The Ontario Court Of
Appeal’s Ruling In Minott On Wrongful Discharge
Lisa Kirby (Toronto)
Tel: (416) 865-6973
On January 9, 1999, the Ontario Court of Appeal issued a decision in the case of Minott v. O’Shanter Development Co., which answers several questions of substantial consequence to employers regarding wrongful dismissal actions and subsequent trial awards. The ruling is instructive for any multinational corporation operating in Canada.
The Question Of "Just
Cause"
The first question answered by the court’s
decision in Minott is whether or not a long-time employee can be dismissed for
deliberately refusing to report to work. According to the decision, such a refusal alone
does not constitute just cause for dismissal.
The case involved Timothy Minott, who had worked at O’Shanter
Development Co. for 11 years. Until his dismissal, his employer had no complaints about
Mr. Minott or his work. The dispute began when Mr. Minott decided to cash in his Canada
Savings Bonds that he had purchased through payroll deductions. At the time, Mr. Minott
owed the employer money, so the employer first deducted that amount. Because of the
deduction, Mr. Minott lost the opportunity to purchase a new car, which had been his sole
purpose in cashing his Savings Bonds. Mr. Minott was annoyed by the turn of events and he
did not report for work for two days, nor did he contact his employer to advise that he
would be absent; thereafter, the employer suspended him. A misunderstanding between Mr.
Minott and his supervisor as to the dates on which the suspension was to be served led to
a heated argument, following which Mr. Minott was terminated. At trial, the judge
concluded that Mr. Minott had been honestly confused about the dates on which his
suspension was to have been served, and therefore, his failure to return to work on the
date that his employer expected him was not just cause for his termination. On appeal, the
employer argued that the judge’s finding of fact about Mr. Minott’s "honest
confusion" was not supported by the evidence and was therefore an error that ought to
be reversed.
The Ontario Court of Appeal refused to second-guess the trial
judge’s finding of fact. It determined that "[e]ven if Minott knew he was
expected to work on November 14, yet wilfully refused to do so… his refusal did not
give O’Shanter cause to dismiss him." While the Ontario Court of Appeal
acknowledged that wilfully missing a day’s work might justify dismissal "in a
rare case," it does not do so in a case where the employee otherwise had a long
record of loyal service to the employer and was not given any warning that his job was in
jeopardy.
The Difference Between
"Misconduct" And "Just Cause"
Prior to the decision, Mr. Minott had been found to have lost
his job "by reason of his own misconduct" by a Board of Referees constituted
under the Employment Insurance Act. However, in its decision, the Ontario Court of Appeal
concluded that a finding of "misconduct" under the Employment Insurance Act does
not necessarily mean that an employer has just cause for the worker’s dismissal, and
conversely, that an employer may have just cause for dismissal even though an employee has
not engaged in misconduct. The Court of Appeal ruled that "just cause" at common
law requires a much broader inquiry into the issue of misconduct than for purposes of an
employee’s eligibility to receive employment insurance benefits.
While misconduct focuses narrowly on the employee’s actions, the
Court of Appeal held that the determination of just cause must take into account a host of
other considerations, such as the seriousness of the conduct; the employee’s
disciplinary history; whether the conduct was an isolated or aberrant incident; whether
the employee received any warnings about his conduct; the employee’s length of
service; and how (or whether) other employees were disciplined for similar behavior.
Because these factors are not normally considered to determine misconduct under the
Employment Insurance Act, the Court of Appeal found that the question at issue for
purposes of employment insurance benefits is not the same question that is at issue
in a wrongful dismissal action.
The Question Of Issue
Estoppel
The question as to whether a finding of a Board of Referees,
under the Employment Insurance Act, prevents the employee from maintaining an action for
wrongful dismissal was also addressed in the Minott case. According to the Court of
Appeal’s decision, the answer is no.
In Minott, the employer relied on the principle of "issue
estoppel" to argue that Mr. Minott was not entitled to maintain an action for
wrongful dismissal based on the Board of Referees’ decision. Issue estoppel in Canada
prevents the re-litigation of an issue that a court or tribunal has decided in a prior
proceeding. It has a pervasive application at common law and applies not only to decisions
made by the courts, but also to those made by administrative tribunals. In order for issue
estoppel to apply to a subsequent proceeding, three criteria must be satisfied: (i) the
same question must be at issue; (ii) the judicial decision which is said to create the
estoppel must be final; and (iii) the parties to the subsequent proceeding must be the
same as those in the original proceeding.
The Court of Appeal in Minott found that the employer’s
assertion of issue estoppel in this case failed on the first and third criteria. The Court
of Appeal refused to apply the principle of issue estoppel to Minott because the
parties to the two proceedings – the Board of Referees and the court action for
wrongful dismissal – were not the same. The Court of Appeal noted that deciding
whether the "same parties" requirement has been met is a difficult issue when,
as in this case, one of the parties to the second proceeding (the court case) was entitled
to participate in the first proceeding (the Board of Referees), but chose not to do so.
This issue has long plagued employers in Ontario since the Court of
Appeal decided the case of Rasanen v. Rosemount. In Rasanen, issue estoppel
was applied to prevent the litigation of a wrongful dismissal action after a Referee under
the Employment Standards Act ruled that an employee was not entitled to termination pay
because he had been "laid off after refusing an offer by his employer of reasonable
alternative work." Prior to the Rasanen decision, employers often did not
appear on applications or employee appeals for unemployment insurance benefits because the
stakes in such actions are small and employers have no direct financial interest in their
outcome. However, because such proceedings are generally considered to be
"employee-friendly," the Rasanen decision created a number of unanswered
questions for employers:
- Should they participate in the proceeding in the hopes of proving their allegation of misconduct?
- Should they not participate but risk a finding favourable to the employee, which may bind them in a subsequent wrongful dismissal action?
- Even if they choose not to participate, will receiving the notice of hearing coupled with their right to participate be sufficient to satisfy the "same parties" requirement of issue estoppel?
- Should they take a middle ground and make written submissions on the issue of misconduct? And, if they do so, would such action constitute participation sufficient for the purposes of applying the principle of issue estoppel in a subsequent civil action?
The decision in Minott clarifies these issues for employers. The Court of Appeal decided that whether the "same party" requirement has been met for purposes of applying issue estoppel depends upon the degree of a party’s participation in the first proceeding. In Minott, while the employer did not participate in the hearing, it did provide a written statement outlining the circumstances that led to Mr. Minott’s dismissal. The Court of Appeal found that the Board of Referees relied on the employer’s written statement in reaching its decision. However, it also found that providing a written statement about the circumstances of the termination did not constitute "participation" in the administrative proceeding sufficient to make the employer a party to the proceeding. The Court of Appeal reasoned that to find otherwise might turn a "right to participate" in a proceeding into a practical obligation to do so. This would provide a perverse incentive for employers to participate actively in hearings in which they have little practical interest in the outcome.
Using The "Rule Of
Thumb" To Determine Wrongful Dismissal Damages
For years, Canadian employment lawyers have been advising
clients that in cases of termination, if cause is not present or not proven, then
employees are entitled to reasonable notice of termination, and, in turn, that reasonable
notice is determined based on a number of factors including: (i) the employee’s
length of service; (ii) the character of the employment; (iii) the employee’s age;
(iv) the availability of similar employment having regard for the employee’s
training, skills, and qualifications; and (v) the prevailing economic climate at the time
of termination.
Employers also have relied on a generally accepted "rule of
thumb" – that, if successfully litigated, an award of damages for wrongful
dismissal is likely to be in the approximate range of one month’s notice or pay in
lieu thereof for every year of service. This "rule of thumb" guided the trial
judge in the Minott case as to the reasonable notice to which Mr. Minott was
entitled; the trial judge also increased Mr. Minott’s award to account for his age
and for the limited likelihood of him finding alternative employment, and awarded 13
months’ compensation in lieu of reasonable notice.
The employer in Minott argued that the trial judge’s award
of 13 months’ compensation was excessive because the trial judge failed to consider
the distinction between reasonable notice for a labourer and reasonable notice for a
managerial, supervisory, or executive employee. In this regard, the trial judge stated
that she found "no basis in fact or in law to decrease the (13-month) award given to
Mr. Minott because he is a plasterer rather than an executive."
However, subsequent to the release of the trial decision, the Court of
Appeal reversed the decision on which the trial judge had relied for this holding. In Cronk
v. Canadian General Insurance Co., the Court of Appeal endorsed the notion that
clerical workers (or labourers) are generally entitled to less notice than senior managers
or specialized employees. Mr. Minott’s employer, however, took the argument a step
further and argued that the Court of Appeal in Cronk had in fact set an upper limit
of 12 months on wrongful dismissal damage awards for non-managerial employees. On this
last point, the Court of Appeal in Minott disagreed.
Despite its finding that the trial judge made two palpable errors in
reaching the decision as to the quantum of Mr. Minott’s compensation, the Court of
Appeal refused to intervene and concluded that the "rule of thumb" approach was
not appropriate. The Court of Appeal commented that determining entitlement to reasonable
notice is an art, not a science, and the "rule of thumb" approach over
emphasizes one of many factors (i.e., length of service) at the expense of all the
other factors that must be considered on a case-by-case basis. Therefore, the Court of
Appeal accepted that there will always be a range of what is considered
"reasonable." So long as the trial judge was not outside that range, the Court
of Appeal opined that it would not intervene with the award at trial, even when, as in Mr.
Minott’s case, the award was on the very "high end" of what might be
considered reasonable.
Conclusion
While the Court of Appeal’s decision in Minott
may well have answered some perplexing issues for employers, its impact may well be felt
in more expensive settlements of wrongful dismissal actions. Each of the questions
answered by the Court of Appeal seems to incrementally increase the bargaining power of
employees, which will no doubt make for a shift in the negotiating dynamic most employers
have experienced to date.
Refusing
Work Due To Allegedly Unsafe Co-Workers
David Cote (Toronto)
Tel: (1-416) 865-6924
In Canada, an employee has the right to refuse to work due to unsafe conditions. Yet, there are conflicting opinions as to whether or not an employee can legally refuse to work with a co-worker because the employee believes the co-worker is unsafe. The uncertainty comes from inconsistently written health and safety laws and conflicting decisions from Labour Relations Boards. There are, however, certain guidelines employers can follow when faced with these situations that will help protect them from potential legal exposure.
The Law
In Canada, each province has specific health and safety
statutes that permit employee complaints of unsafe work. In Ontario, this subject is
governed by the Occupational Health and Safety Act ("OHSA"). Part V of OHSA is
devoted entirely to the rights and duties of workers in refusing unsafe work situations.
Certain classes of workers, such as fire fighters, police officers, and some hospital
workers, are sometimes exempt from the right to refuse unsafe work. Workers may refuse to
work where they have reason to believe that equipment or the workplace is unsafe.
Essentially, this means the worker must have an "honest belief" that the
situation is unsafe. This requirement is designed to stop workers from using health and
safety laws for other purposes unrelated to real workplace safety issues.
An employee who feels that the workplace is unsafe must promptly report
the situation to management. In turn, management is required to investigate the
worker’s concern immediately in her or his presence, along with a worker health and
safety committee member (or with a worker health and safety representative if no committee
exists). A worker committee member or representative must be involved in the
investigation; having a management member is not sufficient. Management and the health and
safety committee member/representative must make their best determination about whether
the situation is truly unsafe. If the worker disagrees with their conclusion (or
management and the health and safety committee member/representative cannot agree among
themselves), the situation proceeds to the next level.
At the next level, the worker must have more than an "honest
belief" that the work is unsafe. Rather, the worker must have "reasonable
grounds" for the belief. Under the "reasonable grounds" test, there must be
an objective basis for the concern, beyond the honest belief of the worker. At this level,
a Ministry health and safety inspector must be called in from the Health and Safety
Branch, who will review the situation and render a decision. If either party disagrees
with this decision, it can be appealed under the existing law.
Refusing To Work
There is some confusion as to whether an employee can
lawfully refuse to work with a co-worker that he or she thinks is working unsafely. This
depends, at least in part, on whether the applicable health and safety laws allow workers
to use the right to refuse unsafe work provisions in these situations. However, even the
Labour Relations Boards have interpreted the laws differently.
For example, in Kucher v. Canadian National Railway Company
[1996] C.L.R.B.D. No. 30, Mr. Kucher refused to work a shift with a particular co-worker,
claiming that the co-worker engaged in unsafe work practices. Mr. Kucher relied on the
right to refuse unsafe work found in the Canada Labour Code. Mr. Kucher was disciplined
for his refusal, after which he then filed a complaint against the employer, claiming that
it had taken a reprisal against him for raising a health and safety concern. At the
hearing, the following facts were found:
- Mr. Kucher’s concern about the co-worker’s work habits stemmed back almost 20 years to when he was an apprentice under the supervision of the co-worker (the co-worker was referred to in the decision as "Mr. X");
- Over the years, the employer had gone to substantial lengths to ensure that Mr. Kucher was not assigned to work with Mr. X, but on the shift in question, personnel shortages resulted in the two workers being assigned together;
- When asked for specifics of how Mr. X’s work was unsafe, Mr. Kucher was unable to offer any; and,
- The employer called a number of witnesses who all testified that Mr. X was in fact a perfectly competent worker.
The Canada Labour Relations Board
ruled that Mr. Kucher’s claim was not valid. The Board held that Mr. Kucher’s
difficulty with Mr. X more likely stemmed from a personality conflict than a real safety
issue and that there was no hard evidence of an unsafe work situation. The Board also
concluded that the conduct of a co-worker could not constitute a "danger" for
the purpose of a worker’s right to refuse unsafe work under health and safety law.
The Kucher decision seems inconsistent with the direction taken
by the Ontario Labour Relations Board in interpreting the Ontario Occupational Health and
Safety Act. The leading case in Ontario is Pauline Au v. Lyndhurst Hospital [1997]
O.L.R.D. No. 2523. In this case, Ms. Au claimed that her work was unsafe because she was
the subject of sexual harassment. One of the key issues in the case was whether the right
to refuse unsafe work provisions of the Ontario law included allegations of sexual
harassment. The Board concluded that it did. Interestingly, the Board held that conduct by
co-workers could result in legitimate claims that work is unsafe, stating: "[i]t is
important to recall here that whatever ambiguity there may be about whether
stress-producing working conditions, or harassment producing injurious stress, are hazards
covered by the OHSA, there is no doubt that working in a manner that may endanger another
worker or engaging in rough conduct are activities specifically contemplated as hazardous
by the OHSA in Section 28(2)(b) and (c)... In these circumstances, we find that Ms. Au was
reporting a hazard of which she was aware..."
OHSA Requirements
According to Section 28(2)(b) and (c) of OHSA, "[n]o
worker shall use or operate any equipment, machine, device or thing or work in a manner
that may endanger himself, herself or any other worker; or engage in any prank, contest,
feat of strength, unnecessary running or rough and boisterous conduct." While these
sections require that employees not work in a fashion that endangers co-workers, it is not
clear that this translates into an employee’s right to refuse to work with them.
These situations are not addressed in the right to refuse work sections
either. According to section 3 of the law, "[a] worker may refuse to work or do
particular work where he or she has reason to believe that: (a) any equipment, machine,
device or thing the worker is to use or operate is likely to endanger himself, herself or
another worker; (b) the physical condition of the workplace ... in which he or she works
... is likely to endanger himself or herself; or (c) any equipment, machine, device or
thing he or she is to use or operate or the physical condition of the workplace ... in
which he or she works ... is in contravention of this Act ... and such contravention is
likely to endanger himself, herself or another worker." While these sections seem to
be limited to health and safety concerns about the physical working environment, rather
than the manner in which colleagues work together, the Labour Relations Board concluded
that sexual harassment could constitute a hazard under OHSA in the Au case.
What Should Employers Do?
There are several steps an employer should take to protect
itself under Canadian law when an employee refuses to work because he or she claims a
co-worker’s practices are unsafe. Such complaints should be taken seriously and not
assumed to be a simple personality conflict between two employees. If there is a real
problem and management is not seen as being pro-active, the company may expose itself to
legal action. If an employer has a health and safety committee, it should involve a worker
member (or worker representative if there is no committee) immediately. In view of
decisions such as that in the Au case, employers may be legally obligated to
involve the health and safety committee.
When investigating a complaint, the employer should do so in a thorough
manner. Items to cover include:
- Ask the worker for details of why he or she thinks the co-worker’s work practices are unsafe. Write down the information, date it, and sign it. This will provide a good record of the salient facts should the matter end up being adjudicated. If possible, have the employee sign the note as well, revising it if necessary;
- Ask if there are any witnesses to the alleged unsafe work practices. If there are, they also should be interviewed and the subsequent information put in writing;
- Once all facts have been collected, make an initial assessment about whether the worker has a valid case and request the input of the committee;
- If the committee does not agree with the employer’s assessment, allow it to attempt to present its position;
- If an agreement between management and the committee is reached and the consensus is that the co-worker is engaged in unsafe work practices, then corrective action will be required vis-a-vis the co-worker. Depending on the seriousness of the matter, this may involve discipline. At a minimum, it should include appropriate safety training;
- If the consensus is that the co-worker is already working safely, the complainant must be told of this fact. The worker health and safety committee member should be involved in this discussion with the complainant. If the complainant does not accept the decision and continues to refuse to work, discipline may be required. Discipline in these cases should be handled very carefully, as it may expose the employer to a claim that it took reprisals against the complainant simply because he or she raised a safety issue; and,
- If management and the committee cannot agree on the appropriate course of action, the company should request an inspector from the Health and Safety Branch. The inspector will make a determination, which, as noted above, can be appealed by either party.
Conclusion
Although the laws and relevant decisions regarding this issue
are conflicting, an employer should always take a complaint of an unsafe worker seriously
and never discipline a complainant for refusing to work on that basis without first
thoroughly and fairly investigating the matter. By carefully following proper procedures
and documenting its efforts, an employer can dramatically reduce its potential exposure
for legal action in Canada.