What’s New

Must, or Should, the Employer Offer a Reason for Termination?

The traditional view of the common law has been that the employer has no obligation to provide to the employee the reason for termination.

The questions to be considered are:

  1. Does the duty of good faith imposed by Wallace and considered in Honda, as supplemented by the duty of honest performance in Bhasin, revise the law on this issue?
  2. Is there a duty in human rights jurisprudence to provide such reasons for termination?
  3. Is there a statutory duty to advise of the reasons for termination?
  4. Might the employer's reason, once given, for termination somehow result in the application of the doctrine of issue estoppel?

To summarize that which follows, this is the synopsis of the next 25 pages:

Summary

  1. The employer has a duty not to deceive the employee as to the reasons for termination.
  2. The employee may assert and prove the true reason for termination was not as stated. Once established, the duty of fairness may apply to the alleged wrongdoing, if so, to determine liability for aggravated or other damages.
  3. It is submitted that the question of whether the reason for termination must be given, by common law, is undecided presently. There are many authorities to the contrary of this submission, holding that there is no such obligation.
  4. There is a statutory duty to advise of the reason for termination as mandated by the Employment Insurance Act.
  5. Should these reasons assert misconduct, either party may be vulnerable to an argument of issue estoppel, allowing the E.I. process to determine the outcome of the liability issue in a civil proceeding, provided that the employer is an active participant in the process. There is a detailed, well reasoned Ontario Court of Appeal decision denying the application of issue estoppel to allow the E.I. decision to bind the civil trial. A subsequent Ontario trial level decision has uniquely distinguished the Court of Appeal decision, one which, in turn, has been followed by a Canada Labour Code unjust dismissal case. In each of these last two instances, issue estoppel denied the employer's just cause defence, based on the E.I. decision allowing for benefits.
  6. The employer may be well advised to remain external to this process, given that the E.I. regime is somewhat employee friendly. 1 If so, it will not be a party to the process and the issue estoppel "same parties" test will fail.
  7. The employer will likely be prudent to offer an affirmative reason for termination to defend against a possible human rights proceeding.

Brief Summary of Wallace-Honda-Bhasin Duties

Wallace and Honda, of course, allowed for the duty of good faith and fair dealing at the time of termination.

The Supreme Court of Canada decision of Bhasin v Hrynew provided two additional duties to the common law. The first is that “good faith contractual performance” was determined to be an important “organizing principle” of the common law of contract. The second is, as a reflection of the first, was that there is a duty “to act honestly in the performance of contractual obligations”. 2

In Bhasin, itself, the trial judge found that Can-Am acted dishonestly in its manner of exercising the existing non-renewal clause by which it could terminate the relationship by the giving of six months advance notice. The conduct of dishonesty was found in Can-Am’s intent to merge the business of Hyrnew with that of Bhasin, thereby to allow the defendant, Hyrnew, the opportunity to take over Bhasin’s business. The trial judge found that Can-Am lied to Bhasin about this intent. 3 This dishonest conduct led to the company misleading Bhasin when it terminated the relationship:

 As the trial judge found, this dishonesty on the part of Can-Am was directly and intimately connected to Can-Am’s performance of the Agreement with Mr. Bhasin and its exercise of the non-renewal provision. I conclude that Can-Am breached the 1998 Agreement when it failed to act honestly with Mr. Bhasin in exercising the non-renewal clause.

This decision then demands that in the employment context that the employer must be honest when terminating its employee.

This question may be more complex. Would it be proper, for example, to give a misleading reason for the termination such as “we are firing you on a not-for-cause basis” when the true reason is suspected wrongdoing? Further, taken to a higher level, is there an obligation to state the reason for termination?

Passage from Wallace

The court in Bhasin did reference the Honda duty. The passage which follows recites a citation also from Wallace. These words have been quoted in many cases following to support the principle that the employer has no obligation to state the reason for termination. For reasons which follow, it is submitted that this interpretation is in error.  4 5 The passage reads as follows:

For example, this Court confirmed that there is a duty of good faith in the employment context in Honda Canada Inc. v. Keays, 2008 SCC 39, [2008] 2 S.C.R. 362. Mr. Keays was diagnosed with chronic fatigue syndrome and was frequently absent from work. Honda grew concerned with the frequency of the absences. It ordered Mr. Keays to undergo an examination by a doctor chosen by the employer, required him to provide a doctor’s note for any absences, and discouraged him from retaining outside counsel. The majority held that in all employment contracts there was an implied term of good faith governing the manner of termination. In particular, the employer should not engage in conduct that is “unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive” when dismissing an employee: para. 57, citing Wallace v. United Grain Growers Ltd., 1997 CanLII 332 (SCC), [1997] 3 S.C.R. 701, at para. 98. Good faith in this context did not extend to the employer’s reasons for terminating the contract of employment because this would undermine the right of an employer to determine the composition of its workforce: Wallace, at para. 76.

The Court, in the last sentence of this above quotation, above, referenced a passage from Wallace. The context of this observation in Wallace was in response to the  argument made by Wallace that there must be a “good faith” reason for termination, as opposed to honestly stating the reason for termination.

This statement was clearly made in response to the appellant/employee’s submission that there should be implied into the employment relationship a principle that the employer would not be terminated, save the existence of cause or a legitimate business reason.

The plaintiff's argument was noted to be as follows: 6

The appellant urged this Court to find that he could sue UGG either in contract or in tort for “bad faith discharge”.  With respect to the action in contract, he submitted that the Court should imply into the employment contract a term that the employee would not be fired except for cause or legitimate business reasons.  I cannot accede to this submission.  The law has long recognized the mutual right of both employers and employees to terminate an employment contract at any time provided there are no express provisions to the contrary.

In rejecting this submission, the Court offered these words to deny the law requires such a term be implied into the employment relationship:

76                              A requirement of “good faith” reasons for dismissal would, in effect, contravene these principles and deprive employers of the ability to determine the composition of their workforce.  In the context of the accepted theories on the employment relationship, such a law would, in my opinion, be overly intrusive and inconsistent with established principles of employment law, and more appropriately, should be left to legislative enactment rather than judicial pronouncement.

This requirement of a “good faith reasons" for dismissal did not relate to the giving of reasons for termination, as has been popularly suggested in many decisions following.

It is submitted that this passage again means that there need not, as a legal construct, be a good faith reason for the termination. The employer may terminate, generally speaking, absent contractual, statutory, or human rights issues, as it may determine. This has not been in issue at any time. The view that passage from Wallace denies the need to state the reason for termination is one which is mistaken.

This proposition need not end the debate as to whether there is, in law, a duty to state the reason for termination. The modern law may well develop to this end, but the Wallace passage does not provide it.

Reason Given Must be Honest

The related submission is that the employer must be honest about the reason, once given. This, as noted below, is beyond doubt presently. It is a higher level issue as to whether the employer must state the reason.

Bhasin was not an employment case but it has been applied to the duties within an employment relationship. The Supreme Court referenced Bhasin in its 2015 decision, defining the employer’s duty of honest performance as one which extends throughout the duration of employment. 7

In Potter, the Supreme Court 8, noted that the plaintiff had been given no reasons for his administrative suspension. The significant issue is the acceptance of Bhasin setting an employment standard. The Court concluded that this administrative suspension must be accompanied by providing the reasons for it:

In the instant case, this basic requirement was not met.  To begin with, Mr. Potter was given no reasons for the suspension. It seems to me that, in most circumstances, an administrative suspension cannot be found to be justified in the absence of a basic level of communication with the employee. At a minimum, acting in good faith in relation to contractual dealings means being honest, reasonable, candid, and forthright: Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494, at para. 66. Failing to give an employee any reason whatsoever for his suspension is, in my opinion, not being forthright. Moreover, the limited evidence presented in support of the Board’s ostensible purpose of facilitating a buyout is undercut by the actions the Board took to have Mr. Potter terminated. As I mentioned above, the Board’s resolution of January 5, 2010, and the January 11, 2010 letter to the Minister in which the Board recommended that Mr. Potter be terminated ought to have been admitted at this stage of the analysis. With respect, this constituted a significant error on the trial judge’s part.  Add to this the facts that Mr. Potter was replaced during the suspension period and that that period was indefinite, and there remains no doubt in my mind that the suspension was unauthorized. To reiterate, which factors must be considered will vary with the context and will depend on the nature and circumstances of the suspension.

The above statement arose in the context of determining whether there was an implied right to suspend within the employment relationship. The issue of “no reasons given” in this circumstance was not one intending to answer the question posed in this immediate review. It is, nonetheless, reflective of the Court’s acceptance of Bhasin as determining a common law employment standard.

The Supreme Court in 2020 also observed that it is a breach of duty to lie to the employee as to the reason for termination. 9 This statement was an extrapolation of the duty outlined in Potter:

  Nonetheless, I would observe that it is clear from the findings at trial Mr. Matthews was mistreated and lied to about the security of his future with the company in the years leading up to his constructive dismissal in a manner that contributed to making his job intolerable. Compensation during the reasonable notice period does not speak to this. While it may not result in further remedies in this case, it is not inappropriate to recall that the “non-monetary benefit” (Potter, at para. 84) derived from the performance of work can be wrongly taken from employees if, at dismissal, they are lied to or misled as to the reasons for termination.

That certainly establishes that it is a breach of the duty of honesty to mislead the employee as to the reason for termination. That issue is beyond doubt. The related issue is whether there is an obligation to provide the reason.

Collateral Attack on Reason Given

This issue becomes more complex when the reason given is false in the sense that the employer believed it had just cause due to alleged performance or other issues, but chose not to enter into this debate with the employee and elected to fire for no cause, and/or asserted some other untrue business reason.

These were the facts that led to a court room in Ontario in 2021. 12 The termination was said to be a not for cause termination. No reason was given. The plaintiff sued, however, alleging that the true reason was otherwise. The evidence at trial showed that her allegations were correct. The minutes of the town council meeting which led to her termination included unsavory allegations made against the plaintiff.

As to the discrete issue whether the defendant was untruthful to the plaintiff in providing the reason for termination as not-for-cause, the court stated that there was no violation of the duty of good faith and this particular issue was not actionable to lead to an aggravated damage claim.

However, in this instance, given the allegations made against her, the court stated that this conduct leading up to the termination was a violation of the duty of good faith under the Honda test. This would appear to be a distinction without a difference. The end result becomes the same. The court determined that the real motivator was the cause allegations, none of which had been put to the plaintiff.

This conduct allowed for the award of aggravated damages:

I do not suggest that an employer is obliged to give an employee the reasons for termination, but I agree that the failure to allow an employee to respond to allegations of misconduct can be considered part of the “conduct during the course of the dismissal” and can be a factor in determining whether moral damages should be awarded.

In substance, this conclusion required the employer to put the real reason for termination to the plaintiff in advance of effecting the termination.

This led to an aggravated damage claim of $75,000. 13

This decision allowed the court to look behind the stated reason for termination. It then looked to the real unstated reason and applied the test of unfairness to it.

Human Rights Considerations

The employer has an affirmative obligation to respond to a successful case showing a prima facie case. This is a relatively low bar for reasons discussed elsewhere. The employer must then introduce evidence to show that the issues leading to the prima facie case are without foundation or that there did exist an alternate bona fide reason for the actions taken, such as termination. That burden is now upon the employer.

The issue will then turn to the reason for termination. The tribunal will examine the evidence to establish the presence of such action. It will not serve the employer well in this instance had it given a “no reason” or “not-for-cause” termination. There will be an emphatic need for affirmative evidence to prove the real intent. It is a difficult evidentiary burden on the best of days, but in this context, it starts with the need to show why the termination letter did not state the reasons now to be offered in evidence.

Such an issue was an emphatic one in a 2010 Ontario Tribunal decision. At the hearing, the employer put forward assorted reasons to rebut the complainant’s assertions. However, at the time of termination, no reason was given for the termination. The reasons asserted at the hearing were not after-acquired cause. The Tribunal made this observation: 14

The letter of termination gives no reason for the decision, and so I am left to infer from the documents and the testimony of the personal respondent (that which could be believed) the real reason or reasons for the termination of applicant’s employment.

The same theme is present when the assertion is made that the termination was a reprisal against a threatened complaint.

In such a case, the applicant’s evidence showed a remarkable adverse change in the employer’s attitude towards her, following her report of an offending incident. This was followed by an email terminating her employment in which there was no reference to termination for cause. The Tribunal concluded that, in the absence of an explanation showing a contrary reason, that the reprisal complaint was successful. 15

Statutory Considerations & Issue Estoppel

Every employer must issue a Record of Employment, given an interruption of employment for seven consecutive calendar days. The content of the R-o-E, which is not mandated by statute or regulation, apart from the requirement that it be in a form approved by the Commission, obliges the employer to state the reason for its creation. 16

These reasons, as contained in the form, include shortage of work, strike or lock-out, maternity leave, illness or injury, quit, retirement, work sharing, apprentice training, dismissal, leave of absence, parental leave and “other”. The code “dismissal” is to be used for an employer initiated termination, save for layoff or mandatory retirement. The intent of the document is to determine the eligibility of the employee to employment insurance benefits. The employee may be denied benefits for “misconduct”. The employer may be asked by the Commission to detail reasons for the termination. There is no mandatory requirement by statute to respond. It does state:

51 If, in considering a claim for benefits, the Commission finds an indication from the documents relating to the claim that the loss of employment resulted from the claimant’s misconduct or that the claimant voluntarily left employment, the Commission shall

(a) give the claimant and the employer an opportunity to provide information as to the reasons for the loss of employment; and

(b) if the information is provided, take it into account in determining the claim.

That being said, most employers will likely provide details, when requested. It is an offence under the Act to provide false or misleading information to the Commission. 17

The issue may arise as to whether a finding made in the E.I. process of “misconduct” or “no misconduct” may be binding on a civil court considering a claim such as wrongful dismissal or other issues related to the termination of employment, where the employer asserts “just cause” for termination. The reason given for termination may take on a more emphatic consequence, other than E.I. eligibility. It may determine the liability issue in the civil trial.

This then raises the question of issue estoppel and its impact on a later civil proceeding where the E.I. process has adjudicated on the reasons given for termination. For example, an employee’s success in winning a disputed claim for benefits based on alleged misconduct, could be determined as denying the employer the same just cause defence in the civil case.

Employment Standards & Issue Estoppel

The leading case on this subject is a Supreme Court of Canada decision in 2001. 18 This case did not involve an E.I. issue but dealt with a prior claim made under the Ontario Employment Standards Act.

The plaintiff in a civil action for wrongful dismissal and unpaid wages and commissions, allegedly owing at the time of termination in the sum of $300,000, had initially applied under the ESA for the sum of unpaid compensation. The ESA officer had not made the employee aware of the employer’s submissions to deny the statutory claim. The claim for the unpaid wages and commissions was denied. An order was issued for payment of two weeks’ notice. There was a right under the statute for a review of this decision which was not requested. Prior to the ESO decision, the plaintiff had commenced a civil claim for wrongful dismissal and the same unpaid commissions.

The employee continued with the civil claim of wrongful dismissal and unpaid compensation. Following the ESO decision to deny the commission claim, the employer moved successfully to strike the claim of unpaid wages and commissions, a decision which was affirmed by the Ontario Court of Appeal, based on the submission of issue estoppel.

A brief review of the test for this plea is in order. To succeed, the party submitting must show:

  1. The same question has been decided in a prior proceeding;
  2. The above judicial decision was final; and
  3. The parties to that decision, or their “privies” are the same in each proceeding.

Even where these tests are met, the court must determine whether, as a matter of discretion, issue estoppel should apply.

Generally speaking, the Court viewed the application of this concept with favour:

The law rightly seeks a finality to litigation.  To advance that objective, it requires litigants to put their best foot forward to establish the truth of their allegations when first called upon to do so.  A litigant, to use the vernacular, is only entitled to one bite at the cherry.  The appellant chose the ESA as her forum.  She lost.  An issue, once decided, should not generally be re-litigated to the benefit of the losing party and the harassment of the winner.  A person should only be vexed once in the same cause.  Duplicative litigation, potential inconsistent results, undue costs, and inconclusive proceedings are to be avoided.

On these facts, the Supreme Court found that the three criteria were met, notwithstanding the apparent unfairness in not providing the plaintiff the details of the employer’s rebuttal and the right to reply to it. This issue did not deny the application of the above steps, but this failure to allow for a fair process was a factor in influencing the Court’s exercise of its discretion to refuse the application of issue estoppel. 19

The Court set out factors which would provide guidelines for the exercise of its discretion to deny the application of the principle:

  1. The words of the statute permitted a duplicate civil proceeding. 20 The civil proceeding was commenced in this instance prior to the ESO decision;
  2. The purpose of the ESA was also considered, as it was seen as a quick and inexpensive way to deal with this issue as opposed to a complex civil proceeding;
  3. No appeal was available under the statute. There was a potential of administrative review, a factor weighed against the plaintiff.
  4. Were there adequate safeguards in place? Here, there was not as there was an evident breach of natural justice.
  5. What was the degree of expertise of the decision maker? In the immediate case, the ESO was seen as a person without legal training, deciding a complex issue.
  6. What was the context of the applicant in prior administrative proceeding? In this case, the plaintiff was in a personally vulnerable financial circumstance with a dismissal looming. The statute by the date of hearing had been amended to limit recovery to $10,000. This showed that the intent of the statute was one to deal with smaller claims and enacting a barrier to the making of such claims was a policy to be encouraged.
  7. Overall, was there a potential injustice?

All of these factors taken cumulatively were seen as influential to deny the principle of issue estoppel based on the exercise of the Court’s discretion.

Employment Insurance Regime & Issue Estoppel

Prior to the above decision, in 1999, the Ontario Court of Appeal reviewed the question of whether the hearing process under the Employment Insurance Act could lead to a successful plea of issue estoppel. 21

Minott was employed in the defendant’s maintenance department. He had worked for 11 years and was considered a good worker. He had a dispute with his supervisor which prompted him to take an unauthorized leave of absence for two days. Upon his return to work, he was suspended for a further 2 days. He did not return from this suspension and was terminated.

His application for E.I. benefits was denied for a period of six weeks, at first level by the Insurance Officer, due to a finding of his misconduct. He appealed to the Board of Referees which agreed with the finding of misconduct, yet reduced the period of disqualification to three weeks. Minott had the right of appeal under the statute, one which he did not exercise.

The employer was aware of the hearing and chose not to attend. The Board did have in its file a written statement from the employer which stated that Minott had been given written warnings about his attendance and was offered other suitable employment accessible by public transit and did not seem interested.

He sued civilly. The employer’s argument of issue estopped failed at trial. It appealed this issue and others to the Court of Appeal in 1999. 22 The Court of Appeal looked to the three tests of issue estoppel as follows:

  1. Same Issue

The Court noted that issue estoppel may apply to issues of fact, issues of law, or questions of mixed fact and law. The appellate court noted that neither the Insurance Officer nor the Board made any evidentiary findings. Had this been done, the parties, the Court stated, may have been precluded from litigating such evidentiary findings in the second proceeding.

The Board’s finding was one of mixed fact and law. The trial judge had found that “misconduct” under the statute was different from “just cause” at common law.

Molloy, J., the trial judge, concluded that just cause at common law may encompass misconduct in the E.I. regime but the contrary is not necessarily so. Misconduct may or may not be just cause in the civil context. The Court of Appeal took issue with the proposition that an employer may have just cause for dismissal even though there was no misconduct found in the E.I. process

The Court of Appeal did agree with the concept that an employee’s conduct may be seen as misconduct under the E.I. regime, but would not be just cause at common law. The Court cited a prior Federal Court decision which spoke to this issue:

In the recent case of Fakhari v. Canada (Attorney General) (1996), 197 N.R. 300 at p. 302 (F.C.A.), Robertson J.A. noted that an employee's actions could be characterized as misconduct under the Act though an employer would not have just cause for dismissal:

An employer's subjective appreciation of the type of misconduct which warrants dismissal for just cause cannot be deemed binding on a Board of Referees. It is not difficult to envisage cases where an employee's actions could be properly characterized as misconduct, but the employer's decision to dismiss that employee will be rightly regarded as capricious, if not, unreasonable.

The converse is also true, the Court concluded. There may be just cause at common law but no misconduct in the E.I. process:

Conversely, an employee who is incompetent or persistently careless may be dismissed for cause though no misconduct is made out, because misconduct requires a wilful or reckless disregard of an employer's interest: see generally Canada (Attorney General) v. Tucker, 1986 CanLII 6794 (FCA), [1986], 2 F.C. 329, 66 N.R. 1 (C.A.) per MacGuigan J.A.; Rudner, The 1998 Annotated Employment Insurance Statutes (1997), at p. 607; and Canada (Attorney General) v. Jewell (1994), 175 N.R. 350, 94 C.L.L.C. 14,046 (F.C.A.).

The summary is that misconduct and just cause are not parallel concepts. It is not the case that one test is harder to achieve and success in demonstrating its existence would thus lead to meeting the lower threshold. It is simply that these tests are different.

For this reason, the Court of Appeal concluded that the same issue test was not met.

  1. Was the Board decision final ?

The Board decision was required to be which was a judicial one and final. This issue was determined as met.

  1. Were the parties the same?

The employer did not attend the hearing before the Board, although it was invited to do so. It had previously provided a written statement, as referenced above. The Court agreed with the following statement from In their article, "Ties that Bind at Common Law: Issue Estoppel, Employment Standards and Unemployment Insurance Adjudication" by Goodman & Murray: 23

The caselaw to date suggests that employers can avoid creating an estoppel either by not appealing a decision favourable to an employee or not attending an employee's appeal. The cases have held that by appealing or attending at an employee's appeal the employer becomes a party to that appeal.

The Court further offered policy reasons justified examining the degree of participation to assess whether an entity is a “party” to the proceeding:

In addition to the case law, I think that policy considerations justify focusing on the degree of participation to determine whether an employer in O'Shanter's position is a party for the purpose of issue estoppel. Holding that an employer who merely provides information to an insurance officer becomes a party and thus bound by the Commission's or the Board's findings could turn a right to participate into a practical obligation to do so. Ordinarily, employers do not appear on applications for unemployment insurance benefits or even on appeals because the stakes are small and they do not have a direct financial interest in the outcome, although they may be liable under s. 46(1) of the Act to repay any benefits received by an employee who subsequently succeeds in a wrongful dismissal action. Thus, to give employers in O'Shanter's position party status for the purpose of issue estoppel would provide a perverse incentive for employers to participate actively in hearings before the Board of Referees or before an umpire.

For this reason, this test was not met.

Further the court concluded that even had all three test been met, it would have exercised its residual discretion to deny the application of issue estoppel:

Applying issue estoppel to the findings of an administrative tribunal to foreclose a subsequent civil proceeding may also be unfair or work an injustice. Its application to findings made in proceedings under the Employment Insurance Act is a good example. Looking at legislative intent, nothing either in the scheme of the Act or in its individual provisions suggests, for example, that the finding of misconduct by a Board of Referees or by an umpire is binding in a civil action for wrongful dismissal. Issue estoppel is a common law rule and therefore the courts must consider the appropriateness of applying it to the findings of a tribunal under the Act to prevent those findings from being relitigated in a subsequent action for wrongful dismissal.

One would expect that this decision would be the definitive guidance on this issue. This would prove to be incorrect.

This issue of the application of the statutory hearing process dealing with E.I. benefits was again considered in a 2005 Ontario decision. 24

The plaintiff was a night shift supervisor whom was terminated due to allegations that he had allowed employees to steal property and leave their shifts early. His application for E.I. benefits was initially denied due to these allegations of misconduct. His appeal to the Board of Referees was successful. The employer appealed again which was heard by a retired justice of the Manitoba Court of Queen’s Bench. At this hearing, the employer unsuccessfully moved to allow the admission of new documentary evidence and new testimony, as it had been available at the time of the Board hearing. The meaningful factual distinction between this case and Minott was that the employer clearly was a party in the process.

The Ontario court found that all three tests were met. In consideration of the discretionary issue, the court noted that this was not a case in which the employer had no involvement and then found itself bound by the result. Here, the employer was aware of the employee’s allegations and chose to respond.

The employer’s appeal failed.

Is the decision in Global Wood good law?

There was no appeal taken from this result.

How this decision may possibly distinguish Minott remains a vivid mystery. There was no qualifier offered as to how the "same test" question was rejected by the Court of Appeal. Similarly, there was no narrative offered to distinguish the Court of Appeal commentary on the policy reasons for its refusal to apply the concept for discretionary reasons, even had the three tests been made.

The court’s attention was not drawn to a section of the Employment Insurance Act, which allows the employee a statutory boost in cases by allowing them the “benefit of the doubt” in which the evidence is “equally balanced”. Section 49(2) effectively states that the tie goes to the runner, this being the employee. This is obviously a concept foreign to the common law. It is also reflective of the intent of the legislation to favour the applicant:

  • Benefit of the doubt

(2) The Commission shall give the benefit of the doubt to the claimant on the issue of whether any circumstances or conditions exist that have the effect of disqualifying the claimant under section 30 or disentitling the claimant under section 31, 32 or 33, if the evidence on each side of the issue is equally balanced.

Similarly, the E.I. process allows for a graded assessment of the degree of misconduct by its discretion to offer a period of ineligibility as opposed to a fundamental denial of entitlement. This is unlike the common law which requires a binary choice between cause or no cause. This submission has not been made to date.

The above decision was nonetheless applied to an unjust dismissal hearing under the Canada Labour Code. The employee's application for E.I. benefits was accepted at the first level. The employer had provided information setting out the reasons for dismissal. There was no appeal taken. The Insurance Officer found in favour of the employee's application. The adjudicator found that issue estoppel applied and denied the employer the right to assert just cause on this issue. 25

One point of note is that in considering the exercise of the residual discretion of the decision maker, once the three components of the test were met, the adjudicator noted that one factor was that the employer chose not to appeal. That is a unique factor not referenced in any prior cases.

More to the point, however, is that the adjudicator also noted that the termination letter did not reference any misconduct on the part of the employee to justify termination:

Considering all the facts, and noting that the termination letter does not mention any misconduct, that the notes of the Employment Insurance officer suggest the Employer had not looked into, and did not pursue, the issue of missing fuel which is the only point mentioned which might have been misconduct, and that the Employer has at no point pursued the Employment Insurance Commission decision, I am unable to find any basis for concluding that the application of issue estoppel would result in an injustice.

It is also to be recalled that the Ontario Court of Appeal decision did agree that the parties may be bound by a factual finding made in the administrative process.

Canada Labour Code

The remedy of unjust dismissal is available to all persons holding a non-managerial position, with at least one year of employment. Such eligible persons may request from the employer the reasons for dismissal, which is mandated by the statute to be provided within 15 days. 26

New Brunswick Employment Standards Act

This statute requires the employer to provide reasons for termination, when the relationship is terminated for cause. 27

  1. There a series of similar employment standards statutes which mandate that the reason for a group termination be provided to the relevant authority, but this are not germane to this review

Summary

From the above review come these principles:

1.The employer has a duty not to deceive the employee as to the reasons for termination.

2.The employee may assert and prove the true reason for termination was not as stated. Once established, the duty of fairness may apply to the alleged wrongdoing, if so, to determine liability for aggravated or other damages.

3.It is submitted that the question of whether the reason for termination must be given, by common law, is undecided presently.

4.There is a statutory duty to advise of the reason for termination as mandated by the Employment Insurance Act.

5.Should these reasons assert misconduct, either party may be vulnerable to an argument of issue estoppel, allowing the E.I. process to determine the outcome of the liability issue in a civil proceeding where the employer is an active participant in the process.

6.The employer may be prudent to offer an affirmative reason for termination to defend against a possible human rights proceeding.

To repeat the initial summary:

  1. The employer has a duty not to deceive the employee as to the reasons for termination.
  2. The employee may assert and prove the true reason for termination was not as stated. Once established, the duty of fairness may apply to the alleged wrongdoing, if so, to determine liability for aggravated or other damages.
  3. It is submitted that the question of whether the reason for termination must be given, by common law, is undecided presently. There are many authorities to the contrary of this submission, holding that there is no such obligation.
  4. There is a statutory duty to advise of the reason for termination as mandated by the Employment Insurance Act.
  5. Should these reasons assert misconduct, either party may be vulnerable to an argument of issue estoppel, allowing the E.I. process to determine the outcome of the liability issue in a civil proceeding, provided that the employer is an active participant in the process. There is a detailed, well reasoned Ontario Court of Appeal decision denying the application of issue estoppel to allow the E.I. decision to bind the civil trial. A subsequent Ontario trial level decision has uniquely distinguished the Court of Appeal decision, one which, in turn, has been followed by a Canada Labour Code unjust dismissal case. In each of these last two instances, issue estoppel denied the employer's just cause defence, based on the E.I. decision allowing for benefits.
  6. The employer may be well advised to remain external to this process, given that the E.I. regime is somewhat employee friendly. 28 If so, it will not be a party to the process and the issue estoppel "same parties" test will fail.
  7. The employer will likely be prudent to offer an affirmative reason for termination to defend against a possible human rights proceeding.

 

Leave a Reply

Get 14 Days Free!

To continue enjoying all the benefits of an authorized user, register now and get the first 14 days of platform usage for free.

Get 14 days free

I already have an account Sign In