A COMPARATIVE ANALYSIS OF THE LAW IN CANADA AND UNITED STATES.

JUST CAUSE DISMISSAL

Introduction

Just Cause is a legal term that means an employer is justified in terminating an employee without providing reasonable notice or payment instead of the notice.

Emphasizes and protect the dignity and autonomy of employees.

An exception to the general principle of termination. Section 230 Canada Labour Code.

-Notice -Payment in lieu -Unionized employees

Rationale for the protection.

Presumption of power imbalance - Principle of equality and fair deal

Natural Justice theory - Don’t judge your own cause - All party must be heard

JUST CAUSE IN CANADA

The law distinguishes between lawful dismissal known as “just cause termination” and unlawful dismissal known as “wrongful dismissal.

Re Optinia Incorp. Case The duty of good faith, fairness, non-arbitrariness.

Economic difficulty or restructuring- Social Relation- “work is one of the most fundamental aspects in a person’s life, providing the

individual with means of financial support and importantly, a contributory in the society. A person’s employment is an essential component of his or her sense of identity, self-worth and emotional well-being”. – S.C.C in Re Public Service Employee Act case.

WHAT CONSTITUTE JUST CAUSE IN CANADA?

Before the hammer fall- - Breakdown of employee/employer relationship – McKinley v.

BC Tel. case - How senior is the employee - Previous warnings (progressive discipline) - Condonation - once an employer has knowledge of

employee’s misconduct or incompetence, it must be addressed within a reasonable period of time. If not, it cannot later be acted upon or referred to by the employer as grounds for dismissal. Allen v. Devon Lumber Co.

GROUNDS FOR JUST CAUSE

1- Incompetence This refers to the inability of the employee to perform basic work functions as required by the employer.

Requirementsi. The requirements of the job are clear and understood by the employeeii. The employee has received requisite training for the job and all support necessary to discharge the required duties.iii. There are clear performance standards for the employee to attainiv. The employee must perform below the required standard and the

failure must be communicated to the employee.v. The employer must design a performance improvement program

The level of incompetence must be objective, apparent and reasonable- Matheson v. Matheson International Truck Ltd

Sexual Harassment

Deliberate, improper conduct directed towards the opposite sex.

Exception to the progressive discipline theory, if substantiated. - Bannister v. General Motors of Canada the Court held that a supervisor did not require a written warning before he could be dismissed with cause for sexual harassment.

Acts/conducts outside the workplace too can constitute sexual harassment- Simpson v. Consumers Association of Canada

Absenteeism

Innocent absenteeism is when the employee is involuntarily absent from work. Due to lack of intent, innocent absenteeism cannot be ground for just cause dismissal.

Culpable absenteeism (blameworthy) is where the employee, without good cause, deliberately or negligently absented himself from workplace - Nossal v. Better Business Bureau of Metropolitan Toronto (Better Business case)

DISHONESTY AND CRIMINAL ACTIVITIES

These are conducts that indicates an employee’s disregard for the employer’s inherent trust in the employee. Fraud and theft are examples of dishonesty.

- High standard of proof from the employer - Demonstrate that the act bear some relevance to the workplace - Materially impacted the employee/employer relationship - Rifou v. CIBC Yet in the Bell case the verdict was different. - Bell v. Computer Science Corp where an employee intentionally lies

about the content of emails between himself and his subordinate and lying about his personal use of company equipment and was subsequently dismissed by the company for dishonesty. While the Judge found that there was no actual prejudice to the employer from the act/dishonesty of the employee, lying about the content of emails between himself and subordinate and use of computer is work related

Breach of Fiduciary Duty/Trust

Breach of fiduciary duty or trust include- An employee competing against his employer while employed Doing anything that is in breach of his duty to his employer. A breach of trust

or fiduciary duty arises when someone in a position of trust violates the trust invested by someone else in some way.

Employee exhibits conduct that promotes his or her interests instead of the employer’s interests; where the employee’s conduct was motivated by conflict of interests - Felker v. Cunningham

INSUBORDINATION

Insubordination is a kind of misconduct whereby the employee refuses to recognize and submit to the authority of the employer, and refuses to comply with the employer’s clear instructions, policies and procedures without reasonable excuse.

Usually, the courts will not allow an employer to fire an employee for a single, minor incident of insubordination, unless it was of some significance.

How significant is significant????? Henry v. Foxco Ltd and Vatri v. Delco Wire & Cable Ltd cases considered

on grounds of – - isolation of incidence - damage to employee/employer relationship

Cumulative Incident Rule.

Allows the employer to take into account previous instances of misconduct or incompetence in combination with a new offence in order to justify summary dismissal.

Previous misconducts (whether documented or forgiven) + New offence (Not in itself terminable) - Daley v. Depco International

Condonation and Cumulative Rule- Unionized workplace, an employer is precluded from reviving previous

instances of misbehavior unless the employee was clearly warned at the time that subsequent action would result in dismissal.

In contrast, at common law the employer can revive previously condoned misconduct pursuant to a new culminating incident.

DISCUSSION

Take a second look at the two cases and tell us if you think your actions/recommendation should change.

JUST CAUSE DISMISSAL IN UNITED STATES

Introduction General overview of the American legal system

Just Cause Under the Federal Law. General prohibition of dismissal based on protected grounds, viz; - Civil Right Act 1967 (as amended)- Race, origin, religion, sex, sexual

orientation etc - Age Discrimination in Employment Act 1967 – Dismissal on ground of age. - Pregnancy Discrimination Act 1974 – Dismissal on ground of pregnancy,

childbirth, medical condition relating to womanhood etc - Americans with Disabilities Act 1990 – Dismissal on ground of disability - National Labour Relations Act 1935 (as amended).

“AT-WILL” RULE

Like all common law theory is an offshoot of the English law as expressed in the Statute of Labourers 1562.

An employer can dismiss an employee for any cause, no cause, or even a cause morally wrong without being liable.

The American Supreme Court in Payne v. Western & Atlantic Railroad (The Payne’s Case) stated – “Men must be left, without interference to buy and sell where they please, and to discharge or retain employee at –will for good cause or for no cause, or even for bad cause without being been guilty of an unlawful act per se”. (underlining mine for emphasis)

Wither goes the protection, dignity and autonomy of the employee???

Contractual Relations-

1. Two (2) contracting parties 2. Legal capacity to enter contractual relations 3. Intent (consensus ad idem) 4. Consideration supporting contractual relation.

Outcry, agitation and changes/amendment to the law. - the constraints of contractual relations; - the insignificance of remedies under contract law.

Exception to the ‘At-Will’ Rule

Public Policy- Nullify the employer’s power of dismissal when the employer refuses to perform an unlawful or illegal act.

In Tameny case an employee of 15 years standing was urged to participate in an illegal scheme to fix the retail price of gas in violation of federal laws. When the employee refused, he was terminated. The Court held that public policy had nullify the employer’s power to dismiss in respect of that incident.

Further that the action was not based on contract law but on Tort law which imposes a duty on all to implement and respect fundamental public policies embodied in the Statutes. Punitive damages were awarded.

- Refusal to commit crime- The Tameny Case - Reporting criminal activities to appropriate authorities- The Garibaldi case - Disclosing illegal, unethical or unsafe practices- The Hantzel case - Not an exhaustive list

Implied covenant of good faith and fair dealing

Imposes the duty of good faith and fair dealing on parties in the performance and enforcement of the contract.

It prevent a party in an employment relationship from preventing the other party from enjoying the benefits of the contract after performing his part of the bargain.

In The Fortune Case, a salesman was dismissed by the employer to avoid paying the full commission earned by the salesman on a five Million dollar sale. Held that the exception to the “At-Will” Rule did not permit an employer to first obtain the fruits of an employee services rendered in reliance upon the promise of commission and then dismiss the employee to deprive him of that commission.

The Handbook Exception

Also known as the Legitimate Expectation Theory It prohibit and prevent an employer from exercising his right of dismissal

where the exercise of such power negates the provisions of the Staff Handbook.

In the Toussaint case, employee was employed as Company Treasurer and was told that he could have his job forever so long as you perform his duties. He was later given a Staff Handbook where it was stated that he will not be dismissed so long he perform well. He was later dismissed for his inability to administer the Company car pool program. The dismissal was held to be wrongful.

- Toussaint case v. contractual principles - Estoppel theory of law.

JUST CAUSE UNDER THE STATE LAW

Wrongful Discharge From Employment Act 1987 - the only Statute requiring just cause in U.S - modify the termination “At-Will” Rule under common law - incorporate the exceptions under the ‘At-Will’ Rule. - not applicable to Collective Bargaining Agreement

It define Just Cause as “reasonable job related grounds for dismissal based on failure to satisfactorily perform job duties, disruption of employer’s operation, process, structure, hierarchy, or other legitimate business reasons”. (underline mine).

What is ‘legitimate business reason’?

“often necessary but difficult decisions for the sustenance of the business”.

In Re: The Cecil case, an employee recently promoted Executive Vice President was dismissed without any prior warning or indication of poor performance due to decline in crude oil price and the resultant reduction in production and income. A fact attested to by the Plaintiff. The Montana Supreme Court held that the elimination of position, due to business needs, being an economic reason constitute a legitimate business reason.

The Act protect the good faith employer and recognizes him as the sole judge to carry out decisions concerning employment.

And the winner is …………..?

- “ the employment of a worker shall not be terminated unless there is a valid reason for such termination connected with capacity or conduct of the worker or based on the operational requirements of the undertaking, establishment or service”. – Per International Labour Organization (I.L.O)

Which way forward for HR Manager/Employers? Contract theory or Social Relations? Employee Protection or Protection of good faith employer?

SALIENT POINTS SO FAR

- Similarity despite the differences (National Just Cause legislation). - Uncertainty in the interpretation and application. - Common law (traditional, narrow) approach.

TRENDS IN OTHER JURISDICTIONS (England)- Birthplace of common law- Carlil v. Carbolic Smokeball (1893);- Addis v. Gramophone Co. Ltd (1908)- set the stage for its application to labour

law cases. Enactment of Just Cause Legislation. Sections 94- 98 The Employment Right Act

1996.- Codify the existing laws on individual rights in labour law. Autoclenz Ltd. v. Belcher (2011); Transco Plc v. O’ Brien (2002); Malik v. BCCI (1991)

Sanctity of the Courts.

RECOMMENDATION

- PROGRESSIVE DISCIPLINE. Coy/Org should put in place and implement progressive discipline policy-

procedural fairness and good faith. -verbal reprimand -written reprimand -suspension without pay -dismissal -document the complaint/misconduct, investigate, interview witnesses and

gather evidence, interview employee(s) involved, review evidence and facts, take action.(Reprimand, Suspension, Dismissal)

LEGAL REFORM

Enactment of Federal Just Cause legislation.

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THANK YOU!