Termination: Avoiding the ‘Scorched Earth’ Policy

One of the most difficult situations an individual can find themselves in is being unexpectedly terminated from their job. The uncertainty, the anxiety, the financial pressures are just a few of the realities that a newly unemployed individual faces. In such difficult times, one would expect that an employer who has just terminated an employee would display empathy and compassion for their situation. All too often, however, employers take the exact opposite and wrong approach. Some examples that I have seen repeatedly include forcing an employee to sign a document giving up their rights to sue before exiting the building, making completely unfounded allegations to justify a for-cause termination, or using every legal avenue possible to force an employee to accept a sub-par severance package.

Two recent cases highlight the substantial pitfalls of taking a “scorched earth” approach to terminating an employee. In the first case (Lalonde v Sena Solid Waste Holdings, 2017 ABQB 374) the employer terminated a 62-year-old millwright with 4 years of service for cause allegedly for “serious safety violations and insubordination”. Prior to the termination, the employee was never given an opportunity to respond to the allegations before his termination and ignored evidence from another employee which contradicted the employer’s assertions. The employer maintained its position that it had cause to terminate the employee for 5 years until withdrawing the allegations just before the commencement of trial. The Court made a number of findings including that the investigation into the employee’s conduct was a sham, that the plaintiff was publicly humiliated at the time of dismissal and the humiliation continued as rumors concerning the reasons he was dismissed continued to circulate, and that the employee now suffered from depression as a result of the employer’s actions. The Court ultimately determined that the employer did not act in good faith and that its conduct was egregious. Taking everything into account, the Court awarded the employee $75,000.00 in aggravated damages as a direct result of the employer’s conduct.

In the second case (Ellis v Artsmarketing Services Inc., 2017 CanLII 51563) the employee was employed for over 9 years when she was verbally terminated from the marketing campaign she was working on. The question before the court was whether being terminated from the campaign itself constituted termination from the company and a constructive dismissal, or whether she resigned by not returning to work thereafter in a different role and a different project. In keeping with the employer’s position that the employee had resigned, the employer took 5 months to submit a Record of Employment (“ROE”) to Service Canada and indicated on the ROE that the employee had resigned, disentitling her from EI benefits. After the Court found that the employee was constructively dismissed and did not resign, it turned its attention to the ROE issue. The Court found that the employer had intentionally delayed filing the ROE and improperly stated that the employee resigned. The court stated that the employer’s dithering in filing the ROE was “inexcusable” and caused the employee significant financial hardship, stress, and inconvenience for no good reason. The Court ultimately awarded the employee an additional $1,000 for inconvenience damages as a direct result of the employer’s conduct.

The above two cases should send a strong message to employers that terminating an employee with the utmost good faith and dignity is not simply a courtesy. An employer must recognize the difficult situation the employee faces and govern its actions accordingly. The Court’s do not take the employer’s duty lightly and should an employer fail to act in a reasonable and good-faith manner, they can expect to face stiff financial consequences.