THE EMPLOYERS' EDGE
Court Upholds Just Cause Termination of Long Service, 75-Year Old Employee Due to Dishonesty and Breach of Fiduciary Duty
Just cause terminations are often referred to as “capital punishment” in the Employment and Labour Law world. This is owing to the fact that these terminations allow an employer to dismiss an employee, without providing any notice or pay in lieu of. As such, these terminations are only reserved for instances where the respective employee’s misconduct is so egregious that no reasonable employer would be expected to continue the employment relationship.
Often, a termination for just cause will occur following the discovery or incident of a single actionable wrong, such as: theft, workplace sexual harassment or off-duty conduct. However, the recent Ontario Superior Court decision in Goruk v. Greater Barrie Chamber of Commerce, 2021 ONSC 5005, illustrated that numerous less “major” acts of misconduct under the right circumstances, may be taken together to effectively form a valid just cause termination.
The 75-year old plaintiff employee had been employed by the defendant employer for nearly seventeen (17) years as their Executive Director. Throughout the plaintiff’s tenure, she was considered to have been a “terrific” employee, with an employee file entirely “bereft of concerns, complaints or disciplinary actions.” However, this all changed when the plaintiff was placed on a paid administrative leave pending an investigation into unparticularized “irregularities”. Over two (2) months later, the plaintiff’s employment was subsequently terminated, by email, for just cause, without any further notice, compensation or severance provided to her at the time of termination.
The defendant contended that it had just cause to terminate the plaintiff’s employment because she had allegedly breached her duty to act in the organization’s best interests, in numerous ways, including by:
- altering a bank document;
- taking unauthorized vacation pay;
- granting herself an unauthorized pay raise;
- awarding contracts to her sons without following the Chamber’s established protocol and without disclosing those transactions to the Chamber’s auditor;
- suppressing a letter from the Chamber’s auditor which expressed a number of concerns regarding their financial statements; and
- reimbursing herself for charges on her personal American Express credit card without supplying proper supporting documentation.
The plaintiff naturally disagreed with the defendant’s position and alleged that her dismissal was wrongful and disingenuous. She sought damages in excess of $800,000 comprised of notice (24 months’ salary and car allowance), aggravated damages and punitive damages.
Justice Cary Boswell, speaking for the court, highlighted the following factors as critical elements of their analysis:
- The defendant is a volunteer-based, non-profit organization which serves the interests of hundreds of members, who pay annual fees to be a part of the organization. These consideration further heightened the importance of maintaining the defendant’s reputation for integrity and honesty;
- The defendant relies upon a Board of Directors for governance and the Executive Director for hands-on day-to-day management. As such, the Board could engage in only modest oversight of the plaintiff’s activities and relied implicitly on her integrity and trustworthiness; and
- The plaintiff was considered a fiduciary in her position as Executive Director. As such, she owed them duties of loyalty, honesty, good faith, a strict avoidance of conflicts of interest and to act in their best interests, at all times.
Justice Boswell carefully reviewed each act of misconduct listed above and found that any one of the acts taken alone would not be sufficient to support a termination for just cause. However, Justice Boswell indicated that taken together, these acts demonstrated the plaintiff’s recent “tendency to exercise very poor judgment in significant ways” and an “aspect of dishonesty”. As such, having determined that honesty, faith and trust were integral components of her employment – Justice Boswell concluded that just cause existed for her termination. Accordingly, no further compensation was owing to the plaintiff on account of notice or aggravated or punitive damages.
In October 2021, Justice Boswell considered the parties’ written submissions on costs. While Justice Boswell considered the plaintiff’s contestation to the amounts requested by the defendant – he swiftly stated that while unfortunate, the plaintiff was well aware of the “well-established convention […] that losers pay the winners a significant portion of their costs” adding that “litigation is an expensive business […] it is not for the risk-averse or the faint of heart.” Ultimately, Justice Boswell ordered the plaintiff to pay the defendant employer $125,000 (pre-HST) in costs.
The plaintiff employee in this decision had many of the factors that generally result in high notice awards. For instance, she was: advanced age, long service and a high-ranking employee with a clean disciplinary record. However, her position as a fiduciary, coupled with the nature of the defendant employer as a non-profit organization – resulted in the court applying a more critical lens when reviewing her acts of misconduct. With this lens applied, it is easy to see why the court ultimately determined that the plaintiff’s conduct taken as a whole was incompatible with the fundamental terms of the employment relationship.
As such, while we consistently caution our employer clients that justifying a just cause termination is high bar to meet – this decision effectively reiterates that employees, no matter their seniority or age, are not immune to the “capital punishment” of termination, under the right set of circumstances.
The CCP team can assist employers experiencing difficulty navigating their termination obligations, with expert legal advice and ways to minimize liability. Please contact one of our lawyers who can assist with all of your workplace concerns.