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Just Cause – Workplace policies remain an important consideration in judicial decision making

In the recent case of Cuconato v. Parker Auto Care Ltd., a robust system of workplace policies and enforcement could likely have altered the outcome for the employer in this situation.

workplace policiesThe recent summary judgment decision of Cuconato v. Parker Auto Care Ltd., reinforces the high bar employers must meet to justify termination for cause and the importance of having proper procedures in place to deal with inappropriate employee conduct.

The employee had worked for the employer for almost 25 years as a senior automotive technician. One day, he was called into the manager’s office and advised he was seen making a sexually explicit gesture behind a female customer’s back. The employee denied making the gesture because he alleged he did not know to what the manager was referring. The employee was then shown a video recording the manager had made on his phone of the security footage that purportedly captured the employee’s gesture. The video recording was of poor quality. The employee disputed that the gesture was sexual in nature. The manager was unable to find the security footage of the incident to show to the employee. The manager advised the employee to “go home and think about what you want to do,” adding that if the employee resigned, the manager would not tell his wife about the incident. The employee’s position was that the investigation into the incident was a “sham” and was tailored to “trap” him and that the manager had already made the decision to fire him.

The employee refused to admit he had performed the gesture and was terminated the next day. His employer took the position that his refusal to admit any wrongdoing breached the implied duty of faithfulness and honesty owed from an employee to the employer. Although it appears the employer terminated the employee for cause, he was provided five and a half weeks of pay in lieu of notice.

For the purposes of the motion, the employee conceded that he did in fact make a sexual gesture. Ryan Bell J., was required to determine the nature and extent of the misconduct, consider the surrounding circumstances, and decide whether dismissal was warranted.

The judge found that the employee had engaged in dishonesty by refusing to admit he had made the gesture that he subsequently conceded to. However, the judge did not accept that maintaining his denial up until the date of examinations for discovery constituted “persistent” dishonesty. First, the employee’s evidence was that he initially denied making the gesture because he did not know of what he was being accused. Second, the manager admitted that the recording on his phone was so poor that it was “not clear enough…to see anything.” At that point, the employee said the gesture was something other than a sexually explicit gesture. Third, the manager admitted that when the two of them went to the mezzanine level to view the security footage, he was unable to find the incident on the video footage. Fourth, the following day, there was no denial or even discussion about the video: the employee advised the manager that he was not going to resign and the manager responded that he was going to have to terminate the employee’s employment.

In considering the above, the judge found that the relevant time period for considering the nature and extent of the denial was the time prior to and including the date of termination. He found that the denial was limited to the meeting during which he was shown a poor quality recording of the incident.

In considering the surrounding circumstances, it was noted that the employee had an otherwise unblemished 25 year career with the employer. Similarly, he found that the employer did not have any written disciplinary policies. Other policies were brought to the attention of employees in a patchwork fashion. No training was provided to its employees in relation to workplace violence or harassment.

In the judge’s view, considering the limited extent and isolated nature of the incident, the employee’s long and unblemished record of service prior to the incident, a workplace environment that did not include written disciplinary policies and in which the employer failed to provide training to its employees on issues of harassment and workplace violence, dismissal was a disproportionate response. Ryan Bell J., found the employee entitled to 20 months of common law notice.

There are several important points to take away from this decision. The first is that just cause remains a high burden for employers. Despite the offensive nature of the conduct, judges continue to consider just cause dismissal a remedy of last resort. The second is that the employer’s lack of written policies and proper method of implementing and enforcing them was particularly problematic. A robust system of policies and enforcement could likely have altered the outcome for the employer in this situation. Finally, this decision should serve as a reminder for employers to perform contract “check ups” of their long-term employees. Termination clauses, while presently considered standard, were not as common 15-20 years previous. It is essential to review and appropriately update an employee’s contract to address this. Otherwise, these long-term employees may present significant economic liabilities should their employment ever be terminated.

Cuconato v. Parker Auto Care Ltd., 2018 ONSC 2803 can be found here: http://canlii.ca/t/hrt3d

Devan Marr

Devan Marr is a lawyer at Strigberger Brown Armstrong LLP. With two offices located in Toronto and Kitchener/Waterloo, the firm offers a full range of legal services to our industry partners in insurance and risk management. The firm aims to provide its clients with focused, practical, and cost efficient legal advice. Devan primarily defends insurance claims with a particular interest in the intersection of the contractual, statutory and common law obligations of parties in long-term disability and employment practice liability claims. His practice also includes providing employment related legal advice to both employers and employees in the context of contract negotiations, evaluation of termination clauses, workplace investigations, and assessment of exposure to wrongful dismissal claims.
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