Can One Bad Decision Justify Getting Fired?

I have the good fortune of meeting with large groups of people who are interested in employment law. Whether it’s a large meeting hall full of company workers in Ontario, a Zoom room of executives in New York, or a classroom full of law students in New Brunswick, all of them understand that certain kinds of bad behaviour can justify firing an employee. The hard question is “When is bad behaviour bad enough to get fired?” That line has shifted over the decades that I’ve been a lawyer, and it appears to be taking another shift right now.

What is “just cause”?

In the USA, Canada, and other common law countries, the employment relationship is founded on contract law principles. In other words, it’s a transaction of work for money. However, early in the history of employment the law recognized that it’s a peculiar and special relationship that is distinct from the kind of contract made when a consumer buys commercial goods. As a result of this peculiarity, courts have layered complicated “implied terms” over most employment contracts – unspoken responsibilities assigned to employers and employees. One of the many implied terms is the employee’s duty to be honest with their employer.

When an employment contract term is breached, the other side will usually think about whether the employment contract should be terminated. However, except in the USA, 1 an employer’s termination of a contract attracts the risk of having to pay “reasonable notice” compensation to the dismissed employee. Canadian employees usually have some familiarity with this concept; when they get “fired”, “laid off”, or “restructured”, they often expect that they are entitled to financial compensation. How much compensation might be owed to them and how it is paid is a completely different matter that attracts its own set of legal complications, but the first question is whether “just cause” for termination of employment exists.

“Just cause” is another employment contract term. It essentially means that, in the face of sufficiently bad behaviour by an employee, the employer is entitled to terminate the employment without paying any compensation. What constitutes sufficiently bad behaviour, though, is a nuanced question that, in many cases, can’t be easily answered. Over the past few decades, Canadian courts have wrestled with the line between bad behaviour that constitutes just cause and bad behaviour that doesn’t. In a recent Ontario case, the Superior Court considered when being untruthful to your employer constitutes “just cause” for firing: Lagala v. Patene Building Supplies Ltd, 2024 ONSC 253 (CanLII), https://canlii.ca/t/k26p8. The outcome should be comforting to employers.

Lagala v Patene Building Supplies Ltd.

1 All American states except Montana have a form of “at will” employment that allows employers to terminate employment contracts with reduced liability risks.

The employee in the case was the company’s former health and safety manager. Her job included duties regarding the safe operation of the company’s business. At the time she was fired in December 2019, the employee had worked for Patene for 13 years.

In March 2019, Lagala slipped and fell in the company’s parking lot. As the Health and Safety Manager, Lagala knew that Patene had a policy that required her to report her accident. The policy read:

When an injury, accident or incident occurs you must take the following steps:

1) look after the injured person - get first aid, remove anything that may

have fallen on top of him/her etc.

2) do not disrupt the scene - (other than that required in #1)

3) report incident to supervisor immediately - if it is after hours, leave a note or a message on their voice mail. It is imperative that all injuries are reported immediately. Form HS707 (internal report) is to be completed for ANY minor incidents.

The supervisor must ensure the employee is being looked after, secure the scene, and advise members of the JHSC if applicable.

In spite of the policy, Lagala did not report her accident to the company until October 2019. However, she did report the accident to WSIB, the Ontario workers compensation commission. When the company found out about the failure to report, it fired Lagala. In turn, Lagala sued the company for wrongful dismissal, arguing that her conduct was not sufficiently bad to justify her firing.

In assessing the employee’s misconduct, the Court referred to these cases:

McKinley v. B.C. Tel, 2001 SCC 38, [2001] 2 S.C.R. 161, in which the Supreme Court of Canada stated that not every case of dishonesty would justify the termination of an employee’s employment. Proportionality must be considered.

Dowling v. Ontario (Workplace Safety and Insurance Board) (2004), 2004 CanLII 43692 (ON CA), 192 O.A.C. 126, leave to appeal refused, [2005] S.C.C.A. No. 25. In that decision, the Court of Appeal described the standard for assessing just cause as:

1. determining the nature and extent of the misconduct;

2. considering the surrounding circumstances; and,

3. deciding whether dismissal is warranted (i.e. whether dismissal is a proportional response).

The Court found, in Lagala, that

…the Plaintiff was directly responsible for the administration of the Defendant’s Health and Safety policies.  As a result, I infer that the Plaintiff knew, or ought to have known, what the policies required her to do in this case. She failed to follow those policies.

Further, the Court stated that:

The Plaintiff’s misconduct, and her dishonesty when confronted with that misconduct, irretrievably destroyed her ability to carry out her employment responsibilities.  Put simply, an employer cannot be expected to employ a Health and Safety manager who does not comply with health and safety policies when those policies affect her, and then is dishonest with her employer about what happened after the fact.

What to take away from the Lagala case

Every case turns on its own set of facts and is in part dependent on the way a court or tribunal interprets those facts. However, the Lagala case is beneficial to employers in that it demonstrates a willingness on the part of courts, as in Render v. ThyssenKrupp Elevator (Canada) Limited, 2022 ONCA 310 (CanLII), https://canlii.ca/t/jnrvb to recognize that, sometimes, a single act of bad behaviour warrants dismissal for just cause, and the employee is not owed compensation.

How we can help: If you’re an employer who’s trying to navigate the choppy waters of wrongful dismissal law, we can help. Feel free to give us a call at 506.633-3535 or email us!

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