Many employers are aware that they can terminate an individual’s employment without notice where there is “cause” (generally acts that fundamentally undermine the employment relationship such as theft, violence in the workplace, etc.). However, employers may not be aware that Ontario’s employment standards legislation sets a different, arguably higher bar for misconduct before an employer is relieved of the obligation to provide notice (or pay in lieu of notice).
Under Ontario’s Employment Standards Act, 2000 (the “ESA”), employers are not required to provide notice before terminating an employee where the individual has engaged in wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer. However, the concept of “wilful misconduct” as contemplated by the ESA is much narrower than what may serve as grounds for “cause” at common law. As a result, an employee dismissed “for cause” may nonetheless be eligible for notice under the ESA, even though the employee is not entitled to common law notice.
For example, in Oosterbosch v. FAG Aerospace Inc., 2011 ONSC 1538, an Ontario court awarded $25,000 to an employee that was continually late for work and produced defective products. Even though the employee’s behaviour was “inconsistent with the continuation of his employment”, the judge found that the employee’s conduct was not “wilful” such that he would be disentitled to termination and severance pay under the ESA.
More recently, in Zhang v Crystal Claire Cosmetics Inc., 2015 CanLII 32245 (ON LRB), the Ontario Labour Relations Board (the “Board’) found that an employee who was asleep on the job was entitled to termination pay. The Board noted that, in order for the employee to be disentitled to termination pay, the employer was required to show that the employee intended to fall asleep “or that he behaved recklessly in allowing that to occur by, for example, reporting for work without regard for the probability that he would fall asleep”. However, the Board held that “wilful” misconduct would not include a situation where the employee “did not intend to sleep, but was overcome by fatigue”.
As the employer did not offer any evidence as to why the employee, in fact, fell asleep, the Board held that the employee’s behaviour was simply unexplained. As a result, the Board concluded that the employee was owed termination pay. The Board also found fault with other employer decisions, including the fact it did not follow its own progressive discipline policy, it never told the employee about the zero-tolerance policy and it considered allegations that were not referenced in its own termination letter and referenced incidents that did not occur.
The key lesson from these decisions is to remember that “cause” or “willful” misconduct/neglect of duty is an extremely high bar that can be difficult to meet in all but the clearest of cases. Employers hoping to dismiss an employee without notice should conduct a careful analysis in order to determine what potential liability may exist under both the common law and the ESA in the event that a reviewing court, or the Board, later finds that cause did not exist in the circumstances.