Two recent Small Claims Court cases demonstrate the courts' willingness to sanction employers for improper just cause allegations. These cases highlight the fact that employers need to be cautious in asserting just cause.
It has been about eight years since the Supreme Court of Canada decision in Honda Canada v Keays, which dramatically altered the law with respect to damages relating to bad faith conduct in the course of dismissal. Is the topic still relevant? A recent Ontario decision confirms that it is.
The Court acknowledged that an employer may allege just cause, and later abandon that claim at any time. The Court held that it wouldn’t be appropriate to penalize an employer for changing its mind if it initially had a reasonable basis to believe it had just cause to terminate an employee. As such, it is important to investigate and document any evidence of employee misconduct, and to act accordingly.