A Cautionary Tale: Onus is on the Employer to Establish Just Cause for Termination

Facts

In Hrynkiw v. Central City Brewers and Distillers, the plaintiff was 56 years old and the former chief financial officer of Central City Brewers and Distillers. He had been employed for 6 years and his employment title changed from controller to chief financial officer within the first year of employment. He also obtained a raise during his employment. The plaintiff’s employment terms were agreed to during an in-person discussion with the CEO and president of the company. However, the agreement was not in writing and the plaintiff and the CEO disagreed on the terms of the plaintiff’s employment.

The plaintiff was dismissed for just cause based on allegations that (1) he took unauthorized share bonus payments and falsified records to increase his vacation entitlement, (2) his conduct was disobedient in not returning to work when told to, (3) he took his personnel file, and (4) he failed to purchase shares with his share bonus compensation.

The plaintiff sued for damages equal to his salary, bonus, and benefits for a reasonable period of notice, and aggravated and punitive damages arising from the manner of his dismissal.

Issue

The court had to determine whether the defendant had just cause to dismiss the plaintiff.

Analysis

The court confirmed that an employer has the right to summarily dismiss an employee for just cause, which requires conduct incompatible with the root of the employment contract. The onus is on the employer to establish cause for dismissal.

The court held there was no evidence of any deliberate wrongdoing by the plaintiff in receiving unauthorized bonus payments and a falsification of vacation records. The court held the share bonus compensation and annual vacation were previously authorized. The court went further and said that, even if the bonus compensation and vacation were not authorized, it would not have been enough for cause because the plaintiff genuinely believed he was entitled to the share bonus structure and vacation.

The court also concluded there was no disobedience and there was no evidence he took his own personnel file. The court held that the defendant did not have just cause to dismiss the plaintiff and the plaintiff was entitled to payment in lieu of reasonable notice.  

The court determined that 12 months was the reasonable period of notice and awarded $118,492.76 as compensation in lieu of reasonable notice, as well as $33,513.92 for the share bonus compensation, $14,903.87 for accrued vacation pay, and $35,000 in aggravated damages.

Take Away

Employers should be careful and seek advice when considering whether they have just cause for termination.  In this case, the employer was ordered to pay aggravated damages in addition to providing pay in lieu of reasonable notice. 

This update was authored by Brett Weninger. Looking for more information regarding similar issues? Contact Brett at [email protected] or anyone else listed on the authors page.