Northern Exposure

When are criminal charges none of your business?

by Hannah Roskey

Off-duty misconduct could lead to an employee’s dismissal. But a recent court decision in Ontario suggests that the circumstances where that will amount to just cause for termination are quite limited. The court found that an employee who had been fired after being criminally charged with sexual assault was wrongfully dismissed. The employee was awarded damages.

Background
Merritt was a 67-year-old laborer with Tigercat Industries. The company produces forestry and industrial machines. It has several production facilities in Ontario. Merritt was hired in 1998. He was fired in February 2015. The company said it had just cause.

Merritt was arrested at a Tigercat facility. He was charged with two counts of sexual assault against minors. Management met with Merritt the following day, but he declined to provide any details of the charges. He said only that the alleged events did not happen at the workplace and did not involve any Tigercat employees. Merritt was asked to resign, but he refused. Instead he agreed to take a two-week leave of absence.

When he returned from the leave, Merritt was fired right away. No investigation report was generated. No written notice or reasons for termination were given.

Merritt then sued Tigercat for wrongful dismissal. The company defended the lawsuit by saying that Merritt’s criminal charges and the reputational harm those charges had caused to Tigercat gave it just cause to fire him.

Decision
The trial judge agreed with Merritt. The judge criticized Tigercat for failing to conduct an investigation before making the decision to fire Merritt. The criminal charges were not associated with his employment and did not involve other employees. There was no evidence of damage to Tigercat’s reputation. The court decided that Tigercat had failed to demonstrate it had just cause. Merritt was thus awarded 10 months’ pay as damages for wrongful dismissal.

The decision highlights that improper conduct of an employee while not at work may form grounds for termination with cause but in very limited circumstances. The onus is on the employer to prove one or more of the following about the off-duty conduct:

  1. It harms the company’s reputation or product;
  2. it renders the employee unable to satisfactorily perform his or her duties;
  3. it leads other employees to refuse or be reluctant or unable to work with him or her;
  4. it amounts to a serious breach of the Criminal Code of Canada that is injurious to the general reputation of the company and its employees; or
  5. it makes it difficult for the employer to efficiently and effectively manage the workforce.

It is not necessary that all of the above factors exist. Depending on the impact, any one factor may warrant discharge for cause. What is crucial is that there is a justifiable connection between the conduct and the employer or nature of employment.

The court clearly stated, though, that criminal charges alone do not constitute just cause for dismissal when they arise outside of work.

Takeaway for employers

Off-duty conduct, no matter how reprehensible, will generally not constitute just cause for dismissal. There must be a clear link between the behavior and the job; or the employee is in a “front-line” or public position and could damage the employer’s reputation.

It is important for employers to proceed cautiously in these cases. A proper investigation will be crucial. This process should involve obtaining relevant statements, keeping thorough records, complying with all workplace policies, and giving the employee an opportunity to respond to the allegations of misconduct.

This is not to say that employers may never terminate or discipline employees for conduct outside the workplace. But employers should be aware of the risks and protect themselves from liability.

Contemplating opening operations in Canada or already operating there? You need to understand the complexities of Canadian employment laws. Because both Canadian federal and provincial governments have jurisdiction over employment, it is important that you know which one regulates your industry and how to abide by their laws. Join us on January 10 for Canadian Employment Laws 2017: Best Practices and Key Rules for Operating North of the BorderFasken Martineau DuMoulin LLP attorneys Brian P. Smeenk, Emilie Paquin-Holmested, and David G. Wong will provide up-to-date explanations on the latest Canadian employment laws and regulations impacting how you conduct business  to help you minimize your company’s legal risks. For more information, click here.