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PLANT

Firing for cause? Your company better have proof

Dismissed man receives $25,000 severance despite misconduct on the job


April 28, 2011
by Matt Powell

STRATFORD—Employers may want to pay closer attention to progressive dismissal plans after an Ontario Superior Court judge has awarded a dismissed aerospace employee more than $25,000 in severance pay–despite being fired for misconduct.

Stephanus Oosterbosch had been disciplined (and suspended) a number of times by Stratford’s FAG Aerospace Inc.’s supervisors for tardiness, long meal breaks and iffy production.

According to court documents, the machinist at the global aerospace component manufacturer had, on several occasions, produced a number of plane parts that failed to meet the company’s quality specifications. Two days prior to his dismissal, he produced 60 unusable parts during his eight hour shift, court documents show.

Oosterbosch was fired on April 1, 2008 after being written up for a fourth time that year.

He claimed damages for wrongful dismissal against FAG for termination and severance pay as described under the Employment Standards Act.

FAG countered that the firing without notice or severance was justified because Oosterbosch was dismissed for cause. In court, the judge determined that the onus was on the employer to establish just cause for Oosterbosh’s termination

In a March 14 decision, a judge ruled in favour of Oosterbosch and required FAG to pay almost $8,000 in termination pay and more than $17,000 in severance for the 17 years and four months he had worked there.

Why? Because the company was unable to prove the misconduct has been intentional in court.

While Oosterbosch’s dismissal complied with the company’s progressive dismissal policy, the judge found that there wasn’t justification for his termination through just cause at the common law level – that requires the employer to provide necessary termination notice or to pay severance in lieu of that notice.

It didn’t help the company that shift leaders testified that Oosterbosch had an attitude issue, but none suggested his misconduct was intentional.

“Because it is a performance-related issue, the court found the company was in the right for terminating the employee under common law,” says Arleen Huggins, partner at Koskie Minsky LLP in Toronto. “But, under the Employment Standards Act (ESA), the company couldn’t prove that his misconduct was deliberate, and therefore are required to pay severance.”

Under the ESA, an employee with at least eight years of service must be paid eight weeks of pay in lieu of notice. When a company has a payroll over $2.5 million and a terminated employee has worked there for five or more years, severance of one week per year to a maximum of 26 years is payable, she adds.

Brahm Lecker, partner at Toronto-based Lecker & Associates, says it doesn’t matter if an employee is warned, the question is whether they’re actually doing something wrong.

“That’s the difficult thing to prove,” he says. “You have to show that the act of the employee is causing the intentional or negligent harm.”

Janice Rubin, partner at Rubin Thomlinson LLP in Toronto, says the company did everything properly in this case – even though they lost.

“A lot of companies don’t have discipline policies, but this one did,” she says. “The employee was formally warned on numerous occasions and was explained the consequences of continued bad behaviour.”

Court documents show that the judge recognized that FAG had followed its progressive discipline policy, where infractions were recorded and discipline is imposed in a four step process.

The company was able to show that Oosterbosch had been disciplined four times within a 12 month period, the last of which resulted in his dismissal.

Rubin says the carelessness, sloppiness and negligence shown by the employee wouldn’t be considered willful misconduct in courts and the company would be required to pay the employee termination and severance pay  and therefore wouldn’t fall under behaviours outlined in common law and would therefore have to settle under conditions of the ESA.

Acts like theft or divulging confidential company information would generally fall under willful misconduct, says Rubin. But it’s often hard for a company to prove bad performance was willful misconduct before the courts.

The judge will also consider the age of the employee and length of service, she says.

“This individual was 53 years old and he had worked there for 17 years,” she says. “Those facts are going to be very compelling for a judge, because even if the employee was behaving badly, those facts will usually trump the misconduct. The judge wouldn’t want him to go away with nothing given his age and length of service.”

Under common law, courts will usually consider the age of the employee, length of service, position of employment and how much the employee earned. Judges will usually attempt to identify the length of notice that would be required for the employee to find alternative employment.

Daniel Lublin, partner at Whitten and Lublin LLP in Toronto, suggests that while the court found there was cause for dismissal under common law, ESA conditions are described differently and because the legislation has a lesser definition of cause, the employer had to pay the employee out.

“Even if a company has cause, it might not have statuatory cause and therefore the company will have to pay the employee severance,” he says. “A company shouldn’t fire someone for misconduct unless it can absolutely prove that the employee has been willfully acting badly. If you can’t, pay out.”

Lublin says employers can protect themselves by having enforceable clause agreements that determine the amount of severance pay in the case of termination in an employee’s contract.

Companies need to ensure they are truly enforcing progressive discipline plans as well if they choose to use them.

“Misconduct letters need to actually be misconduct letters,” he says. “Don’t give someone a misconduct letter that says ‘if you do this again, you might be fired’. Make sure that letter says ‘if you do this again, you will be fired’.”