A recent Ontario decision reminds employers that where an employee is dismissed without cause, the employee’s performance record generally becomes irrelevant. This is because the primary issue of concern for the courts in without cause dismissals is the assessment of the employee’s termination entitlements, and the courts do not consider the employee’s performance or competence to be a relevant factor in such an assessment.
In Kaminsky v Janston Financial Group, the Ontario Superior Court of Justice (the “Court”) barred an employer who unequivocally dismissed an employee without cause from relying upon allegations of poor work performance to defend against a wrongful dismissal claim.
The employee, Carolyn Kaminsky, worked for the employer, Janston Financial Group (“Janston”), for nearly 18 years when her employment was terminated without cause. Upon her dismissal, Ms. Kaminsky was provided with termination and severance pay totaling 20 weeks’ salary. Despite that this amount exceeded Ms. Kaminsky’s minimum statutory entitlements under the Employment Standards Act, 2000, she was not required to sign a release of claims. Subsequently, Ms. Kaminsky brought an action for wrongful dismissal.
In Janston’s Statement of Defence (“Defence”), it argued that while it had cause to dismiss Ms. Kaminsky due to her allegedly poor work performance, it decided to terminate the employment relationship on a “without cause” basis in consideration of the familial relationship between Ms. Kaminsky and Janston’s principal. The Defence detailed Janston’s concerns with Ms. Kaminsky’s performance record, including that Ms. Kaminsky had failed to carry out her employment duties loyally and diligently, worked for another business while on Janston’s time, and took advantage of the principal’s absence to further her misconduct.
At the examination for discovery stage of litigation, Ms. Kaminsky refused to answer questions related to her performance record on the basis that her work performance was irrelevant due to the termination being without cause. Ms. Kaminsky sought a related Court order to strike those portions of the Defence that detailed the alleged performance concerns.
The Court granted Ms. Kaminsky’s order and struck the paragraphs containing the alleged performance concerns.
The Court noted that while the law is clear that a payment to an employee on termination will not necessarily preclude an employer from later asserting termination for cause (including “after-acquired” cause that relies upon evidence of misconduct discovered after dismissal), the same principle does not apply to Janston’s Defence.
The Defence unequivocally stated that Ms. Kaminsky was dismissed without cause, and that although Janston believed it was entitled to terminate Ms. Kaminsky’s employment for cause, it did not do so. The evidence given by the employer at discovery was consistent with its Defence and its position that it did not dismiss Ms. Kaminsky for cause. Moreover, Janston failed to amend its pleadings to assert cause for dismissal, despite having had the opportunity to do so.
The Court consequently concluded that the portions of the Defence relating to performance concerns should be struck out for their irrelevance, pursuant to Rule 25.11 of Ontario’s Rules of Civil Procedure.
Takeaways for Employers
The Court’s decision in Kaminsky reminds employers to be mindful of the manner in which dismissals are carried out, and that reasons for a dismissal are consistent with an employer’s ultimate litigation strategy. Specifically, where an employer unequivocally dismisses an employee without cause despite knowing of potential grounds to dismiss for cause, such grounds may not be relied upon later in litigation. As Kaminsky demonstrates, the employer may be precluded from pleading potential grounds for cause in its Defence and from pursuing evidence related to those grounds. Conversely, if an employer has a legitimate basis to dismiss an employee for cause and has documented a history of progressive discipline where circumstances warrant it, then it may attempt to rely on those reasons in a for cause dismissal.
Where potential grounds for cause exist but an employer is nevertheless reluctant to dismiss an employee for cause, the employer should seek legal advice about potential termination strategies that mitigate the risk of an employee commencing litigation. In certain situations, an employer may be able to assert cause at the time of dismissal while also offering an employee a gratuitous, without prejudice payment or departure package in exchange for their execution of a release of claims. Such a strategy could mitigate the risk of an employee commencing a wrongful dismissal claim, while also preserving an employer’s ability to defend its termination decision in potential litigation.
This blog is provided as an information service and summary of workplace legal issues.
This information is not intended as legal advice.