Does an employee have the common law right to procedural fairness in the manner of their termination

It is assumed by most H.R. professionals that employees are entitled to procedural fairness and, in particular, to be advised as to the reasons for dismissal from employment. In fact, there is no such right in private companies. Employees in private companies (i.e. non-governmental entities) have no common law right of procedural fairness in the manner of their termination, whether the termination is for cause or not. Similarly, employees have no legal right to an opportunity to respond to the alleged reasons for dismissal.

While it may not win many friends or build employee loyalty, employers can justify dismissal retroactively based on different grounds than those specified at the time of dismissal. The grounds eventually specified by the employer may not have even been known to the employer at the time of the dismissal (often referred to as “after acquired cause”). While employers do have a fairly wide discretion in how they describe the basis for the termination, this discretion does not eliminate the obligation on the employer to impose less draconian discipline where appropriate. Employers are still required to advise the employee of its performance concerns and give the employee a reasonable opportunity to improve his performance where such performance issues are capable of correction. Of course, where the performance issues go to the very heart of the contract (such as employee dishonesty), the employer is not required to give an opportunity to correct the performance.

It was assumed for many years that public sector employees were entitled to procedural fairness in the manner of their termination. However, in a lengthy decision of the Supreme Court of Canada in 1990, the Court held that most public servants are only entitled to the same rights of procedural fairness as those of other employees.

The courts of Ontario have been notoriously reluctant to find that an employee’s conduct has breached the threshold of cause. For example, in one decision of the Superior Court, the fact that the employee was found to have stolen food from the employer’s restaurant facility and had improperly charged personal purchases to the company credit card was not sufficient to justify immediate dismissal. Rather, the judge in that case felt that the employee should have been suspended with pay pending a full investigation.

While H.R. professionals may be well aware of the duty to warn of the possible implications of poor performance, many do a poor job of giving such warnings. The change in role from facilitator to critic is often a difficult transition. However, warnings which are unclear or equivocal will not be given any legal effect by the courts in considering whether or not cause has been made out. As one judge stated “giving an employee a mixed message by on the one hand reprimanding her and on the other giving her a raise and a promotion…” will not be considered proper warning. In order to ensure that the warnings given to an employee do have legal effect it is best that they be formulated in advance and reduced to a performance memo to be handed to the employee at the conclusion of the review. If properly drafted, such warnings will support the employer’s argument of cause. They will also be of assistance where the employer seeks to rely on successive instances of poor performance or actions inconsistent with the employment relationship as a basis for termination. Finally, clear expressions of the source of the employer’s dissatisfaction may actually prompt the employee to improve his performance, thereby avoiding termination altogether.

The duty to warn will not apply to instances of “serious misconduct”. However, the onus will be on the employer to prove such misconduct, and to satisfy a court it was in fact serious. While it is difficult to describe where the line is drawn over which misconduct will be serious, the court will consider the “nature and seriousness of the dishonesty in order to assess whether it is reconcilable with sustaining the employment relationship”. In other words, does the nature of the dishonesty make it impossible for the employer to continue to trust the employee to carry on her duties?

Employers should be cognizant of the degree of misconduct the court will require before cause will be found. In one Ontario case, the court concluded that comments of a sexual nature, including inappropriate suggestions as to conduct, were insufficient for dismissal without warning. However, in a different case, a judge of the same court concluded that unwanted sexual touching of a female employee by a supervisor was sufficient for a dismissal of the supervisor with cause, and therefore disentitled the the supervisor to notice. The court found that the supervisor’s long record of service to the company was irrelevant on these facts. It is interesting to note that the court commented on the effect of the supervisor’s continued denial of the alleged improper acts as limiting the employer’s options. Obviously, where the supervisor was not prepared to acknowledge that his conduct was improper, it was unlikely that an apology would be forthcoming.

Particularly in the case of employees with substantial years of service to the employer, the employer has a duty to fully and fairly investigate the allegations on which it is relying for termination. Such investigation is best carried out by an independent party in the H.R. department or, where possible, by an outside third party. The investigation should be fully documented, and the employee given ample opportunity to respond to the facts discovered in the course of the investigation.

As always, employers considering terminating an employee on the basis of such actions should obtain detailed legal advice based on the unique facts of the case, before taking any irrevocable steps.

Earl Altman
Partner
Garfinkle, Biderman LLP