IS THERE A DIFFERENCE BETWEEN JUST CAUSE UNDER THE COMMON LAW AND WILFUL MISCONDUCT UNDER THE EMPLOYMENT STANDARDS ACT (ONTARIO)?

MAY 12, 2022

In an earlier blog about the enforceability of termination clauses in employment contracts, I noted that a termination for cause (aka “just cause”) is a Canadian common law (judge-made law) concept whereby an employee may be denied notice or pay in lieu of notice that a judge would otherwise grant to an employee who was terminated “without cause”.

However, in Ontario, an employee who is terminated for cause may still be entitled to their (usually lower than common law) minimum entitlements under the Employment Standards Act (2000) (“ESA”). This is the case unless the employer can establish that the employee is “guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer” (or “wilful misconduct” for short). The concept of just cause does not exist under the ESA. Therefore, just because an employee’s behaviour amounts to just cause, doesn’t mean it amounts to wilful misconduct.

But what exactly is the difference between just cause under the common law and wilful misconduct under the ESA?

The Answer: Wilful Misconduct is Preplanned

Let me explain.

The recent Ontario Court of Appeal decision in Render v. ThyssenKrupp Elevator (Canada) Limited, 2022 ONCA 310, concerned an employee’s appeal from a judgment at trial that upheld his dismissal for cause. Render, the appellant, was a 30-year manager who was dismissed following “a single incident that occurred in the workplace where he slapped a female co-worker on her buttocks. The trial judge found that the incident caused a breakdown in the employment relationship that justified dismissal for cause.”

(Note to Reader: In this blog, the word “appellant” is used interchangeably with Render (the employee), as is the word “respondent” with the employer, ThyssenKrupp. This is the wording the Court of Appeal used in its judgment. All quoted text is from the judgment. Any bolding of that text is mine and not the Court’s).

Among other things, the appellant/employee, Render, disputed the trial judge’s conclusion of just cause. Render also argued that he was entitled to his minimum entitlements under the ESA, even if he had been dismissed for cause. This latter issue had not addressed by the trial judge, the Hon. Mr. Justice Chalmers.

The Hon. Madam Justice Feldman, of the Ontario Court of Appeal, dismissed Render’s appeal from the finding that there was just cause (and, therefore, no wrongful dismissal), but allowed his appeal with respect to the ESA entitlement because Render’s conduct was not pre-planned. According to the Court, “[a]lthough his conduct warranted dismissal for cause, it was not the type of conduct in the circumstances in which it occurred that was intended by the legislature to deprive an employee of his statutory benefits.”

In every case about just cause, facts matter. This is because courts in Canada take a “contextual approach” to determining if there is cause, based on the Supreme Court of Canada decision in McKinley v. BC Tel, 2001 SCC 38, [2001] 2 S.C.R. 161:

“The contextual analysis requires an examination of the particular facts and circumstances and considers the nature and seriousness of the employee’s conduct to determine whether it is sufficiently egregious so as to violate or undermine the employment relationship.”

Facts also matter when determining if there has been wilful misconduct.
Therefore, like the Court of Appeal, let’s dive into the facts in Render.

Note to Reader: Feel free to skip “The Fine Print” next (or just read the bolded text) and meet me at “What You Must Know” near the end of my post. I do, however, invite you to read The Fine Print because while, on the one hand, this decision is about an important legal distinction, just as importantly, it is an instructive about how courts deal (and won’t deal) with sexual harassment in the workplace, particularly in so-called “locker room” environments.

The Fine Print

Background Facts in Render:

• Render was hired in 1984. At the time of termination, he was the operations manager of the Mississauga office with 4 direct reports and 40 indirect reports. He was also involved in hiring and training.
• Vieira, the employee who was slapped, was an accounts manager who worked with Render. She reported to the office manager, Platt.
• They worked in a small office with 13 employees: 10 were men and 3 were women. When Platt was away, Render was in charge.
• According to the Court: “There was a very social atmosphere in the Mississauga office, including lunches and other events and regular joking and bantering. The appellant described it as a friendly and joking environment that he fostered to reduce stress.”
• “This atmosphere included inappropriate jokes. One of the other male employees made sexist and offensive comments to or about Ms. Vieira. The male workers would occasionally tap each other on the buttocks and say “good game” as if they were football players on the field or in the locker room. The female employees, including Ms. Vieira, were not included in this activity.”
• “Render and Ms. Vieira would engage in jokes and banter, including Ms. Vieira making jokes or teasing him that he was short and not as good‑looking as his brother. On at least one occasion, she jokingly punched him in the arm…”
• “[Render] and Ms. Vieira occasionally saw each other at the gym where they both worked out. He thought they were friends. She testified that she participated in the joking and bantering so that she would not be ostracized and so that she would be respected.”

 

The Employer’s Anti-Harassment and Anti-Discrimination Policy and Progressive Discipline Policy

From the decision:

“[10] On February 20, 2014, the [respondent employer] presented its newly introduced Anti‑Harassment and Anti-Discrimination Policy by way of a PowerPoint presentation and discussion. Both the appellant and Vieira attended the presentation. The policy states that the respondent has “zero tolerance” for harassment and discrimination, provides that sexual advances and touching are considered sexual harassment, states that sexual harassment can arise from a single incident and may include public humiliation, and states that an employee who engages in conduct that is contrary to the policy will be subject to appropriate discipline, up to and including termination of employment.

[11] In addition to the Anti-Harassment and Anti-Discrimination Policy, the [employer] had implemented a Progressive Discipline Process Policy in October 2011, which was revised in August 2012. The progressive discipline under this policy would “[t]ypically” begin with coaching, move up to a verbal warning, then a written warning, final warning with suspension, and termination. The policy also provides that where the misbehaviour is of a severe nature, the progressive discipline can be accelerated to match the violation. As a supervisor, the appellant was required to know and implement the policies, and he confirmed that he was familiar with them before the incident in question.”

 

The February 28 Incident

• The incident that led to the Render’s dismissal took place on February 28, 2014 in one of the employee offices. Six employees were present.
• One man was on the phone while the others were speaking to each other loudly and jokingly. A male co-worker, Daniel, “commented on a stain on Ms. Vieira’s blouse by asking if she was lactating…”
• “…Ms. Vieira made either a verbal or non-verbal joke about [Render’s] height. He responded to the comment “you’re short” by saying, “yes I am”, crouching down while about 12 inches from her, and saying, “this is how short I am when I take my boots off”. He then went down on his knees, crouching in front of her with his face close to her breasts for two to three seconds. Everyone including Ms. Vieira was laughing.
• “Then the man on the phone finished his call and [Render], who was waiting to speak to him, told everyone to leave. As he was getting up from his knees, he made a sweeping gesture with his right hand, intending to tap Ms. Vieira on the hip and said, “get outta here”. However, he testified that he either lost his balance or she turned, with the result that his hand touched her buttocks. When that happened, he said, “good game”.
• “Ms. Vieira’s response changed the atmosphere in the room. She gasped, said that what he did was not okay, and that she could not believe he had done it. He asked if she was serious, and why she was upset when she had previously punched him in the arm. She responded that that was different because “you hit me on a private sexual part of my body.” He said that she could not punch him in the shoulder anymore, then he apologized, and said it would not happen again. Ms. Vieira denied that he apologized at this time.”
• “Ms. Vieira documented what occurred immediately afterward in two emails to herself and her husband. In between, she reported the incident to her manager, Mr. Platt, telling him that she wanted the appellant to apologize.”
• “[Render] went back to his office, distraught at what had just happened. Two of the men who had witnessed the incident came to his office where they discussed what had occurred. During the discussion…. the appellant admitted that he said, “for 10 bucks you can shake my hand.”
• “About ten minutes later, the appellant made eye contact with Ms. Vieira from the hall while she was in her office, made a gesture like he was slapping his hip, then went into her office. She said he should not have done that, in reference to hitting her buttocks, and he responded that it was a joke. She said it was no joke because he had hit her on her private parts. He responded that it was not sexual and that he was not trying to sleep with her. He then apologized. He believed that she accepted his apology, but she testified that he did not seem sincere.”
• “Upset about what had happened, the appellant decided to leave early…, but ran into two other employees on the way out. One asked what was wrong and they had a cigarette in the parking lot where the appellant demonstrated what had happened by crouching and making a swatting motion. He told them he had tapped Ms. Vieira in a playful way and expressed regret.”
• “Ms. Vieira observed the meeting from her office window and perceived that she was being mocked by the appellant, although she [later] agreed in cross-examination that there was no laughing or high fiving. She immediately reported her observations to Mr. Platt who sent an email to all the people who had been in the room when the incident took place and in the parking lot afterward, saying that what occurred could not happen again and that the matter should be put to rest…”
• On March 3, Render “apologized again, but Ms. Vieira felt it was insincere [and] she made a formal complaint to HR that day.”
• The HR manager carried out an investigation. “She advised the appellant that he may receive a letter in his file, suspension or termination, and that she viewed the incident as sexual harassment. Becoming concerned for his job, the appellant told [her] about prior incidents in which Ms. Vieira had punched him in the arm and she and others had made anti‑Semitic comments to him. On March 5, he filed a formal complaint with HR against Ms. Vieira and the company regarding these incidents.”
• “After [the HR manager] reported the results of her investigation to the VP, they made the decision to terminate [Render’s] employment… based solely on the incident in which the appellant touched Ms. Vieira on the buttocks.”
• Render’s employment was summarily terminated the next day. “He was given no severance, termination, or vacation pay.”

 

The Court of Appeal’s Analysis

(1) Did the trial judge err by making findings of fact that were not supported by the evidence or that involved inconsistent credibility findings?

The Court of Appeal was not prepared to interfere with the trial judge’s rejection of Render’s evidence that his contact with Vieira was accidental, and that he didn’t show remorse.

(2) Did the trial judge err in law by finding that there was just cause for termination of the appellant’s employment?

From the decision:

“[65] The core question on a case of just cause dismissal is “whether an employee has engaged in misconduct that is incompatible with the fundamental terms of the employment relationship”. If the court ultimately finds that there were reasonable alternatives to termination, summary dismissal will not have been justified, and the employer will be liable for wrongful termination. However, the fact that the employer did not specifically turn its mind to this question is not a free-standing error that turns an otherwise proportionate summary dismissal into a disproportionate one.

[66] In any event, there was evidence that the respondent in this case did consider the availability of other disciplinary measures but decided that they could not be implemented because to retain the appellant would send a message to other female employees that the impugned conduct was being condoned. Given the seriousness of the conduct, involving non-consensual touching of a private part of the body, the respondent determined that it could not condone it or be seen to condone it.

[67] The trial judge agreed. He referred to the respondent’s Anti-Harassment and Anti-Discrimination Policy, which had just been implemented, plus the fact that the appellant was a manager and was responsible for implementing the policy, the sexual nature of the contact, and the appellant’s lack of appreciation of its seriousness in the workplace context. He weighed all the other circumstances, including the appellant’s long and unblemished history with the company, but concluded that the respondent was entitled to terminate the appellant’s employment for cause.

[68] With respect to the appellant’s argument that the respondent has treated other employees more leniently in the past, it must be remembered that each case is to be examined on its own particular facts and circumstances… For example, the appellant’s position as a manager who supervised other employees and implemented the respondent’s policies puts him in a different position from non-managerial employees…

[69] I see no error in the trial judge’s approach or analysis. He considered and weighed all of the relevant factors. His conclusion is entitled to deference.”

Madam Justice Feldman concluded with the following:

“[70] I would also add that this was a most unfortunate situation that arose out of an overly familiar and, as a result, inappropriate workplace atmosphere that was allowed to get out of hand. As this court said in Bannister almost 25 years ago, it is a workplace atmosphere that can no longer be tolerated. Although some may perceive it to be benign and all in good fun, those on the receiving end of personal “jokes” do not view it that way. And when things go too far, as they did in this case, the legal consequences can be severe. Every workplace should be based on mutual respect among co-workers. An atmosphere of mutual respect will naturally generate the boundaries of behaviour that should not be crossed.”

(3) Did the trial judge err by failing to award the appellant his ESA entitlements?
According to the Court:

[79] The law on the interpretation of the prohibition sections [of the ESA] has been consistently stated to require more than what is required for just cause for dismissal at common law. In Plester v. Polyone Canada Inc., 2011 ONSC 6068, 2012 C.L.L.C. 210-022, aff’d 2013 ONCA 47, 2013 C.L.L.C. 210-015 (the reasons on appeal found it unnecessary to address this point), Wein J. explained that in order to be disentitled from the ESA entitlements under the “wilful misconduct” standard in the Regulation: the employee must do something deliberately, knowing they are doing something wrong. In the case before Wein J., the conduct was not preplanned and not “wilful” in the sense required under the test, which she described as follows at paras. 55-57:

The test is higher than the test for “just cause”.

“In addition to providing that the misconduct is serious, the employer must demonstrate, and this is the aspect of the standard which distinguishes it from ‘just cause’, that the conduct complained of is ‘wilful’. Careless, thoughtless, heedless, or inadvertent conduct, no matter how serious, does not meet the standard. Rather, the employer must show that the misconduct was intentional or deliberate. The employer must show that the employee purposefully engaged in conduct that he or she knew to be serious misconduct. It is, to put it colloquially, being bad on purpose”.

….Wilful misconduct involves an assessment of subjective intent, almost akin to a special intent in criminal law. It will be found in a narrower cadre of cases: cases of wilful misconduct will almost inevitably meet the test for just cause but the reverse is not the case.

The conduct of Mr. Plester was serious, and his failure to report deliberate. However, it did not rise to the very high test set for disentitlement to the statutory notice benefit. It was not preplanned and not wilful in the sense required under this test. There was an element of spontaneity in the act itself and at most a “deer in the headlights” freezing of intellect in the delay in reporting. On these facts willful misconduct should not be found. [Emphasis added.]

[80] The differing standards at common law and under the ESA are further discussed in a number of cases, as well as in the Ministry of Labour’s Employment Standards Act Policy and Interpretation Manual (2020). The Manual states: “this exemption is narrower than the just cause concept applied in the common law and in collective agreement disputes. In other words, an arbitrator or a judge may find that there was just cause to dismiss an employee, but this does not necessarily mean that the exemption …applies.” This principle has also been followed in a number of other authorities…

[81] In my view, the appellant’s conduct does not rise to the level of wilful misconduct required… While the trial judge found that the touching was not accidental, he made no finding that the conduct was preplanned. Indeed, his findings with respect to the circumstances of the touching are consistent with the fact that the appellant’s conduct was done in the heat of the moment in reaction to a slight. Although his conduct warranted dismissal for cause, it was not the type of conduct in the circumstances in which it occurred that was intended by the legislature to deprive an employee of his statutory benefits.

[82] The appellant proved his entitlement to eight weeks of termination pay. However, as we were not directed to anywhere in the record of evidence that the respondent has a $2.5 million payroll, as required under s. 64(1)(b), the court is not in a position to award the requested 26 weeks of severance pay.”

It’s important to note that, had the Court not found that there was just cause to terminate Render’s employment, he might have been entitled to up to 24 months of pay in lieu of notice of termination.

What You Must Know

If you skipped “The Fine Print” and are rejoining us, welcome back. However, I suggest you at least read the bolded passages from the court decisions referred to above.

Key Takeaways

1. Cases involving allegations of just cause and wilful misconduct always turn on their own facts. Context is everything.
2. The standard for wilful misconduct – in which an employee will be denied their statutory entitlements due on termination – is higher than that for just cause. It requires behaviour that is not only wilful, but also pre-planned and not spontaneous.
3. A single incident of sexual harassment can amount to just cause under the common law.
4. Yet that same incident, if it is not pre-planned and was in “in the heat of the moment”, may not amount to wilful misconduct under the ESA.
5. Employers need to create and enforce “zero tolerance” sexual harassment policies and provide sexual harassment training. Employees (and especially managers) must abide by the policies and comply with the training.
6. Managers will always be held to a higher standard than non-managers.
7. As Feldman J.A. noted above, an overly familiar workplace atmosphere (including one resembling a football locker-room) is inappropriate and will no longer be tolerated. Every workplace should be based on mutual respect among co-workers to generate boundaries that should not be crossed.
8. One issue the Court of Appeal addressed, and which could not be covered in this blog due to space, was the employer’s litigation misconduct at trial (see paras. 83 – 91 of the decision), which disentitled it from receiving its costs of the trial.

 

Lingering Questions

1. Did the Court of Appeal create the proper standard for determining if an employee is guilty of wilful misconduct?
2. Even if pre-planning is the standard to be applied, did the Court of appeal apply that standard properly in the Render decision, in light of all of the facts?
3. What evidence would be required to prove that an employee pre-planned sexual harassment behaviour?
4. Will an employee who defrauds their employer of millions or even thousands of dollars, at the spur of the moment and without pre-planning, still be entitled to their ESA minimums – which can be as high as 34 weeks’ pay? If so, is this a fair result?
5. What about an employee who injures a co-worker in a sudden act of non-sexual violence in reaction to a slight?
6. As a result of Render, and as a practical matter, should employers always provide employees with their ESA minimums at termination even if they are alleging just cause? ESA Termination Pay is only between 1 – 8 weeks. Also, in many cases, there is no entitlement to ESA Severance Pay because of the size of the employer’s payroll. However, improperly refusing to pay ESA minimums can lead to a larger damages and costs award against an employer.
7. Finally, did the Court of Appeal err in not sending the matter back to the trial judge to consider possible new evidence about the size of ThyssenKrupp’s payroll? If it had a $2.5 million or higher payroll (and, presumably, it does as it is a large company), then Render would be entitled to an additional 26 weeks based on his length of service.

So, there are many questions left unanswered. We will need to wait to see how the law develops. I welcome any comments – or questions – you may have about this case, and… 

If you are an employer or employee, I can help guide your termination of employment scenarios, as well as workplace policies and contracts.  I have more than 25 years’ experience as an employment lawyer with satisfied, repeat clients.

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This blog is for educational purposes only and is not intended as legal or other professional advice.