When what’s good for business isn’t good employment law: What warrants termination for cause?

September 30, 2012 - by: Kyla Stott-Jess 0 COMMENTS

by Kyla Stott-Jess

Is a Canadian employer justified in terminating an employee for cause when that employee has disobeyed company policy? What if the consequences of the employee’s failure to follow policy put other employees at serious risk of harm? Not necessarily, said the Ontario Supreme Court recently in Barton v. Rona Ontario Inc.

Rather, the potential severity of any misconduct must be balanced against the employee’s attitude and past history when evaluating whether termination for cause is warranted.

Background

Kerry Barton was a longtime employee of Rona until the company fired him for cause in 2009. At the time of termination, Barton was the assistant store manager in Barrie, Ontario, and was responsible for managing about 140 employees. He had received good performance appraisals and had no disciplinary record.

Incident leading to termination

In spring 2009, a wheelchair-bound employee was scheduled to complete a training seminar on the upper floor of the Barrie store. Unfortunately, the upper floor, which contained all of the training materials, was not wheelchair-accessible. Several employees hatched a plan to hoist the disabled employee to the seminar using an order picker truck.

As you can imagine, it involved clear breaches of Rona’s health and safety policies. Barton was informed of the plan and, although he didn’t approve of it, he failed to prevent it. No one was harmed during the incident, but there were numerous significant risks for serious injury: The wheelchair wasn’t secured to the lift during the descent, the lift operator wasn’t wearing his fall protection harness, and the area below the lift wasn’t kept clear.

After investigating, Rona disciplined all of the employees involved. Only Barton was fired.

Barton’s lawsuit

Barton sued Rona claiming that his actions didn’t amount to cause. Rona argued that the termination was both justified (Barton’s management position equated to higher expectations about following policy) and necessary (Rona wanted to send a message to all employees about the importance of adhering to Rona’s safety standards). The court disagreed with Rona and found that the company wrongfully dismissed Barton.

Citing the leading case of McKinley v. B.C. Tel 2001 SCC 38 (CanLII), the court determined that a balance and proportionality needed to be achieved between Barton’s conduct and the sanction that Rona imposed. Given Barton’s excellent work record and attitude, termination for cause was unjustified and a stern warning would likely have sufficed.

In addition, although Rona was entitled to terminate Barton’s employment for business reasons, namely to send the message about the importance of health and safety, such a termination was a breach of Barton’s employment contract, and Rona owed him damages if it chose to proceed that way.

Lesson for employers

Barton emphasizes that the proportionality principle set out in McKinley is still key in determining whether termination for cause in Canada is warranted or not, even in situations where misconduct had the potential for serious harm. An employee’s overall attitude and history with the company must be balanced against the severity of any misconduct.

In addition, Barton illustrates that the best business decision arising from a breach of policy may not be the best decision from an employment law context. Although Rona’s business reasons leading to termination were legitimate, these motivations couldn’t justify a breach of an employment contract without providing notice.

About Kyla Stott-Jess:
Kyla Stott-Jess Kyla is an associate in Fasken Martineau’s Litigation and Dispute Resolution Group practicing in Calgary. She has appeared before all levels of court in Alberta as well as in arbitrations and mediation. She also has assisted clients in administrative proceedings before the Alberta Utilities Commission. Kyla’s practice encompasses a broad range of complex corporate/commercial disputes, with a particular focus on employment law and estate litigation.
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