Surprise! Misconduct Incompatible with Fundamental Duties Establishes Cause
It is widely recognized that our Courts are loathe to find just cause in employee terminations, except for the clearest of cases. That said, it is a welcome relief for Ontario employers and HR practitioners, to see the Ontario Superior Court of Justice (the “ONSC”) recently holding that there was cause for an employee’s dismissal because she engaged in misconduct which was incompatible with the fundamental duties of her position.
In Lagala v. Patene Building Supplies Ltd. [Lagala], the ONSC held that the employer had cause to dismiss an employee for improperly reporting a workplace injury that she had allegedly suffered, because one of the fundamental duties of her position was ensuring compliance with the Workplace Safety and Insurance Act, 1997 (the “WSIA”).
This decision illustrates that an employer can establish cause for dismissal without prior progressive discipline in appropriate circumstances, including where an employee engaged in misconduct which is incompatible with properly discharging the fundamental duties of their job.
Background
Ms. Lagala was employed by Patene Building Services Ltd. (“Patene”) as a Health, Safety, and Training Manager for more than 13 years, until her employment was terminated for cause in December 2019. She was responsible for Patene’s compliance with all requirements under the WSIA, which included: ensuring that Patene had an effective system for investigating and reporting all workplace accidents; administering Patene’s accident and incident reporting policies; and minimizing costs related to workplace accidents.
Ms. Lagala later testified that she slipped on ice and fell in the parking lot of Patene’s Brantford branch in March 2019, but she did not initially report this accident to a supervisor or the Workplace Safety and Insurance Board (“WSIB”) because she did not experience any pain or view the accident as being serious at the time. However, Ms. Lagala testified that she subsequently began experiencing back pain and consulted her family doctor in April 2019, and that her back pain got worse in May of 2019.
Ms. Lagala reported her purported workplace injury to the WSIB by submitting a Form 7 on Patene’s behalf on May 9, 2019, months after it allegedly occurred. Moreover, Ms. Lagala did not submit a Form 6 to the WSIB to report the injury on her own behalf until September 19, 2019. This was shortly after she consulted a rheumatologist and received a CT scan indicating that she had degenerative disc disease.
Ms. Lagala did not advise any other manager at Patene of her WSIB claim until well after the accident. This was despite the fact that she submitted monthly reports to Patene’s President regarding both WSIB reports and internal incidents, including very minor incidents. Nonetheless, Ms. Lagala did not report her injury in a monthly report until October 2019.
The WSIB had allowed Ms. Lagala’s claim for physiotherapy benefits in September 2019, but it subsequently asked her to provide witness statements and have her supervisor sign off on Patene’s Form 7 in October 2019. No one had seen Ms. Lagala fall, but Patene’s Traffic Manager at its Brantford branch sent an email to the WSIB stating that she had reported the slip and fall to him at the time. However, the Traffic Manager later testified that this was not true, and that he sent the email because Ms. Lagala had instructed him to do so as his superior.
Ultimately, Ms. Lagala’s WSIB claim came to the attention of Patene’s President and an investigation into it was conducted, which resulted in her being dismissed for cause in December 2019. The grounds for her dismissal were dishonesty, serious conflict of interest, breach of fiduciary duty, and potentially fraudulent conduct. In response, Ms. Lagala sued Patene for wrongful dismissal, claiming it did not have cause to dismiss her.
The Court’s Decision
The Court ruled that there was cause for Ms. Lagala’s dismissal because it found she had engaged in serious misconduct which was incompatible with her fundamental duty to ensure that Patene complied with the WSIA.
In reaching this decision, the court held that the test for determining whether employee dishonesty establishes cause for dismissal requires: determining the nature and extent of the misconduct; considering the surrounding circumstances; and, deciding whether dismissal for cause is a proportional response. Applying the law to the facts, the court found that Ms. Lagala had failed to follow corporate policies for which she was responsible. Furthermore, the court found that Ms. Lagala was dishonest with Patene and the court about reporting her slip and fall to the Traffic Manager in March 2019, and that this was an attempt to conceal her misconduct. Moreover, given that the WSIA requires employers to report workplace accidents within three days after becoming aware of an accident if it necessitates healthcare or prevents the employee from earning full wages, the court found that Ms. Lagala put Patene at risk of being found to have violated the WSIA by failing to report the alleged accident in a timely manner. Furthermore, the court found that Ms. Lagala’s decision to report her own accident on behalf of Patene was a serious conflict of interest which she either knew or ought to have known.
The court ultimately ruled that there was cause for Ms. Lagala’s dismissal because her misconduct and related dishonesty irreparably destroyed her ability to fulfill her fundamental duties as a manager responsible for ensuring compliance with Patene’s health and safety policies. In the result, the court dismissed Ms. Lagala’s wrongful dismissal claim.
The Bottom Line
As noted above, Lagala illustrates that employers can successfully establish cause for an employee’s dismissal without prior progressive discipline in appropriate circumstances, including where an employee engaged in misconduct which is incompatible with properly discharging the fundamental duties of their job. This is notable because employers generally cannot establish cause for an employee’s dismissal without first engaging in progressive discipline unless the employee’s misconduct was particularly egregious, for example, embezzling large amounts of money.
However, engaging in sufficient progressive discipline to establish cause for dismissal is typically a lengthy process, which involves providing employees with repeated warnings that their misconduct is not acceptable and may result in further discipline up to and including dismissal for cause. Accordingly, Lagala is a favourable decision for employers in that it stands for the proposition that an employer can successfully dismiss an employee for cause with minimal liability in appropriate circumstances, without having to put up with unacceptable misconduct for prolonged periods of time while engaging in progressive discipline.
Hyde HR Law is one of Canada’s top-ranked law firms providing labour and employment law advice and representation to Management. If you require support on how to appropriately address employee misconduct or performance issues, or assistance with ending an employment relationship while minimizing liability, please do not hesitate to contact us for expert legal advice and guidance.
