When an employer seeks to rely on a breach of policy in disciplining an employee, the employer must prove that it clearly communicated the policy to the employee in question and has enforced the policy consistently. The importance of such communication in enforcement of workplace policies was demonstrated in Lambe v. Irving Oil Ltd.
Irving Oil dismissed Lambe, a branch manager, for just cause, claiming he breached a variety of workplace policies and was dishonest. Although Lambe admitted to breaches to workplace policies, he brought a wrongful dismissal action against the employer claiming he was not properly made aware of the workplace policies as he had never received any workplace policy or procedural manual or instructions on business practices, nor did he receive any training as a manager. According to Lambe, he learned from the other managers and did what he was told from head office. He did not question head office on issues.
After four years of being on the job as a manager, none of the other managers or his direct subordinates had ever told him that he was not managing the branch properly or that he had acted improperly before his dismissal. On the contrary, the employer had given him raises, was considering him for a new position and had consistently ignored any action contrary to business practices.
The court agreed with Lambe and found there was no just cause for his dismissal.
Why is that?
Relying in part on The Law of Dismissal in Canada by Harold A. Levitt (Canada Law Book, 1985), under the heading “Breaches of Rules or Company Policies,” an employer cannot claim breach of policy to terminate an employee if the policy was not clearly communicated to the employee. The textbook states:
Generally, companies must establish the following factors in order for breach of a company rule to constitute cause for discharge.
- The rule must be distributed
- The rule must be known (communicated) to the employees
- The rule must be consistently enforced by the company
- The employee must be warned that they will be terminated if a rule is breached
- The rule must be reasonable
- The implications of breaking the rule in question are sufficiently serious to justify termination
- Whether a reasonable excuse exists
Referring to the cases of Tracey v. Swansea Construction Co. Ltd. and Holloway v. The Town Council of Marystown reflex, as well as The Law of Dismissal in Canada, the court found that, by waiting 27 months to act on policy breaches, Irving was prevented from relying on Lambe’s alleged policy breaches. In addition, since an Irving representative told Lambe’s supervisor to ignore his alleged breaches of policy, Irving could not then come to court and allege these as grounds for dismissal.
In addition, if an employer alleges dishonesty and there is no evidence to support the allegation or prove just cause, the employer takes the chance of an increased notice period being assessed against him or her.
In this case, the employer had to pay a high cost for the above mistakes. Irving had to pay Lambe:
- Eight months’ pay in lieu of notice in the amount of $32,000
- Medical and prescription costs of $2,400
- Solicitor and client costs to be taxed
- Pre-judgment interest
What can employers take from this case?
Although courts and tribunals have held that an employee’s failure to sign a policy is not determinative of the notification (communication) question (Re. Intercontinental Packers Ltd. v. UFCW Local 248-P), the practice of obtaining signatures confirming that employees have read and understood key policies is nonetheless essential when applying due diligence to establish that employees have been advised of the terms of those policies and the consequences that may occur in the event of a breach. Now having a small quiz attached to certain policies (e.g., health and safety, accessibility standards, related policies) as proof of understanding is another helpful practice.
To ensure the terms and conditions of the policies will be binding, employees should confirm, by signing a document, that not only have they received the policy materials, but that they have read, been trained on the policies and understood them and agree to be bound by them. Again, this is not absolutely necessary, but it avoids a lot of arguments when or if proof becomes an issue.
It is advisable that employers maintain a policy binder in a central location or create an intranet page where policies are posted and always available for review. The policy manual should be a featured issue during training and orientation. Having a process to inform employees of new or revised policies is also a must. Ensure that employees acknowledge that they have received, understand and commit to complying with new or revised policies. This practice will help ensure that all employees have sufficient knowledge of the policies and the consequences of any breach and will help in your due diligence defence.
By consistently applying the policies as set out, the employer puts the employee on notice that failure to measure up to the standard may result in termination.
But a very important point was raised in Irving, and employers should take heed:
Similar to providing the employee with a raise, providing an employee with a positive performance review or a letter of praise will have the general effect of condoning performance.
Thus, if an employee is not performing up to expected standards, be consistent:
- Let the employee know that his or her performance is not meeting expected standards
- Document the negative performance and review
- Communicate the negative performance review to the employee
- Have the employee acknowledge receipt of such performance review
- Provide time for the employee to improve performance or correct any problematic issues
- Help and guide the employee on what can be done to improve poor performance or behavioural issues, and do everything possible and reasonable to assist the employee (e.g., training, reviewing the policy manual, counselling, outside courses, etc.)
- Don’t provide a raise or a bonus or other incentive if you are not satisfied with the employee’s performance; however, make sure your compensation, salary increase or bonus policies do not contradict your actions
- Follow up on the negative review within six months to a year to ensure improvement or the need for more corrective steps or dismissal
- Maintain communication and support
First Reference Human Resources and Compliance Managing Editor
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With the passage of Bill 168, this issue may become even more crucial in the context of occupational health & safety. A good article and interesting case! Thanks.