Improper Allegations Of Just Cause May Result In Punitive Damages
An Ontario Small Claims Court decision illustrates the danger of an employer improperly alleging just cause as a reason for dismissing an employee. The employee was award $6,707.08 in damages related to failure to provide reasonable notice and another $10,000.00 in damages because the employer had improperly alleged just cause.
The employee was hired to build up the human resources department of the employer. Prior to her start, the employer did not have a human resources department, did not have a disciplinary or evaluation process and did not have a policy manual. The employee was tasked with creating the policy manual and with keeping files on each employee.
An incident occurred within the employer which resulted in the termination of three other employees. The employee was asked to prepare and organize the files on those three employees. Before doing so, she was suspended pending an investigation into inter alia her general duties including whether she was maintaining employment files.
The employer alleged that the investigation revealed that the employment files were missing and the employee was terminated. She sued.
The court accepted the argument that the employee was wrongfully dismissed. Rather it found that the investigation was conducted after the decision to terminate the employee had been made. The termination allowed the employer to have a "clean slate" to bring in new employees for the department. Additionally, the court found that there was no evidence to support the allegation that files were missing.
The amount of punitive damages awarded was approximately 150% of the amount awarded for failure to provide reasonable notice. This amount indicates the court's willingness to sanction employers for improper allegations of just cause.
The Lesson: Before termination a bona fide investigation must be conducted with a clear plan which allows the employee an opportunity to respond to the allegations of wrongdoing. Proper documentation of the investigation is recommended. It is also recommended that the employer seek legal advice as to whether the alleged misconduct gives rise to termination or whether a less severe form or discipline should be given. Failure to properly investigate and to keep any discipline proportionate to wrongdoing could result in an award of damages for wrongful dismissal and punitive damages.
Barry v Certified Equipment Sales Services and Rental Ltd., 2017 CanLII 77433 (ON Sm. Cl. Ct.) https://www.canlii.org/en/on/onscsm/doc/2017/2017canlii77433/2017canlii77433.pdf
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