On December 30, 2019 the Supreme Court of Newfoundland and Labrador (the “NLSC”) released its decision in Re Norcon Marine Services Ltd. (“Norcon”) dismissing both an application by a debtor, Norcon Marine Services Ltd., for creditor protection under the Companies’ Creditors Arrangement Act (the “CCAA”), and a competing application by a secured creditor, the Business […]read more
Employee Misconduct: Is it Cause for Dismissal?
A recent case from the Ontario Superior Court of Justice serves as a good reminder to employers that there is a high standard to dismiss an employee for cause, particularly if it is a long serving employee with a good performance record.
In Smith v Diversity Technologies Corporation, 2014 ONSC 2460, an employee with 10 years of service was dismissed purportedly for cause following one incident of misconduct. After being instructed to only accept orders from a customer who owed the employer $100,000 on a cash or credit basis, Mr. Smith took an order in the amount of approximately $1,200 and accepted a cheque as payment. The employer took the position that Mr. Smith was insubordinate and terminated his employment for cause.
The Court found that Mr. Smith was an exemplary employee who was viewed as dedicated, reliable, dependable and valuable by his employer. Further, even if Mr. Smith had intentionally made the sale in contravention to the employer’s rule, it was the first mistake he made in his employment and the amount at issue was “trifling”.
The Court held that given Mr. Smith’s length of service and impeccable employee record, the employer was not justified in terminating his employment for cause. Instead, the employer should have met with him, explained that his actions were in violation of company policy and provided him with a written warning. The Court stated that if the employer had taken these steps and Mr. Smith had persisted in taking orders from the client and accepting cheques as payment, the employer would have had grounds for termination for cause.
Employers should be very careful in dismissing an employee for cause or they could be exposed to significant liability for wrongful dismissal. The employer must be able to show that the termination was proportionate to the employee’s misconduct, having regard to the entire employment relationship, including the employee’s position, length of service and performance record.