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Author:
Charles Binns

Date:
2022.04.28

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THE EMPLOYERS' EDGE

Two Wrongs Don’t Make A Right: Cautionary Tale for Employers Delivered by Ontario Court of Appeal in Sexual Harassment Dismissal Case

Two wrongs don’t make a right.  That is the message from the Ontario Court of Appeal in its recent decision in Render v ThyssenKrupp Elevator (Canada) Limited where a nearly $74,000.00 cost award was overturned on the basis of litigation misconduct by the employer. The case also provides a useful summary of basic principles for employers dealing potential dismissal of an employee for engaging in sexual harassment. For those interested, we previously blogged on the trial decision in 2020, which can be located here.

Facts

The company terminated an employee with 30 years of service for cause after the employer investigated and confirmed that he slapped a female co-worker’s buttocks. The employee brought a wrongful dismissal action and argued that the employer did not have just cause to terminate his employment. He claimed that the touching was accidental and also argued that the termination of his employment was not proportionate or in accordance with the company’s progressive discipline policy.

During the trial, the harassment complainant conducted an interview with the press after her direct-examination but before her cross-examination and exchanged text messages about the case with others, including another witness in violation of an order of the Court. The Employer was found to have facilitated and promoted this conduct by hiring a Media Consultant who sent a media release to the press on the eve of trial containing allegations that were not proven in court.

The trial judge concluded that dismissal was a proportionate response having regard to the seriousness of the harassment; the zero-tolerance harassment policy; the appellant’s role as a manager in implementing the policy; the sexual nature of the contact; and the appellant’s lack of appreciation for the seriousness of his conduct. He also awarded costs of about $74,000.00 to the Employer, although noted that this award was about half of what it would have been but for the Employers’ litigation misconduct.

Decision

The Court of Appeal was asked to review several aspects of the trial judge’s decision, including: (1) whether there was just cause to terminate the employment relationship; (2) if so, whether the employee was entitled to Employment Standards Act, 2000 (“ESA”) notice and severance pay; (3) whether the trial judge erred in failing to award punitive damages or in his cost award based on the litigation misconduct of the employer?

The Court of Appeal had no issue in upholding the termination for just cause, but was careful to emphasize that all dismissals, even those based on harassment in the workplace, need to be assessed in their proper context. In particular, the law requires employers to consider:

  1. The nature and extent of the misconduct;
  2. The surrounding circumstances; and
  3. Whether dismissal is proportional response.

While the employee argued that the employer should have considered other disciplinary responses short of termination, the Court of Appeal rejected the argument that they were required to under the circumstances. In particular the Court of Appeal wrote:    

The core question on a case of just cause dismissal is “whether an employee has engaged in misconduct that is incompatible with the fundamental terms of the employment relationship”. In order to meet its onus on this question, the respondent does not have to prove that it went through the process of applying the three-part test prior to terminating the employee, although that would certainly be the best practice in order to satisfy its onus in court.

The Court went on to clarify that the duty is practical and cautionary and not a “free standing legal duty”. In any event, the Employee in this case did consider other less serious forms of discipline, but determined that anything less than dismissal would be viewed as condonation of the harassment.

As it relates to ESA entitlements, the Court of Appeal confirmed that statutory notice and severance pay can only be denied where an employee is guilty of “willful misconduct”, which is a higher bar than the common law just cause standard. As stated by the Court:  

Careless, thoughtless, headless or inadvertent conduct, no matter how serious, does not meet the standard. Rather, the employer must show that the misconduct was intentional or deliberate. The employer must show that the employee purposefully engaged in conduct that he or she knew to be serious misconduct. It is, to put it colloquially, being bad on purpose.

The conduct at issue was determined not to be pre-planned and the Employee was awarded his statutory notice period of eight weeks. No severance pay was awarded due to a failure of the Employee to provide evidence of the statutory qualifying criteria.

Finally, the Court of Appeal was asked to determine whether the Employers’ trial misconduct warranted punitive damages or a reassessment of the cost award made by the trial judge. The Court of Appeal confirmed that litigation misconduct can form the basis of an award of punitive damages, but deferred to the trial judge’s decision to address the issue in the cost award. The act of hiring a Media Consultant to provide information to the press and promoting the violation of a witness exclusion order was seen as an egregious act of misconduct which sought to undermine the fairness and integrity of the judicial system. As a result, the Court of Appeal overturned the cost award made by the trial judge, disentitling the Employer to the original $74,000.00 they were awarded at trial.

Takeaways

Obviously, Employers should not take termination decisions lightly, even where the allegations are serious in nature. Context is important, and all relevant factors should be considered prior to terminating an employee. That said, courts take harassment, and particularly sexual harassment, in the workplace very seriously. Where sexual harassment can be confirmed, serious disciplinary consequences up to termination may well be warranted, even for a single instance. However, Employer obligations do not end once an employee has been terminated. When in the midst of litigation, employers should always be mindful of the potential consequences of their actions, even where it occurs outside the courtroom. It is always best to seek legal advice in advance of any action that relates to ongoing litigation in advance.

If you have questions about the litigation process, harassment in the workplace, or are looking to institute or update workplace harassment policies, please reach out to the lawyers for employers at CCPartners for proper guidance and support.

Click HERE to access CCPartners' “Lawyers for Employers” podcasts on important workplace issues and developments in labour and employment law.

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