Employers can discipline and even dismiss employees for off-duty conduct. However, a recent decision of an Ontario Court suggests that the circumstances where outright termination is permitted are quite limited. In Merritt v. Tigercat Industries (PDF), the Court found that an employee who had been fired after being criminally charged with sexual assault was wrongfully dismissed. The employee was awarded damages for pay in lieu of notice of dismissal.

Background

Mr. Merritt was a 67-year old labourer with Tigercat Industries, a forestry and industrial machines company. He had been with the company since 1998 and was dismissed in February 2015. The Company said it had just cause.

Merritt was arrested at a Tigercat facility and was charged with two counts of sexual assault against minors. Management met with Merritt the following day, but he declined to provide any details of the charges, saying only that the alleged events did not happen at the workplace and did not involve any Tigercat employees. Merritt was asked to resign, but refused. Instead he agreed to take a two-week leave of absence.

When he returned to work, Merritt was fired right away. No investigation report was generated. No written notice or reasons for termination were given.

Merritt then sued Tigercat for wrongful dismissal. The Company took the position that Merritt had been terminated for cause based on his criminal charges and the reputational harm those charges had caused to Tigercat.

Decision

The trial judge criticized Tigercat for failing to conduct an investigation before making the decision to fire Merritt. The criminal charges were not associated with his employment and did not involve other employees. There was no evidence of damage to Tigercat's reputation. The Court determined that Tigercat had failed to demonstrate it had just cause. Merritt was thus awarded 10 months' pay as damages for wrongful dismissal.

The decision highlights that improper conduct of an employee while not at work may form grounds for termination with cause, but in very limited circumstances. The onus is on the employer to prove one or more of the following about the off-duty conduct:

  • It harms the company's reputation or product;
  • It renders the employee unable to satisfactorily perform his or her duties;
  • It leads other employees to refuse or be reluctant or unable to work with him or her;
  • It amounts to a serious breach of the Criminal Code, that is injurious to the general reputation of the company and its employees; or
  • It makes it difficult for the employer to efficiently and effectively manage the work force.

It is not necessary that all of the above factors exist. Depending on the impact, any one factor may warrant discharge for cause. What is crucial is that there is a justifiable connection between the conduct and the employer or nature of employment.

The Court clearly stated, though, that criminal charges alone do not constitute just cause for dismissal, when they arise outside of work.

Takeaway for Employers

Off-duty conduct, no matter how reprehensible, will generally not constitute just cause for dismissal. There must be a clear link between the behaviour and the job; or the employee is in a "front-line" or public position and their continued presence could damage the employer's reputation.

It is important for employers to proceed cautiously in these cases. A proper investigation will be crucial. This process should involve obtaining relevant statements, keeping thorough records, complying with all workplace policies, and giving the employee an opportunity to respond to the allegations of misconduct.

This is not to say that employers may never terminate or discipline employees for conduct outside the workplace. But employers should be aware of the risks and protect themselves from liability.