When to Let an Employee Go: Establishing Just Cause

A recent civil litigation case[1] out of the Superior Court of Ontario has provided a salient example of the type of conduct that warrants dismissal for cause. It also provides insight into the steps the prudent employer must take to justify, in employment litigation, its decision to dismiss an employee for cause.

Background

The plaintiff was an employee of CIBC from December 13, 2004 to July 25, 2013. During this time, she served as a Senior Financial Advisor and a Financial Services Representative. On July 25, 2013, she was dismissed from CIBC for cause. The plaintiff argued that she was wrongfully terminated and brought an employment lawsuit seeking damages in wrongful dismissal; the defendant countered that she was terminated for just cause. Specifically, the defendant argued that the plaintiff repeatedly breached CIBC’s Code of Conduct, policies, and procedures. It also claimed that the plaintiff received two warnings in writing about violating the bank’s policies and was only dismissed following a final warning.

The judge agreed with the defendant CIBC. There had been numerous violations of the bank’s Code and policies and the bank had attempted to educate her on how to prevent future errors. However, the judge found the plaintiff’s violations to be “routine.” Ultimately, the judge found that having failed to take advantage of ample opportunities to improve, the plaintiff showed she had no intention of following the bank’s policies and procedures. This made her conduct reach the threshold for just cause; CIBC’s dismissal of her was found to be a proportionate response.

Establishing Just Cause: Exhausting Alternatives

When an employee first violates the protocol of their employer (excluding rare, grave errors which give rise to summary dismissal), the employer can discipline the employee but should also try to help the employee improve. In other words, the employer usually has to make an effort to teach the employee how to do the job correctly in the face of errors of the employee. If the employee continues to violate protocol, discipline may be more severe but the employer should continue to try to provide opportunities to learn what was done wrong and how to avoid such outcomes in the future. Dismissing someone for cause should be a last resort which is only exhausted when, as the judge in this case says, the “employment relationship is beyond repair.” As banking is a federally regulated industry, the provincial Employment Standards Act (ESA) is inapplicable, but similar principles apply under the ESA. This approach of rising severity in discipline is called progressive discipline, and it can be an important in proving that the employer did their due diligence in rectifying the issue with the employee before resorting to dismissal.

That is exactly what happened in this case. The plaintiff committed numerous offenses over a period of years. The employer responded with two written warnings and offering various forms of education to the plaintiff to help her understand how to do her job correctly. Specifically, she received coaching after privacy breaches and was encouraged by her manager to take a course on lending but refused it. The judge found that despite having ample opportunity to improve and learn how to comply with the Code and its procedures, she chose not to modify her behaviour by adhering to the Code.

The High Level of Trust, Honesty, and Integrity Required of Banking Industry Employees

CIBC’s Code of Conduct was particularly important because the job was in the banking industry. The Code included rules related to trust, honesty, and integrity, which were also requirements listed in her employment contract. Breaking the Code and not following proper procedures often resulted in violations that were serious because she works in the banking industry. Some case law[2] suggests that given the position of trust of employees in the banking industry, such violations can be considered more serious and therefore can more quickly justify dismissal without the need for the progressive discipline described above. Thus, CIBC may have even exceeded the due diligence required of it when it incorporated progressive discipline; it may have already had sufficient grounds to dismiss for cause due to the breach of this trust by the plaintiff.

Conclusion

If you are an employer, this case serves as a good reminder to work with your employees to improve their conduct before considering more serious ramifications like dismissal for cause. The employer should also have the employee sign warnings to indicate their understanding that future disciplinary issues could result in termination. It can also be helpful to specify in the employment contract itself conduct that would justify dismissal for cause, such as continuing not to comply with employer policies after receiving two warnings. If you are an employee, this case serves as a good reminder that you should take opportunities that are offered to you to improve your performance to preserve a healthy employment relationship with your employer. This will also make it harder for them to argue you should be dismissed for cause.

[1] Pirani v. CIBC, 2023 ONSC 5991.

[2] See ie: Vallières v. Royal Bank of Canada, 2020 FC 957, at paras. 14-15.

Tags:  Employment Litigation, Civil Litigation, Trials

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