BAD FAITH DAMAGES AS A RESULT OF NO JUST CAUSE
Message to all employers: if you have to terminate someone, do it as nicely as you can and try to avoid having them taken from the office to jail by the police. You will pay for it later. A man we will call James was hired to be the executive director of a non-profit corporation in November of 2000. He started with a 6-month probationary period which was completed successfully.
About a year after he started, he received his first performance review which said many positive things about him. The Board of Directors, however, wanted him to improve his relationship with staff, members of Board and Human Resources and Development Canada, their major funder.
Two months after the performance review, James was called into a meeting with all Board members and handed a letter telling him he was terminated for just cause. The Board told him that he was being terminated for not getting along with staff.
James left the boardroom. A number of the staff had gathered outside the door as they wondered what was going on. When he asked them if they agreed that he didn’t get along with him, there was no response.
James went into his office. Eventually, a few of the Board members followed him into his office and found that he was working on the computer. The Board members present decided he was deleting files and one of them lunged towards him to try to unplug the computer. Apparently, James got pushed and he pushed back. One of the Board members then pinned him to the wall and the police were called. The police came, escorted him from the building on the main street of the small town where he worked, put him in the squad car, took him to the police station, took his finger prints and photograph and left him in the jail cell for the rest of the day. When he got home that night many of the staff were at his house to provide support.
When James sued for wrongful dismissal, claiming that he was owed reasonable notice of the termination, the Board of Directors said they had just cause for his termination and owed him nothing.
When James applied for Employment Insurance and his application was allowed, the Board appealed it. You are entitled to Employment Insurance when you are terminated but not if you are guilty of willful misconduct. The Board fought the appeal hard but lost and James got the EI.
Many employers take the position that there is just cause for a termination but few of them actually argue it when the matter gets to trial. This employer did and in fact kept coming up with new reasons for the termination, even as the trial was taking place. The reasons they came up with are too numerous to review here. Nobody seems to have told this Board that unless somebody is guilty of a very serious act of misconduct such as theft or intentional serious dishonesty, if you have not given the employee warning letters letting them know what they are doing wrong and that it is endangering their employment, you will not establish just cause. Maybe the Board was told but just listen.
One of the many arguments the Board made is of some interest. Just before James’ termination, they learned that he had been fired from a job he left 10 years before they hired him for an incident involving a forged receipt and having an affair with another employee’s wife.
The Board claimed that even though they didn’t check this reference or ask James why he left that job, that he had an obligation to tell them about the events. The judge did not agree. He noted that James did not exaggerate his credentials or mislead the Board about his qualifications and was under no obligation to tell them his entire work history unless he was asked a question which would have elicited the information. Otherwise, the judge noted, anyone terminated for misconduct would never be employed again.
The judge decided that there was no just cause for James’ termination and that he was owed reasonable notice. The judge said that in normal circumstances James would be entitled to 6 months pay in lieu of notice. It is noteworthy that James was only in this job for about 14 months. 6 months notice is the high end of what a middle management position would get after 14 months of work.
That, however, is not the end of the story. As a result of the manner of James’ termination, and the fact that the employer vigorously opposed James’ entitlement to Employment Insurance, even though it wasn’t costing them a dime, the judge award another 6 months pay in lieu of notice. These are called bad faith damages. The judge found that the Board breached its obligation to treat James in good faith. The judge found that the Board’s conscious decision to fire James in the workplace at the beginning of a working day also constituted bad faith. The impression left was that the Board was intentionally setting up James to be humiliated in front of his staff.
James got almost as much from his court judgment as he did for working there for 14 months. I have heard for many terminations gone wrong, but this one may take the cake.
As published in the Hamilton Spectator, October 8, 2005
Ed Canning practices labour and employment law representing both employers and employees with Ross & McBride LLP.