Clear written progressive discipline policy a necessity
When dealing with non-unionized employees, the arsenal of disciplinary tools an employer has available to it have always been limited: a few warning letters, suspension without pay followed by a termination.
Most readers will be familiar with that three-step process. The concepts have been around a long time. The Ontario Court of Appeal, however, does not agree. In a recent decision, the Court of Appeal indicated that unless there is an express written policy within the organization notifying the employees that one disciplinary tool may include suspension without pay, that suspension can be interpreted by the employee as a termination.
A 14-year employee was put in charge of making sure some marketing tools arrived at a trade show in Barcelona in time for the event. They didn’t get there. After some heated emails between her and her boss, she was suspended without pay for an undefined period.
When invited back a week later, she did not return. She took the position that she had been constructively dismissed. A constructive dismissal is a situation where the employer has not said, “You’re fired”, but has done something so outrageous that the employee has the right to treat the contract as fundamentally breached. She can sue for pay in lieu of notice.
The trial judge noted that there was no company policy which warned employees that as part of a disciplinary process they could be suspended without pay. The trial judge found in the employee’s favour and awarded her severance. The issue was appealed to the Ontario Court of Appeal. The employer thought that the trial judge should have implied into the contract the principle that disciplinary measures short of dismissal may be appropriate responses for some conduct. The Ontario Court of Appeal said that historically, the discipline of employees did not include unpaid suspensions from work of uncertain duration. They upheld the trial judge’s decision.
It didn’t help in this situation that when the employee was invited back to work a week later, she was told that she was being demoted, losing her flex hours and moving from an office to a cubicle.
It’s impossible to say what the Court of Appeal would have done if this employee had been told from the beginning how long her unpaid suspension would last. Employers, however, should assume the worst. A simple progressive discipline policy in the employee handbook such as the one that follows should suffice:
The Company reserves the right to use a progressive discipline process where appropriate. That may include warning letters, a suspension, with or without pay, for a defined or undefined period and termination. Depending on the severity of the circumstances, the Company may, at its discretion, omit one of these steps.
Despite the wording of the policy, it does not give the employer carte blanche to act frivolously. A suspension which is malicious and unfounded may still give the employee the right to not return and commence a lawsuit. The lawsuit, however, will be more appropriately about whether or not the suspension was malicious rather than whether the suspension constituted a dismissal regardless of the employee’s conduct They courts will intercede, if the employee can prove that the suspension was completely fickle and in bad faith. That’s a tough case to prove.
Using a disciplinary process can help the Employer avoid paying a severance package. It can help establish that there was just cause for the termination. It is rare that negligence or incompetence will ever constitute just cause no matter how many warning letters are created. The employee’s conduct has to rise in almost all cases to the point of willfulness. If an employee is simply incapable, a severance package will have to be paid.
But Employers should not view progressive discipline as simply a way to avoid an eventual severance payment. The fundamental idea is to salvage the relationship.
I have written before about the law of inertia. I have seen many situations where long-term employees don’t really believe in their heart of hearts that they would ever be terminated.
Often, a strongly worded letter or a suspension for 3 days to a week without pay will send the message home.
For the employer, that is a lot less painful than hiring and training an entirely new employee as well as paying out a severance package.
As published in The Hamilton Spectator, February 10, 2007.