Among the items missing from the HR toolbox is a crystal ball. When it comes to terminations, issues can come to light after the worker has been dismissed — and these facts could potentially tip the balance in favour of just cause or bolster an employer’s already strong hand.
Melanie Samuels, a Vancouver-based partner at Singleton Reynolds and Chair of its Employment and Labour Practice Group, said there are a couple of scenarios where “after-acquired cause” can come into play.
The first is where the employer doesn’t allege cause to fire the worker, but then gets hit with a wrongful dismissal lawsuit.
“Sometimes, you have cause — but you want to be decent about it. You don’t want to destroy the person’s life and you’re going to let them go with a little notice,” she said. “But then you get sued? The court is going to allow the employer to bring it up. The gloves are off and the employer can allege cause.”
The second scenario could come into play in situations where the termination has already happened — but information arises about serious wrongdoing.
“We gave you a package and then we find out, during a forensic audit, that you were actually stealing from us,” said Samuels. “Then employers can use that after the fact to say that, while the person was employed, there was a breakdown in the employment relationship because of trust or whatever the fact pattern is.”
No witch hunts
But none of that should be taken as a green light for employers to start throwing spaghetti at the wall to see if anything sticks, she said.
“It can’t be like a witch hunt. Sometimes the employer will get desperate, now that the employee is suing them, to find anything,” said Samuels. “It has to be something substantive. There is, especially recently, a much higher threshold for employers to act in good faith.”
If the employer looks like it is trying to manufacture cause, then it can run into hot water. But if it’s a genuinely serious issue, that goes to the heart of the employment relationship, then it is fair game to bring it up after the fact, she said.
“The employer just has to have clean hands with everything,” said Samuels. “They can’t be in the mud, digging around hoping to find something to justify probable cause. You’ve got to have some reason why you may have investigated that possible situation.”
It’s also a bad idea to rely on misconduct that may have been tolerated from other workers without any discipline directed their way, she said.
“If it’s a minor thing that no one else got fired for, but now you’re going to rely on it for this person? That’s a problem,” said Samuels. “That’s where there is bad faith.”
Lump sum versus salary continuance
If the worker’s package has already been paid out in a lump sum, or run its course, it might be difficult to recoup the funds, she said.
“I don’t know of any case where the employer has turned around and sued the employee for the return of the funds,” said Samuels.
But if the worker is receiving salary continuance — also known as “garden leave” — or on working notice, it might be justifiable to stop the payments.
“If you give someone working notice, and they steal from you during that period of working notice, you can say, ‘Okay, well, now you’re gone,’” she said.
That same logic applies to a worker who has given notice and then commits serious misconduct.
Samuels said the decision to pay lump-sum severance versus salary continuance is one that should be made on a case-by-case basis.
One tactic is to pay 50 per cent of the amount as a lump sum, which gives the worker an incentive to find another job and be able to keep that upfront money, she said. But in other cases, the employer might want to just wash its hands of the worker and pay out the full amount.
“But you have to be sure to ask the right questions, like ‘Is the person imminently starting a new job?’ Because that can really stick in the craw of the employer if they’ve paid that person out and they start a new job the next day,” she said. “It’s a balancing act. If you have cashflow issues, then paying it over time is better.”
Melanie Samuels is a partner and Chair of the Employment and Labour Practice Group at Singleton Reynolds. She can be reached at [email protected] or 604-673-7405.