Failure to properly discipline employee results in more severance: Federal courts

Hussey v. Bell Mobility Inc.

The proper amount of severance for a federally regulated employee was addressed in the recent Federal Court of Appeal (FCA) decision Hussey v. Bell Mobility. In this case, the employer, Bell Mobility (Bell) is federally regulated and subject to different considerations when firing employees.

The matter was originally heard by an adjudicator appointed under the Canada Labour Code (CLC). It was appealed to the Federal Court of Canada, and then to the Federal Court of Appeal. Both the Federal Court of Canada and the Federal Court of Appeal supported the adjudicator’s conclusions.

Facts

• Ms. Hussey started working for Bell in September 10, 2010.
• During Hussey’s employment, there were concerns that she did not punch in and out of her shifts in accordance with company requirements and that she arrived late for shifts and left early.
• On November 29, 2016, Hussey received a written warning regarding the above concerns.
• Despite this continuing behaviour, Bell promoted her twice thereafter and was not disciplined again.
• At the time of her dismissal, she managed a retail outlet for Bell.
• Due to concerns about her managerial performance, on June 16, 2017, Bell fired Hussey from her employment, allegedly for cause.
• Hussey made an “unjust dismissal” compliant under the CLC, being a federally regulated employee.
• The adjudicator who heard the original case determined that Hussey was unjustly dismissed. Despite having committed blameworthy conduct, Bell should have first resorted to progressive discipline (ie written warning, suspension, dismissal) instead of immediate dismissal.

Court’s decision

Unjust Dismissal

Per the CLC and the landmark Supreme Court of Canada decision in Wilson v. Atomic Energy, federally regulated employees – which include people working in industries such as telecommunications, air transportation, banks, broadcasting, railways, transportation services that cross provincial or international borders to name a few – are protected in their employment.

In all but limited circumstances, federally regulated employees are able to obtain a finding that they have been “unjustly dismissed” unless the employer can establish that just cause for termination existed. Further, federally regulated employers must “progressively discipline” their employees before terminating their employment. This generally requires written warnings for specific conduct, escalating to a suspension, and only then can a dismissal be “just”.

In Hussey’s case, Bell had not done enough to reinforce that it wanted her to take their policies seriously; they had only provided one written warning, and then had promoted her twice despite the conduct continuing. Because Bell did not properly progressively discipline Hussey, the adjudicator determined that the dismissal was unjust. The Federal Court of Canada and the Federal Court of Appeal upheld this finding.

Compensation

The CLC, unlike provincial legislation, creates the power to reinstate an employee that is unjustly dismissed. In the Hussey decision, the adjudicator declined to reinstate her, largely due to an assessment that her attitude with respect to adhering to Bell’s policies (punching in and out and arriving on time for her shift) wouldn’t change if she was reinstated.

Instead, the adjudicator awarded damages in lieu of reinstatement. Such damages are calculated differently – and can often exceed – those for a wrongful dismissal of a provincially regulated employee. We can use two approaches:

• Fixed-term approach: This first approach assumes that the dismissed employee would have continued to work for the employer until their expected date of retirement. This is subject to deductions for certain contingencies (such as if it is likely termination would have happened to the employee earlier, or would have left earlier for health reasons).
• Extra compensation: The second approach is similar to that used for provincially regulated employees, which uses factors such as age and years of service to estimate appropriate compensation – but then includes “extra compensation” for the employee to cover the loss of the protection from dismissal other than for just cause under the CLC.

The adjudicator awarded Hussey the equivalent of eight months’ pay. This took into account seven years of service. They added an additional four months’ pay to compensate her for loss of the protection of her federally regulated employment.

Lessons for Employees

• Owed more severance: Unjustly dismissed federally regulated employees may be entitled to more severance pay. These employees have unique protections. When they are unjustly dismissed, compensation can be higher than their provincially regulated counterparts. The Federal Courts and adjudicators under the CLC commonly use a 1.25 month per year of service calculation. Federally regulated employees have protection, in all but limited circumstances, from dismissal except for just cause. If you are federally regulated and have  been dismissed on a “without cause” basis, contact an employment lawyer at Samfiru Tumarkin LLP in Ontario, Alberta or B.C. right away as your compensation may be very different than other employees.
• Progressive discipline is required: Even if you have been fired for cause, and you believe there was blameworthy conduct on your part, the standard for federally regulated employers to use progressive discipline, or warnings, is high. If your employer has not properly warned you in the past about your conduct, contact an employment lawyer at Samfiru Tumarkin LLP for help as “just cause” may not exist.

Lessons for Employers

• Termination without just cause not allowed: Except in limited situations, federally regulated employers can’t fire employees; substantial prior warnings must be given to establish the existence of “just cause”. Employment contracts that describe your employees’ rights in a without cause termination may actually be violating the CLC. They would be illegal and void. If you have such contracts, contact an employment lawyer at Samfiru Tumarkin LLP – we can help you revise them.
• Reinstatement and higher damages: If just cause doesn’t exist, you may have to reinstate an employee after firing them – and provide back pay. Even if reinstatement is not appropriate, severance amounts are likely 25% higher than a provincially regulated business would pay. For advice on complicated terminations where you are not sure if just cause exists, don’t hesitate to contact an employment lawyer at Samfiru Tumarkin LLP for help.