What constitutes just cause?

A glimpse at recent cases where courts upheld dismissal for cause

Stuart Rudner
A few months have passed since the last review of notable decisions on just cause and, not surprisingly, there is a plethora of recent cases on this perennially current topic.

Insubordination, part one: Paramedic’s refusal to attend at emergency or discuss the incident

Shauna Ratzlaff was an emergency medical technician in Price Albert, Sask. She started her employment with North-East Emergency Medical Services in September 1998. On Nov. 30, 2001, she told her employer she was pregnant. A week later, Ratzlaff was on call. It was expected that employees would respond to calls within six minutes. However, she responded late to one call and later said she was not ready to respond to another.

A few days later Ratzlaff was called at 3:10 a.m. to attend an emergency call. She responded by stating that she was too tired. When told that no one else was available, Ratzlaff eventually agreed to respond, 12 minutes after the initial call.

This was considered to be extremely serious. When her immediate supervisor attempted to contact her to discuss the incident, Ratzlaff was slow in responding. Ultimately, she told him that she had not done anything wrong, was not interested in discussing the matter further and hung up.

The company president called Ratzlaff the next day and asked her to come to his office. Ratzlaff then advised that she could not attend as she had a medical appointment. She also mentioned that she had consulted a lawyer who had advised her not to discuss the matter. Ratzlaff did not return to work. Instead she went on stress leave, which lasted until she started her maternity leave. When she returned from maternity leave on April 28, 2003, she was dismissed for cause, based upon alleged insubordination.

The Saskatchewan Court of Queen’s Bench agreed that Ratzlaff was guilty of insubordination, based upon her delay in responding and particularly her refusal to participate in the employer’s investigation of the matter. However, the court applied the contextual approach that is mandated by the jurisprudence.

The court found that Ratzlaff should have been provided with another opportunity to improve her performance and should have been explicitly told that future disciplinary action could result in termination.

This decision is consistent with the general jurisprudence, which holds that insubordination will rarely justify immediate dismissal — progressive discipline will usually be required. One can only wonder what would have happened, however, if someone had suffered severe or catastrophic medical consequences as a result of Ratzlaff’s failure to do her job properly.

Insubordination, part two: Refusal to keep in touch while on LTD

Douglas Ashby was a maintenance worker with Great Canadian Railtour Company in British Columbia. He started in January 2000 and was injured at work in May 2002. His doctor initially stated that he could return to modified duties on June 17, 2002, but then said in October 2002 that Ashby would be unable to return for another three to six months.

Ashby eventually returned in September 2003, on limited duties, but left again on Oct. 16, 2003, claiming that even light duties were causing him pain. In August 2004, the long-term disability (LTD) carrier advised that his benefits would be cut off unless he was incapable of any employment. Great Canadian’s director of HR then requested details of Ashby’s limitations so he could be accommodated. She also advised that she would require updates from Ashby every two weeks.

Ashby did not call back for some time. Over the following months, he failed to check in every two weeks as required and often failed to return voice-mail messages from the company. Occasionally, he would call and leave messages stating that further tests were being done, that he was awaiting results and otherwise generally delaying matters.

Eventually, the director of HR sent a letter, via courier, to Ashby advising she would be in the area where he resided on Feb. 24, 2005, and required his attendance at a meeting. Ashby did not respond, but she reached him by phone, at which time he said he would not be able to attend the meeting. She asked when he could meet, and he said in about two weeks.

After giving it some thought, the HR director called back and left a message for Ashby advising that she expected him to attend the meeting. He did not attend and was dismissed.

At arbitration, Ashby argued the real reason he was dismissed was his disability. This allegation was dismissed, with a finding that there was no evidence to support it. The arbitrator also rejected his submission that he was totally disabled, finding there was evidence he could work with some restrictions.

The arbitrator found Ashby had been guilty of insubordination by failing to report regularly as requested and failing to attend the meeting on Feb. 24. However, the arbitrator also considered the “degree of wilfulness” of the insubordination and the lack of explicit warnings that insubordination would lead to dismissal. The latter was an important factor in the arbitrator’s decision that dismissal was not warranted and that a one-month suspension would have been appropriate.

I should note, lest anyone read this and embark upon a dangerous course, that the right to suspend employees does not exist in all contexts. Before suspending an employee, the employer should be sure it is legally entitled to do so, consulting counsel where appropriate.

Setting up a competing business

Stephen Knowlan was the parts manager at Trailmobile Parts & Services Canada branch in Burnaby, B.C. In the summer of 2003, the company announced the branch would close in early August. However, Trailmobile offered Knowlan the opportunity to become a dealer representative. Knowlan then sent a letter to all of his customers advising of the upcoming closure and stating he was looking into opening a Trailmobile dealership. Knowlan then looked into getting financing to open a dealership, but was turned down. He eventually partnered with the owner of a local trailer repair business, naming their new business Trailine Trailer Parts Ltd.

On July 15, Knowlan told his customers the branch closing had been delayed to Aug. 15 and he was still looking into opening a new Trailmobile dealership. However, he and his partner then decided the Trailmobile parts were too expensive and they applied to become a dealer of Wabash trailer parts, a competitor of Trailmobile. Knowlan sent another letter to his customers on Aug. 8 advising that, as of Aug. 15, he and Trailine Trailer Parts would take over the day-to-day operation of the parts department of Trailmobile, and that Trailine would open soon after.

In the meantime, Trailmobile had instructed Knowlan to reduce the parts inventory and also sell off any assets. Knowlan had his new company, Trailine, purchase most of the inventory at 80 per cent off regular dealer cost. They also purchased many assets. Expecting that Knowlan was to be one of its dealers, Trailmobile gave Knowlan/Trailine a computer containing Trailmobile’s customer lists.

Trailmobile even paid Knowlan for a week after he stopped working, in order to help him establish his new business.

Trailmobile had no idea the new business would be a competitor, since Knowlan had repeatedly and intentionally avoided disclosing this. Even his last letter to his customers was deliberately vague and misleading.

Trailine opened on Sept. 3, 2003, with Trailmobile still in the dark about Knowlan’s intentions to operate as a Wabash dealer. In fact, Trailmobile only found out when it called Knowlan to ask about their parts order and was told that parts had been ordered from Wabash.

Knowlan sued Trailmobile for wrongful dismissal. The British Columbia Supreme Court accepted that Trailmobile had just cause to dismiss Knowlan for setting up a competing business while still working for Trailmobile. Although Trailmobile was not aware of this at the time of termination, the court followed the well-established principle that an employer can rely upon after-acquired cause to justify summary dismissal.

Parting thoughts

There are no hard-and-fast rules regarding what will, or will not, constitute just cause for dismissal. The contextual approach requires that every incident of misconduct be considered within the context of its own unique set of circumstances. The result is that behaviour that constitutes just cause in one case may not in another. Employers are cautioned to always approach dismissals for cause with caution and, ideally, with legal advice.

Stuart Rudner is a partner who practices commercial litigation and employment law with Miller Thomson LLP’s Toronto office. He can be reached at (416) 595-8672 or by e-mail at [email protected].

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