Lawyer: 'It's probably going to result in more of these just cause wrongful dismissal actions'
The importance of documenting progressive disciplinary actions was in the spotlight recently after a recent Alberta Court of King’s Bench decision in a wrongful dismissal claim. The decision pivoted on insufficient evidence of “just cause” brought forward by the employer.
The case saw a senior accounting executive, Kevin McDonald, sue his former employer, Sproule Management GP Limited, for wrongful dismissal in February 2016. In his decision, McDonald v Sproule Management GP Limited, the judge granted summary judgement instead of sending the matter to trial.
The decision is unusual, explained Edmonton lawyer Arooj Tutti-Shah of MLT Aikins, because just cause cases with substantial court documents and facts are normally decided in court, and the decision went into great detail about how such a case can, and should, be decided.
“Parties have tended to shy away from using that summary judgment process for those types of claims,” Tutti-Shah said. “This case is really interesting because it is well-written and thorough, and basically tells litigants that summary judgment is appropriate for wrongful dismissal claims that contain just cause allegations, even if there are disputes about material facts, as long as the court is able to wade through all of the evidence and still fairly make a decision on a summary basis.
“I think it is probably going to result in seeing more of these just cause wrongful dismissal actions going the summary judgment route as opposed to full trial.”
Insufficient documentation of just cause dismissal
Significantly for HR professionals is that Sproule’s management had failed to sufficiently document their process of disciplining McDonald, Tutti-Shah said. Even though he was found to have had poor performance and incompetent in his role as the company’s CFO, the judge observed that there were “serious shortcomings” in McDonald’s performance reviews.
This lack of communication on Sproule’s part was the main cause for the judge’s decision in favour of McDonald. He was awarded 18 months’ pay in lieu of notice, amounting to almost $400,000.
“The affidavits that were submitted by the witnesses for the employer contained personal opinions and hearsay and other sorts of allegations that weren't supported by documented evidence,” said Tutti-Shah. “So the court said, ‘If you're going to make bold assertions about things, or conclusory statements, you have to provide evidence to support what you're saying, and your opinions or your viewpoints aren't something that I need to consider as evidence.’”
HR must thoroughly document progressive discipline
In the McDonald case, Sproule’s communication was found to be contradictory and inconsistent, as the judge noted in his decision: “McDonald’s performance and conduct were certainly becoming serious, but over that same period, he was sent positive messages about his performance, given feedback of things to work on, issued a significant bonus, redesignated as controller, and later told it would be a good idea to change his attitude.
“After his inappropriate conduct […] he was not terminated, but then was immediately warned to ‘begin acting’ differently and that, at some undescribed point in the future, his employment might be at risk.”
To avoid this situation, it is crucial for HR to clearly communicate expectations with employees, and to follow a specific progressive disciplinary process including verbal and written warnings and suspensions where applicable, before resorting to termination.
Employers must also be clear that an employee’s behaviour will result in termination, Tutti-Shah said.
“The employer didn't really follow any course of progressive discipline,” she said. “It is the employer’s burden to show that they followed this this course of progressive discipline. Having it documented is very important because it will bolster that case and provide the evidence that's needed to establish just cause.”