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Misconduct In The Workplace (Canada Laws)

Under the common law in Canada, an employee must be terminated with reasonable notice, or pay in lieu of notice (i.e. severance), unless the employer has “just cause” for termination: Honda Canada Inc v Keays, 2008 SCC 39.

Simply put, just cause can be misconduct that is so serious that it constitutes a breach of the employment agreement allowing the employer to summarily fire the employee.

In short, an employee can be terminated with cause for serious misconduct in Canada. In that case, a terminated employee would not be entitled to any severance. 

As discussed below, there is a spectrum of the types of misconduct at work. Some kinds of misconduct are serious enough that the employer can claim just cause, while with other types of misconduct, it is harder to claim just cause.

Still, the employer has the burden of proving serious misconduct equating to just cause, and it is a heavy burdeon: McKinley v BC Tel, 2001 SCC 38.

The Test For Serious Misconduct

The Supreme Court of Canada has made clear that a contextual approach is required when determining whether an employee’s misconduct is serious enough that it constitutes just cause. In McKinley, the Supreme Court held that the applicable test is “whether the employee’s [misconduct] gave rise to a breakdown of the employment relationship” (see e.g. Ross v IBM Canada Ltd, 2015 ABQB 563; Henry v Foxco Ltd, 2004 NBCA 22).

A contextual approach to assessing cause means that simple proof of misconduct does not automatically constitute just cause for dismissal. In Molloy v EPCOR Utilities Inc, 2015 ABQB 356, citing, among others, McKinley, Justice Topolniski summarizes the fundamental principles that apply in cases where just cause is disputed:

  1. cause is a question of fact;
  2. the assessment of cause is objective, contextual, and proportionate;
  3. the assessment of cause entails three steps:
    1. determining the nature and extent of the alleged misconduct;
    2. considering the surrounding circumstances, including [but not limited to] the employment history, the employee’s role and responsibilities, the type of business or activity, the policies and practices, and the level of trust reposed in the employee; and
    3. determining if the response to the alleged misconduct is balanced, having regard to the facts; the question is whether the alleged misconduct is so incompatible with the fundamental terms of the employment relationship that it warrants dismissal.

Therefore, even if there is misconduct, it is not always just cause. Whether the misconduct at work amounts to just cause will depend on all the circumstances.

An employment lawyer can advise if misconduct amounts to just cause.

What Is Serious Misconduct?

Serious misconduct can be anything that gives rise to a breakdown of the employment relationship. However, some examples of workplace misconduct that is sometimes serious enough for just cause include:

  1. Serious misconduct is any behaviour at work that goes against the employer’s workplace policies.
    • The common law requires that an employee obey the lawful orders and instructions of their employer, including the employer’s workplace policies.
    • Nevertheless, for workplace policies to be considered enforceable, they must be “reasonable, unambiguous, well-published, consistently enforced, and [the employee must know] or ought to have known of [the policies’ contents], including the consequences of breach”: Foerderer v Nova Chemicals Corp, 2007 ABQB 349.
  2. In the alternative, serious misconduct may be dishonesty. In certain circumstances, an employee’s dishonesty may be so significant that it erodes the employer’s trust to the point where termination is warranted: see e.g. Denhamer v RBC Dominion Securities Inc, 2000 ABQB 651. For example, theft is serious dishonesty.
    • In Poliquin at para 32, the British Columbia Court of Appeal  notes that dishonesty has been “traditionally recognized as constituting cause for an employee’s discharge without notice.” The Court at paragraph 35, citing McKinley, clarified that dismissal may be justified when an employee’s dishonesty:
      1. violates an essential condition of the employment contract
      2. breaches the faith inherent in the work relationship; or
      3. is fundamentally or directly inconsistent with the employee’s obligations to the employer.
  3. Another example of misconduct in the workplace is insubordination. An employee has an implied obligation to obey the lawful and reasonable directions of his employer.
    • Insubordination can justify just cause in some circumstances.
    • Even still, rarely will one instance of insubordination suffice to fire an employee summarily unless it is of a nature which amounts to a repudiation of the employment contract or a fundamental term of employment.
  4. A fourth type of misconduct at work is insolence. Angry outbursts by an employee against a supervisor are generally characterized as insolence.  In Henry v. Foxco, 2004 NBCA 22, Robertson J.A., distinguishes insubordination from insolence.  He states at paragraph 76:
    • “…Commentators note the tendency of courts to employ the terms insubordination and insolence interchangeably, yet they remain distinct categories of misconduct.  In the reasons that follow, insubordination means an employee’s intentional refusal to obey an employer’s lawful and reasonable orders.  Insolence means an employee’s derisive, contemptuous or abusive language, generally directed at a superior…”
    • Courts have found just cause for summary dismissal where an employee has engaged in insolent misconduct. Henry v. Foxco dealt with a workplace confrontation involving a single incident of insolence in which the employee became loud and abusive towards his supervisor.  The majority for the New Brunswick Court of Appeal overturned the trial judge’s finding the misconduct warranted summary dismissal.  Robertson J.A. identified three circumstances in which a single insolent act will justify summary dismissal:
      • “A review of the jurisprudence leads me to conclude that a single incident of insolence will justify summary dismissal of an employee in one of three circumstances: (1) the employee and superior are no longer capable of maintaining a working relationship; (2) the incident undermined the supervisor’s credibility in the workplace and, correlatively, his or her ability to supervise effectively; or (3) that because of the incident the employer suffered a material financial loss, a loss of reputation or its business interests were seriously prejudiced.  I confess that these three possibilities do not constitute discrete tests to be applied independently of one another.  They may overlap and other exceptional circumstances may exist: see generally Ellen E. Mole, The Wrongful Dismissal Handbook (Toronto: Butterworths, 1997) at pp. 75-76.”
  5. A fifth type of misconduct is incompetence. Ritter J. of the Alberta Court of Queen’s Bench described the legal test for just cause with regard to incompetence in the following passage from Bogden v. Purolator Courier Ltd., 1996 CanLII 10572 (AB QB):
    • “Here, to a large extent, the employer bases its dismissal of the plaintiff on the plaintiff’s incompetence. In order to establish that an employee’s incompetence is grounds for dismissal, an employer must show more than mere dissatisfaction with the employee’s work and it is not enough to show that the employee was careless or indifferent. To establish cause on the basis of incompetence the employer must show: 1) the level of job performance that it required and that the level required was communicated to the employee; 2) that it gave suitable instruction to the employee to enable him to meet the standard; 3) the employee was incapable of meeting the standard; and 4) there had been a warning to the employee that failure to meet the standard would result in his dismissal.”

Misconduct Is A Spectrum

Misconduct is a spectrum ranging from dishonesty at the high end and insolence at the low end.  Consider the following four traditional categories of misconduct: (1) dishonesty; (2) disobedience (insubordination); (3) incompetence; and (4) insolence. Some categories are inherently or intuitively more serious than others.  For example, dishonesty is usually regarded as the most serious of allegations of employee misconduct because it involves a deliberate act of wrongdoing that is clearly prejudicial to the employer’s financial and business interests.  Yet within the category of dishonesty, there are four sub-categories with some being seen as more serious than others: theft, fraud, misappropriation and false statements.

In McKinley, the Supreme Court observed that the first above-mentioned sub-categories of misconduct ((1) dishonesty; (2) disobedience (insubordination); (3) incompetence) are more apt to support an employer’s decision to summarily dismiss an employee than the fourth (insolence):.

My point is simply this.  When looking at the diverse categories of misconduct, some are inherently or intuitively more serious than others.  The weakest of all is insolence and more so if characterized as an isolated incident.  By comparison, insubordination is inherently more serious than insolence.  Admittedly, a single incident of either may be sufficient to justify an employee’s summary dismissal.  However, the starting point is the understanding that there are distinct categories of misconduct and that some are inherently more serious than others.

Therefore, every instance of misconduct will not amount to just cause. However, some incidents of misconduct will mean just cause is more likely. For example, theft makes just cause near-certain whereas a single heated incident of insolence is less likely to constitute just cause.

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