resources (which in the case of welfare does include maintaining available employment, less so with ODSP) as a ground of eligibility];
  • private short-term and/or long-term disability (STD/LTD) programs
. Multiple Forums and Abuse of Process

A serious problem that has in past plagued the efficient adjudication of employee termination claims, particularly where they involve allegations of human rights violations, is that of 'abuse of process'. In past, this doctrine has commonly been advanced as an employer defence both when employees have attempted to assert human rights allegations within civil wrongful dismissal actions (where the employer would argue that the court had no jurisdiction over the human rights aspects of the claim), and also (ironically) when they have attempted to isolate the human rights issues into separate administrative proceedings in a parallel civil wrongful dismissal action (where the employer would argue for a stay of at least one of the proceedings). The employer goal with such litigation tactics was to get the employee to abandon either the wrongful dismissal aspect of the case, or the human rights aspect of the case, either of which would work to defeat a fair hearing of the full range of issues - which by their nature often resisted having a 'clear, bright line' drawn between them.

The roots of this problem were twofold. The first lay in unfortunate doctrine set down by the Supreme Court of Canada in the 1978 case of Bhadauria v Seneca College, which held that the (then new) Human Rights Commission and Boards of Inquiry system was the sole venue in which human rights issues could be decided, and that no civil tort of discrimination should be allowed to advance in the civil courts. The second root of this problem was drawn from principles of civil litigation which (otherwise quite logically) tried to avoid a 'multiplicity of proceedings' [Courts of Justice Act, s.138].

Thankfully, at least with respect to the human rights aspect of the problem, amendments to the Human Rights Code in 2008 have largely solved this problem, as is discussed at this link:

Human Rights Law (Ontario), Ch.17, s.6: The Civil Courts and the Code

The similar problem of conflict between advancing ESA pay-in-lieu termination claims and wrongful dismissal claims simultaneously, has been addressed expressly by provisions of the ESA [ss.97,98]: see Ch.2, s.2: "Advocacy: Choosing Between Enforcement Procedures".

(b) Damages

. Overview

As noted above, basic damages for wrongful dismissal are the wages that would have normally been earned in the time that any termination notice period was short or absent. Thus if the monthly regular rate was $4,000, and notice was short by eight months, the starting damage figure is $32,000 (8 x $4,000).

To this base figure we can potentially add further amounts for such things as "aggravated" and "punitive" damages (considered below).

And - as is discussed in (c) below, from that figure we can deduct the various items noted above in (a) ["Collateral Benefit Deductions"] - in particular any termination or severance payments already made [employers often offer the ESA termination and severance entitlements in full (and signed) 'settlement' of all termination-related claims]. Further, as a practical matter for the plaintiff employee, we can also add more mundane reductions such as mitigation (the value of substitute earnings over the period of notice), income tax, and legal fees and disbursements.

. Length of Notice Period: the Bardal Factors

As noted above, while the ESA provides for "minimum standard" notice periods prior to termination (except of course in 'just cause' cases), the "common law" (judge-made law in lawsuits) generally requires longer notice periods.

As well, while the ESA [see s.2(c) "Length of Notice", above] establishes firm notice periods for its purposes, the counterpart common law determination is not as certain or predictable. There are hundreds of Ontario cases on this issue, as "wrongful dismissal" (typically involving allegations by the employer of "just cause") lawsuits are amongst the most commonly launched in Ontario courts.

For the purposes of this Employment Law (Ontario) Guide I will only cite the main factors used in determining the appropriate prior notice period under the common law. These emanate primarily from the case of Bardal v Globe and Mail [1960] OJ #149 (QL) (Ont HC), and operate to either increase or decrease the length of the notice period. While some courts are at pains to state that there is no initial estimation to which these other Bardal factors are applied to increase or decrease the notice period, it is plain that a rough ratio of one month's notice for every full year of employment is in fact generally applied. This is in essence the main Bardal factor of 'duration of employment', discussed below. Thus an employee of 15 years' employment would usually start their calculation from a base figure of 15 months, and then apply the additional Bardal factors to increase or decrease that amount.

Whenever estimating the likely notice period to be set for any given termination, the key point always to be kept in mind is that the purpose of notice period is to give the terminated employee sufficient time to (as best can be done) locate themselves in comparable replacement employment - comparable by wage rate, status, location and any other aspects that society views as reasonable.

In addition to 'duration of the employment', the additional Bardal factors are:
  • Age of the employee:

    Generally, the older the terminated employee is, the longer the notice period entitlement. Upto middle age (around 40-45) the factor is generally neutral.

  • Re-employment Market

    A poor local re-employment market for the terminated employee's skills operates to increase notice period entitlement, and vice versa.

  • Status

    This is typically assessed by the degree of supervisory responsibilities held over other employees, or otherwise by specialized skills or education. The higher the status, the more notice period required - and vice versa. This 'status' privilege is plainly a class residue.
For example, take a 50-year old accountant with supervision over two bookkeepers who is being terminated after 15 years service. She lives in a large city with numerous other businesses requiring her type of services. The Bardal assessment might go like this:
- base notice period of 15 months - increases moderately due to age (50 is over the median employment age of 40-45)
- increases moderately due to status (small supervisory/managerial role)
- decreased significantly by good re-employment prospects
A reasonable estimate of a common law notice period in this situation might be 16-18 months.

So, the a basic wrongful dismissal claim, assuming annual wages of $60,000 ($5,000/month) would be as follows:
16-18 months
X $5,000 = $80,000 to $90,000.
Of course, that's before all the deductions (see below).

. Other Length of Notice Issues

Readers may have heard of the expression "near cause", which bears some relationship to the below topic of "just cause". However, an employer's defence pleading of "near cause" is not so much an effort to avoid the employee's wrongful dismissal claim as to reduce it. The argument is that while the misconduct found as a fact does not support a termination entirely without notice, it does justify a reduced notice period (and thus reduced damages). Employer efforts to advance this as a novel legal principle have met without success in Ontario courts: Ditchburn v Landis & Gyr Powers Ltd 34 OR (3d) 578 (Ont CA); Dowling v Halifax (City) [1998] 1 SCR 22..

Some employers have attempted to limit, or even abolish their common law notice period duties by contractual provisions. While this is a complex and unsettled area of law, courts have a general distaste for such provisions and have used a variety of techniques to circumvent them, such as unconscionability, material breach and adverse interpretation. That said, the technique has had some success in limiting notice periods where the intention has been plainly set out in the employment contract, though it cannot apply to reduce the ESA minimum standard notice entitlements, as such rights cannot be contracted out of [ESA s.5(1)] [Machtinger v HOJ Industries (SCC, 1992)].

. Aggravated and Punitive Damages

The Supreme Court of Canada case of Vorvis v ICBC [1989] 1 SCR 1085, itself a wrongful dismissal case, has been held as authority for the claiming of both "aggravated" and "punitive" extended damages in a broad range of contract and tort situations. Of course, the fact that it was a wrongful dismissal case makes it all the more applicable to the present topic.

The court distinguished the purpose of the two types of extended damage claims by defining "punitive" damages as being purely non-compensatory: essentially then an expression of the court's dislike of fraudulent, threatening or otherwise egregious conduct embodied in what amounts to a "fine", incidentally payable to the plaintiff.

"Aggravated" damages, on the other hand, were defined as compensatory in nature, and particularly suited to claims for the intangible injuries that can result from egregious termination conduct by the employer. To address the tension this created over the essentially compensatory nature of general wrongful dismissal damages (as above), the courts have usually demanded that a separate and further (ie. in addition to the wrongful dismissal claim) 'free-standing' cause of action invariably a tort) be located in the facts somewhere. Common candidates for this role included "intentional infliction of mental suffering", or "intimidation". Aggravated damages in a wrongful dismissal case are expressed by an increased notice period.

In Whiten v Pilot Insurance [2002] 1 SCR 595, the Supreme Court of Canada re-confirmed Vorvis on the issue that, if a separate "actionable" wrong is present - even in a contract case - then punitive and aggravated damages are allowable.

Wallace v United Grain Growers [1997] 3 SCR 701 reinforced these themes, including the supplement that "bad faith" dealings by the defendant, if not separately actionable, will be held as a factor increasing the notice period award.

It is beyond the range of this Employment Law (Ontario) Legal Guide to explore these issues more thoroughly, but suffice it to say that punitive and aggravated damages are awarded with far less frequency that a freshly-terminated employee (especially one raised on american TV) would find fair. The behaviours required in such cases are invariably quite exceptional.

. Inducement (or Negligent Misrepresentation)

Another - far less frequent - way in which a wrongful dismissal lawsuit is sometimes advanced is in the form of a claim for "inducement" under the tort doctrine of "negligent misrepresentation". This can apply where the dismissed employee claims that they were 'hired away' from a job that had more benefit (typically: security) than the now-terminated job had. This often happens in fields where key employees are in high demand and 'head-hunted' away from competitors, only to have the relationship sour.

The essence of an 'inducement' claim for wrongful dismissal is that instead of being advanced in "contract" as most wrongful dismissal cases are (under the strained logic that it is an implied term of the employment contract that an employee receive adequate notice of termination), inducement claims are grounded in the tort of negligent misrepresentation. "Tort" is the same general category of law that a person might sue another for accidential or intentional injury such as a motor vehicle accident or assault.

The legal implication of using a tort basis of the claim is that a different measure of damages is used. In tort, the measure of damages is: "but for" the wrongdoing, what would the plaintiff's position be? In contract it is the "expectation" value, measured by hypothesizing full satisfaction of the contract. Thus a dismissed plaintiff claiming inducement after a short period of employment could claim larger damages based on the loss of the employment situation that they 'gave up' to take the now-terminated new employment.

For example, take a plaintiff hired away from a secure and on-going 18-year career in a senior managerial position - only to find that the true demands of the new (and recently ended) job where quite at odds with what he was told (the inducements). Under such a scenario his 'regular' contractual wrongful dismissal claim after 8 months in the new job would be quite low under regular Bardal principles (above). On the other hand, a claim in inducement opens the way for them to claim higher damages, more on a level as though they were dismissed from (or even retained) their previous job.

The factual essence of an inducement claim is the plaintiff's allegation that the defendant employer misrepresented to new job to them, and this "induced" them to (irretrievably) quit their previous job and move to the new company. The plaintiff must be prepared to show that representations by the defendant employer were substantially misleading, or downright false. Frequently however the real basis of an 'inducement' case are the interpersonal difficulties so frequent in a new workplace.

(c) Damage Reductions

. Overview

The initial choice to commence a wrongful dismissal lawsuit is often heavily coloured by the offended pride of the employee, which is natural in a society where personal identity is so commonly tied up with one's trade or profession, and where one's employment reputation is so important to future employment. However significant (and often overlooked) financial considerations - discussed here - need to come into play in making the decision.

These factors include not only the things that first come to mind, such as legal costs and risk of non-collection [for these see Ch.2: "Advocacy"], but also the less well-known ones of the wide array of public and private schemes have evolved to compensate employees for wage loss on termination (in this context referred to as "collateral benefits"). The form of these schemes varies, largely by the cause of the wage loss, and include (there can be more):
  • ESA minimum standards termination "cash-in-lieu" payments and severance pay;

  • mitigation;

  • Employment Insurance (EI);

  • Ontario Works (welfare) and Ontario Disability Support Program (ODSP);

  • Workplace Safety and Insurance Board (WSIB, formerly WCB);

  • private short-term and/or long-term disability (STD/LTD) insurance;

  • Human Rights Code awards.
Important background and tactical issues in relation to some of these are also discussed in s.5(a): "Overview", above.

The main point to remember is that a wrongful dismissal lawsuit is not about recovering the lost job. Wrongful dismissal is only about compensation (in the form of wages) for inadequate notice periods, and - rarely - additional damages for extreme conduct. From this base figure are then deducted the following amounts, as discussed in turn.

. ESA Minimum Standards Termination/Severance Pay-Out and/or Working Notice

Of course, both "working notice" time and any amounts paid of a terminated employee's "pay-in-lieu" entitlements are deductible from a wrongful dismissal claim. This logically flows from the simple fact that the ESA entitlements are "minimum standards", not free-standing entitlements.

As well, severance pay (if paid of course) is fully deductible from wrongful dismissal damages. That issue, not immediately obvious given ambiguity as to the function of severance pay, was decided in the Ontario Court of Appeal case of Stevens v Globe and Mail [1996] OJ #1614 (QL) (Ont CA)].

Tactical issues relating to the payment of ESA entitlements are discussed in Ch.2: "Advocacy".

. Mitigation

One important practical issue to be kept in mind by any dismissed employee is that of "mitigation". "Mitigation" is a principle of civil damages law requiring a party who has suffered a loss to act reasonably to minimize it. The reasoning behind it is that - otherwise - parties are motivated to act in an economically irrationally fashion by 'relying' on their loss to take 'paid' time off (albeit in a risky and speculative manner). Thus, earnings from the 'new job' - if and as applicable to the same time period as the notice time period - are applied in reduction of the wrongful dismissal claim.
Mitigation does not apply to termination pay-in-lieu and severance pay claims advanced under the ESA-given rights - even if they are advanced in a civil action: Boland v APV Canada [2005] OJ (QL) #510 (Div Ct) - although job-search efforts are an expected duty under collateral benefit programs such as public (and private) Employment Insurance and welfare.
The practical impact is that any dismissed employee planning to sue should, as soon as they learn of the impending (or immediate) termination (that is, even before the termination if possible), commence an organized - and documented - job search. This can be conducted by whatever manner is reasonable and accepted in the particular job market involved, but dated and addressed copies of letters, emails and faxes - and detailed written records of phone and other conversations should be kept.

Initially in such a job search it is acceptable for employees to apply for jobs comparable in skill requirements and wages to their previous jobs, and close to where they live. However as time progresses without success the job search should reflect a willingness to modify these criteria reasonably by gradually broadening skill and geographical areas and even reducing wage requirements. Generally however, radical alterations of these factors is not generally expected and courts are quite forgiving whenever they see substantial and good faith mitigation efforts.

That said, it will always be for the deciding court to determine the reasonableness of the mitigation efforts. If a court finds that mitigation efforts have been less than adequate, they can (and do) apply this as a factor to reduce damages awarded - typically by reducing the number of months set for the termination notice period (the notional logic is that a 'proper' mitigation effort would have resulted in re-employment earlier, thus reducing the 'needed' notice period). Remember always that the purpose of prior notice of termination is to give the employee time to find comparable new employment.

Thus, if mitigation efforts are either successful (or only weakly pursued) then the amount of earnings (or imputed earnings) will be deducted from the base damage claim. So if a plaintiff claiming 16-18 months wages in wrongful dismissal damages accepts a wage-comparable job in the eighth month after termination, they cannot claims damages past the eighth month of any later-established fair notice period (though they could claim any reduced wage difference past that time, if applicable). Further, if they refuse such an offer they run the same risk of having the reduction applied - though without the compensation inherent in the new job.

Very awkward mitigation issues can sometimes arise in situations of "constructive dismissal" by demotion or reduction in pay, or where re-employment with the same employer is offered to the employee after termination. It is open to the employer to argue that refusal of these changes constitutes a failure to "mitigate", as by accepting the changes the employee could reduce their losses. Such arguments are almost invariably insincere, since it is the employer which caused the change in the first place. Further, returning to a workplace after a termination entails loss of whatever accrued seniority or length of employment rights the employee had. Courts are not generally favorably disposed to such employer arguments but employees may still see them being advanced, and have to weigh them tactically in their individual situations.

. Employment Insurance Benefits Received

If, as is very common after a termination, the employee applies for and receives federal Employment Insurance (EI) benefits, the amount of such benefits that duplicate compensation for the same periods as the eventually-established notice period must be repaid to EI. In short, you can't keep EI you collected for a period that you later got 'paid for' by wrongful dismissal damages.

Of course, such amounts are not deducted from the court award, they are in the nature of overpayments owing back to EI after the award is received.

In essence, your wrongful dismissal claim is - at least in part - a "subrogated" claim (an insurance term) on behalf of EI, where you effectively act as their * unpaid * legal agent suing a third party to compensate them for the EI benefits paid. This is consistent with the nature of EI - it being an insurance scheme. The same logic will invariably apply by contract to any private unemployment insurance schemes, though they are rarer.

However, where EI benefits are repaid, the time that they first applied to has now been retroactively re-designated as active insurable employment (ie. regular employed work). As such, when the wrongful dismissal 'damages' run out (in the sense that the months that they apply to have expired), there is a (new) deemed employment termination, and full EI eligibility is available to the employee as though no prior claims had been made. In this sense, EI benefits are not eliminated by a wrongful dismissal recovery - just delayed.

. ODSP/Welfare

Ontario's two primary income maintenance programs are Ontario Works (welfare) and the Ontario Disability Support Program (ODSP). Being programs of 'last resort', both will demand repayment if practically any other form of income is available for the same period that they pay out. If such alternative forms of income (such as a wrongful dismissal award) arrive after-the-fact (of welfare or ODSP payment), the result will be the assessment of an "overpayment", and the initiation of (half-hearted) collection efforts.

Like EI payments, welfare and ODSP paid during the notice period are not deducted from the court award, but create 'debts' payable by the employee back to the program that paid them in the first place.

These issues are addressed in extensive detail in the Ontario Works (Welfare) and ODSP Guides, linked off the homepage.


The "Workplace Safety and Insurance Board" (WSIB), formerly the Workers Compensation Board (WCB), provides income replacement and other compensation to employees who suffer from work-related injury or disease, and who additionally suffer loss of earnings caused thereby. If a termination occurs in the context of allegations of work-related injury or disease for which WSIB eligibility has been established, wrongful dismissal damages applicable to periods of WSIB coverage may trigger repayment of any wage-replacement WSIB benefits under the reasoning that there was - retroactively - no 'loss of earnings'.

Again, such amounts are not deducted from the court award. They are overpayments owing back to WSIB after the court award is received.

. STD/LTD Benefits

Where a contractual right to short-term or long-term disability (STD/LTD) payments has been successfully exercised such that STD/LTD payments were received for the same periods as later wrongful dismissal damages, the STD/LTD payments for those times will almost always have to be repaid.

If a termination occurs in context of the sickness or injury for which STD/LTD disability insurance eligibility is claimed, wrongful dismissal damages applicable to periods of such coverage may trigger repayment of any wage-replacement STD/LTD benefits.

. Human Rights Code (HRC) Awards

The broad remedial range of the Human Rights Tribunal of Ontario is cited in s.5(a)above [OHRC s.45.2], and could easily encompass the ordering of payment of wage replacement damages. However, while a parallel wrongful dismissal action for the same damages is not outright barred in law, it may run into the defendant employer's argument that dual proceedings seeking the same remedy constitute an "abuse of process". As such, dual collection of such damages is unlikely and potential re-payment situations would be highly unusual.

The tactical issues involved in such situations are discussed at further length above in s.5(a): "Multiple Forums and Abuse of Process". Note specially the discussion of the Tranchemontagne case on the ability to argue both common law and discrimination issues into the same forum.

(d) Just Cause

. Overview

As stressed throughout this chapter, the primary termination "right" of an employee is to receive reasonable prior notice of their termination [see s.2, above]. "Just cause" is the main exception to this employee right.

If "just cause" exists in an employment relationship, the employer is legally justified in terminating the employee without prior notice. A wrongful dismissal lawsuit is all about the employee disputing that position, and seeking "damages" measured by pay for the time period that notice should have been given.

Employment law textbooks are often comprised of lists of case law summaries itemizing wrongful dismissal cases by: nature and length of employment, judicial fact-findings on the misconduct allegations, and "just cause" conclusions (or alternatively, notice periods awarded). There has even been a "wrongful dismissal database" in Ontario making such extensive summaries available on-line for use in similar-fact litigation cases.

Firstly out of a desire to avoid repeating that (very) laborious task, and secondly out of the view that the judicial determination of "just cause" is far more an art than a science, below I will focus on the "meta"-issues that are invariably considerations in a "just cause" dispute. These includes the topics of: condonement (waiver), prior warning and remedial efforts.
A Note on "Near Cause"
Readers may have heard of the expression "near cause", which bears some relationship to the present topic of "just cause". However, a employer's defence pleading of "near cause" is not so much an effort to avoid the employee's wrongful dismissal claim as to reduce it. The argument is that while the misconduct found as a fact does not support our termination entirely without notice, it does justify a reduced notice period (and thus reduced damages).

Employer efforts to advance this as a novel legal principle have met without success in Ontario courts: Ditchburn v Landis & Gyr Powers Ltd 34 OR (3d) 578 (Ont CA); Dowling v Halifax (City) [1998] 1 SCR 22.
. The Nature of the Employment Relationship

An allegation of "just cause" is almost always an allegation that the employee's behaviour is unacceptable, that their work performance is inadequate - or both. Necessarily these judgments have to be made in the context of the employment relationship, both in its immediate workplace context and its larger social context.

Socially, the origins of the modern employment relationship are embedded deep in class changes brought about by the industrial revolution superimposing itself on the rigid class divisions of England in the 19th century. Large scale productive enterprises first started engaging masses of lower class people, eventually leading to the development of today's huge middle class. At the beginning of that process, the only model that society had to gravitate to and thus categorize the new relationships created was that of 'master and servant'. Indeed, until very recently the whole field of employment law was called the 'law of master-servant relations'.

The "master-servant" relationship was all about control by one person over another, and had few aspects of equality about it. Today it has evolved significantly from those origins, but much still remains. While overt subservience, humiliation - and even corporal punishment - are no longer an accepted aspect of the relationship, some essential aspects remain.

In Ch.1 ["Basics"] I distinguish between "contract of" and "contracts for" service. The first of these is the employment relationship, and the second is what is often described as the "independent" contractor [hereafter "contractor"]. The distinction between them provides a good illustration of the nature of the modern employment relationship, in particular the way in which both treat the goals (the "what") and the methods (the "how") of the larger enterprise being conducted.

In a nutshell: the "what" of the enterprise is always in the control of the enterprise owner, regardless of whether they are using employees or contractors - or both - to achieve it. On the other hand, contractors control "how" they do things, while employees do not. Employees are still very much under the immediate day-to-day control of the employer as to how their tasks are to be performed.

. Categories of "Just Cause" Misbehaviour

That said, modern social norms have evolved which eliminate the overtly degrading aspects of this situation. Dignity and respect, as those terms are presently understood, to the employee are expected and usually granted within the relationship. Similar dignity and respect are expected to be shown by employees to both co-workers, and to workplace superiors - both those immediately supervising the employee and those at the top of the enterprise 'food-chain'.

When these social expectations are breached by the employee then issues of "just cause" for termination (without notice) arise in forms that start to sound familiar: disobedience, insolence, insubordination, dishonesty, criminality and intoxication - to name some of the main ones.

Of course, when the reverse happens, and the social misbehaviour emanates from the employer or supervisors down to the employee, we find ourselves again dealing with familiar modern terms such as: harrassment, humiliation, abuse and - a relatively recent one: the "poisonous workplace". These themes are discussed further below under the topic of "constructive dismissal" [s.5(e)].

. Categories of "Just Cause" Misperformance

Setting aside considerations of the social norms demanded in the modern workplace, the other main area of "just cause" considerations revolve around the employee's workplace performance. After all, any single employment relationship is just a means to achieve the goals of the larger enterprise, so expecting efficiency within that process is entirely foreseeable and legally acceptable.

When employee performance expectations are under question then we again start to see familiar words: incompetence, lateness, absenteeism, neglect and disobedience - to name some of the main ones. Some other issues, such as intoxication, dishonesty and criminality can also have functional impacts as well as the social impacts alleded to above.

. Condonement

"Condonement" is also sometimes termed "waiver" - or even "estoppel". Basically it is the principal that misbehaviour, if tolerated sufficiently long (there are no rules as to how long), loses it's potency as grounds for "just cause" dismissal.

"Condonement" itself is tempered as a principle in that courts may find it inapplicable to permanently excuse some behaviour, finding that an employer who gives sufficient and persistent warning to the employee to desist (or commence, as the case may be) the behaviour of concern may eliminate their past 'condonement' disadvantage.

An example of condonement might be the open and knowing toleration by the employer for a prolonged period of late arrival at work. Attempting to terminate a late-arriving employee after such prolonged tolerance - without giving them some warning beforehand - will not likely succeed as a "just cause" claim.

. Prior Warnings

Related to the issue of "condonement" (above) is that of prior warnings. The typical well-known forms of this are verbal or 'formal' (ie. written) reprimands issued to an employee. The typical pattern of such warnings is "first, second and final" - although there are no hard and fast legal or practical rules on the procedures that need be taken before dismissal. Generally, the more egregious the misbehaviour the fewer warnings required to justify termination.

It is a logical corollary of any expectation of prior warnings that one instance alone of misconduct does not normally constitute just cause, unless of course the conduct is extreme.

Such warnings should state the nature of the complaint with sufficient factual details to allow the employee to identify the situation/behaviour and dispute the accuracy of the allegation (or of course, to remedy the situation). Responsible employer practice will allow the employee to have their 'rebuttal' placed in the file alongside the warning.

. Remedial Efforts by Both Parties

Following on the topics of "prior warnings" above is the related subject of remedial efforts. Here of course an examining tribunal or court is interested in what efforts both parties undertook to actively resolve a problematic situation. Failure by either to engage in reasonable accomodation with respect to each other will injure their respective case on the "just cause" issue. The existence of this doctrine reflects a clear judicial preference for the extending of second - and even third - chances to wayward employees.

Remedial efforts will typically arise where the employee identifies problems in the workplace which allegedly contribute to the misbehaviour complained of by the employer.

An example might be an employer complaint of poor productivity against a bookkeeper employee, countered by the employee pointing to their reception phone-answering duties as interruptive of the concentration needed to work effectively with figures. An employer in this situation should perhaps be amenable to reducing the worker's phone duties, while the worker might be expected to accept some reasonable shift hour changes to take advantage of more quiet time outside of peek phone usage.

A myriad of other fact situations and permutations are possible. The guiding factors will always be the good faith, flexibility and reasonableness of the parties in addressing the problem issues. Failure to so engage will almost always be detrimental to their side of the "just cause" argument.

(e) Constructive Dismissal

. Overview

"Constructive dismissal" is actually a "pro-employee" doctrine that, if met, finds that an unjustified dismissal has occured despite the absence of an overt employer 'firing'. In other words, conditions are SO bad, that courts will let the employee treat the situation as a dismissal without just cause - even if the employer did not expresssly 'fire' them.

I include the doctrine here in the larger topic of "just cause" because, with the exception of the reversal of the party positions - both topics relate inextricably to misconduct. In essence, constructive dismissal is when the employee has "just cause" to quit, and to sue as though they were wrongfully dismissed.

. Social Basis

On this theme, recall the distinction I made above [(d): "Just Cause"] between the behavioural (social) and the performance (efficiency) aspects of "just cause" misconduct when an employee does it. There I noted that when 'bad' social behavioural is engaged in by workplace superiors, the issues that arise are the natural stuff of "constructive dismissal" claims: harrassment, demotion, humiliation, abuse and - a relatively recent one: the "poisonous workplace".

Note however that when "efficiency" problems occur in superiors, [ie. incompetence, lateness, absenteeism, neglect, intoxication, dishonesty and criminality] they do not naturally feed into any employee claim of "constructive dismissal" - at least not until they reach socially unacceptable levels (eg. drunken abuse, unconscionable or violent illegality). In this distinction the claim of "constructive dismissal" is revealed as being primarily about policing social boundaries and expectations rather than enterprise efficiency.

. Human Rights Discrimination

As noted in s.5(a) ["Multiple Forums and Abuse of Process", above], it is (likely) now possible to advance human rights discrimination (ie. race, gender, disability, etc) "in aid" of a wrongful dismissal case. These aspects of law often arise in the "constructive dismissal" area [of course, overt sexual (ie. sexually motivated) harrassment has always been a legitimate construstive dismissal ground]. Indeed, modern human rights law is largely an outgrowth of employment and labour relations law.

The Ontario Human Rights Code (OHRC) expressly addresses employment and workplace discrimination:
OHRC s.5(1)
Every person has a right to equal treatment with respect to employment without discrimination because of race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, gender identity, gender expression, age, record of offences, marital status, family status or disability.
The well-known expression "poisonous workplace" was generated from human rights employment law. The case law on discrimination is extensive and includes not only human rights law but also law developed under s.15 of the Charter (the equality provisions). Charter equality law and human rights discrimination law are largely one and the same in substance, and have been recognized to be so by the courts. Readers may want to review my treatment of human rights discrimination in the Human Rights Law (Ontario) Legal Guide, at Ch.4: Discrimination.

. Condonement

A note of caution. Employees feeling oppressed in the workplace and considering an allegation of "constructive dismissal" must - just like their employer counterparts considering a firing - be careful not to tolerate bad behaviour too long. "Condonement" [see (d) above] is the prolonged tolerance of objectionable behaviour, and - if tolerated to long - can reduce or eliminate its impact. For example, a demoted employee who works the new position for 6 months would have a hard time later claiming constructive dismissal.

That said, sometimes conditions just gradually degrade over time until the "final straw", however small it might be. Employees facing such uncertainty can usually expect sympathetic consideration from the courts.

(f) Procedures and Limitation Periods

If an employee wants to - for reasons of the magnitude of the claim, "easier" ESA procedures, and/or reduced legal costs - they may restrict a wrongful dismissal-type claim to the ESA administrative enforcement procedures. The substantive law respecting such claims are explained in ss.1-3 above in this chapter, and the procedures in Ch.7: "ESA Administrative Enforcement".

However throughout this Guide I have been critical of the ESA administrative enforcement system for reasons which include: employee lack of control, remedial limitations - and most importantly - confusing and short limitation periods.

The only other practical option is of course the courts. The whole issue of the tactical choice between these forums, and the comparative advantages of the court route are discussed extensively in Ch.2: "Advocacy".
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