The recent decision in Drake v. Blach (PDF) in the Ontario Superior Court provides a good example of how not to go about firing an employee.  

Background to the Case

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. Blach. Ms. 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 she spent working for Dr. Blach, Ms. Drake was the only employee in the office and the relationship was amicable. In the last year though, relations went downhill. At that time, Dr. Blach cut Ms. Drake's salary from $54,000 to $40,000, and scaled back other benefits such vacation days and sick days. Months later, Dr. Blach terminated her employment in a letter, which cited a number of "performance issues". The letter gave Ms. Drake 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 did not 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 Dr. Blach attributed to an accounting error, would have been enough for Drake 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 could have also satisfied a claim for constructive dismissal. These included no pay when she was not needed, no compensation for sick days, and a reduction to two weeks of vacation to be preferably taken when the Dr. 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. Terminating employment for cause allows an employer to terminate 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. Dr. Blach listed several performance issues that he claimed had arisen over Drake’s last year of employment. But he never documented any specific instances and there was no written evidence of any discipline. As a result, the judge rejected Blach’s evidence and found that Drake had been wrongfully 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 the entire 20 years she had been working in the same office, or only the 12 years she had been working for Dr. Blach.  

The judge sided with Dr. Blach on this issue. Blach 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, Dr. Blach was only responsible to recognize 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 in respect of 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 misbehaviour and discipline. Significant changes to employment conditions like major pay cuts, or an accumulation of less serious changes, 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.