Termination for just cause has been among the strongest rights an employer has to deal with the termination of an unruly, incompetent or disobedient employee. Although the bar to establish just cause has been set high, employers have traditionally been able to dismiss an employee immediately, and with no obligation to pay any termination pay once the test for just cause has been met. However, a new decision of the Ontario Superior Court of Justice, dated March 14, 2011 establishes that even when just cause is found, a dismissed employee may still have a claim for termination and/or severance pay under the Employment Standards Act, 2000, if the actions leading to dismissal do not meet the standard of “wilful misconduct, disobedience or wilful neglect of duty” set out in the ESA.

In a case that should concern employers, the Ontario Superior Court of Justice has determined that a termination according to a progressive termination policy is not sufficient to disentitle the employee from the termination and severance pay entitlements of the Employment Standards Act, 2000.

Facts:

Stephanus Oosterbosch was 53 years of age, and had been employed by FAG Aerospace Inc. as a machine operator for nearly 18 years when he was dismissed without notice and for cause on April 1, 2009. The employer is a manufacturer of bearings for the aerospace industry. Precision and quality control are essential since the failure of such parts can be catastrophic. As such, machine operators need to be vigilant and keep careful records of any production problems. Scheduling is also a key consideration for the employer, given the intricate nature of the production process.

Oosterbosch was dismissed pursuant to the employers progressive discipline policy, under which four written warnings within a 12 month period could result in dismissal. Oosterbosch received four written warnings between August 22, 2007 and March 20, 2008. However, each of the warnings were for relatively minor incidents, being (i) failure to notice a defect on the production line; (ii) returning approximately 15 minutes late from a 30 minute break; (iii) arriving late for his shift (Oosterbosch was given a two-day suspension for this third infraction); and, (iv) further failure to notice a defect on the production line, and falsification of a production report. Upon receiving his fourth written warning, Oosterbosch was terminated. Oosterbosch then filed an action for wrongful dismissal. The Court’s Decision:

Following a trial, Justice Haines was satisfied that Oosterbosch’s termination was in accordance with the employer’s policy, and constituted justification for his termination at law. Beyond the four infractions that directly led to his termination, Oosterbosch was found to “demonstrate a sustained course of casual and careless conduct that was inconsistent with the continuation of his employment.”

However, the Court went on to state that Oosterbosch’s offending behaviour was not “wilful misconduct, disobedience or wilful neglect of duty” that would disentitle him to receipt of termination and severance payments under the provisions of the Employment Standards Act, 2000. In the result, notwithstanding the finding of just cause at common law, the Court awarded Oosterbosch nearly $8,000 for 8 weeks termination pay, and over $17,000 for severance pay, reflecting his 17 years and 4 months of employment.

Our Views:

While it is too early to tell if this decision will be appealed, the case stands for the proposition that there can be a distinction between what constitutes just cause at common law and what is sufficient to exclude payment of ESA termination and severance pay. We will update this post when and if an appeal is filed or there are further material developments.