How Not to Fire Your Canadian Employee

May 07, 2012 - by: Northern Exposure 0 COMMENTS

By Sean McGurran and Marisa Victor

The recent decision in Drake v. Blach in the Ontario Superior Court provides a good example of how not to go about firing an employee. It provides a good lesson on how employment law in Canada will come to the rescue of a wronged employee.

Background
The case involves an action for wrongful dismissal of a 46-year-old medical secretary against her former employer of more than 12 years, Dr. Peter Blach. Monique Drake had actually been working in the same office and in the same position for about 20 years. She spent the first seven years working for a different physician.

For most of the time Drake spent working for Blach, she was the only employee in the office and the relationship was amicable. In the last year, though, relations went downhill after Blach’s new wife got involved in the office’s management.

At that time, Blach cut Drake’s salary from $54,000 to $40,000 and scaled back other benefits such as vacation and sick days. Months later, he terminated her employment in a letter that cited a number of “performance issues.” The letter gave her eight weeks’ notice during which she was expected to continue working.

This case raises three main issues:

Constructive dismissal
Constructive dismissal is a term used to describe situations in which an employer essentially forces the employee to quit. Drake didn’t argue constructive dismissal because she was actually fired, but the judge stated that she could have. The sudden pay cut from $54,000 to $40,000, which Blach attributed to an accounting error, would have been enough for her to sue for damages for constructive dismissal.

The judge further suggested that the other changes made to Drake’s working conditions during her last year also could have satisfied a claim for constructive dismissal. Those conditions included no pay when she was not needed, no compensation for sick days, and a reduction to two weeks of vacation, preferably to be taken when Blach took his own holidays.

Termination for cause
Blach argued Drake had been fired for cause, even though the termination letter gave her eight weeks’ notice. Under Canadian employment law, terminating employment for cause can be done without any notice. As the judge in this case noted, termination for cause has been described as “the capital punishment of employment law.”

Dismissing an employee for cause requires proof of very serious misconduct — not just accusations. Blach listed several performance issues that he claimed had arisen over Drake’s last year of employment, but he never documented any specific instances. There was no written evidence of any discipline. As a result, the judge rejected Blach’s evidence and found that Drake had been wrongly dismissed.

Length of employment
The last issue that came up was the length of Drake’s employment. The issue was whether she was entitled to damages for wrongful dismissal in relation to the entire 20 years she had been working in the same office or in relation only to the 12 years she had been working for Blach.

The judge sided with Blach on this issue. He signed a new lease when he took over the office. He never entered into any agreement with the previous physician to take over the practice. So, even though Drake’s job effectively continued for 20 years, Blach was responsible to recognize only the 12 years she had been working for him. If there had been an agreement between the two doctors, he could have been on the hook for severance pay for the full 20 years.

Employer takeaway
Employers must appreciate the severity of firing an employee for cause. It requires specific and well-documented incidents of misbehavior and discipline. Significant changes to employment conditions like major pay cuts or an accumulation of less serious charges can support a claim for constructive dismissal. Finally, new business owners must be wary of assuming obligations to employees when acquiring all or part of an existing business.

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