Canadian Case Shows High Costs of Failing to Prove Just Cause

A British Columbia Supreme Court decision last year serves as a reminder to employers in Canada: allegations of “just cause” might be ruled fabricated, particularly if a company doesn’t defend itself in court with legal representation.

In Chu v. China Southern Airlines Co., the court ordered the airline to pay more than $200,000 in damages to a former employee over what it called “abusive” conduct.

The court found the company liable for wrongful dismissal for fabricating allegations of incompetence or misconduct to support firing him, and for trying to embarrass him with public reprimands. The airline fired him at age 68 in a manner designed to disparage him to other employees or potential employers, the court found.

The company “has singularly failed to establish just cause for dismissal without notice. All of its allegations are either entirely unsupported by evidence or lacking in any merit,” the ruling said. The airline “breached its duty of good faith and fair dealing” with the former employee, the court found.

The ruling aligns with previous decisions in which Canadian courts “have considered an employer’s unfounded allegations of just cause and other breaches of an employer’s implied duty of good faith and fair dealing in relation to the termination of an employee,” said Trevor Lawson, an attorney with McCarthy Tétrault in Toronto.

“It is very difficult for an employer in Canada to establish just cause for termination of employment,” Lawson said.

The employer must establish that the employee engaged in conduct that has irreparably damaged the employment relationship and is fundamentally incompatible with continued employment, he explained.

“Don’t act for yourself, but hire a lawyer,” added Howard Levitt, an attorney with Levitt Sheikh in Toronto. The airline, during the proceedings, dropped its legal counsel and represented itself through nonlegally trained local employees, the court noted.

Plaintiff Demoted Before Termination

The plaintiff started working informally for the airline in 2008 and became a full-time employee in 2011, holding a marketing and business development manager role until January 2018, the court noted. The plaintiff, whose work had been well-received up to that point, focused on establishing and building the airline’s business in Canada and met regularly with top executives from the company, the court noted.

Circumstances changed when a new boss arrived. The airline shortly after started to criticize the plaintiff’s work.

In March 2018, the plaintiff was demoted to a customer service position, working at the reception desk of the airline’s downtown Vancouver office, his pay reduced by 25 percent. In October of that year, he was demoted again and assigned to work at the Vancouver International Airport as an airport services worker.

After being demoted, the plaintiff “was criticized for not being able to run to the gate to help with onboarding or other urgent matters,” the ruling stated. The discipline was carried out in embarrassing ways, including yelling at the plaintiff and on one occasion throwing an item at him, the court found.

The airline fired him Feb. 1, 2019, alleging just cause for immediate termination, including allegations of incompetence focusing on his work at Vancouver International Airport and what the court described as a false “time theft” allegation.

Lawson said the Chu case “confirms that terminating an employee for just cause due to incompetence is particularly fraught with difficulty. An employee who is a ‘bad fit’ or simply poor at their job will generally not provide an employer with a sound basis on which to terminate for just cause—and will more commonly lead an employer to terminate without cause and move on.”

Dinah Wisenberg Brin is a reporter and writer in Philadelphia.