Lack of clarity on reasons employee
 was fired leads to unjust dismissal

Loss of trust over suspected gas theft, ‘not a good fit' excuse not enough for just cause under Canada Labour Code: Adjudicator
By Jeffrey R. Smith
|Canadian Employment Law Today|Last Updated: 07/08/2019
Employer was concerned about worker's gas usage but didn't investigate further northlight/Shutterstock

An Ontario employer lost trust in an employee after suspected theft of gas meant for company vehicles and felt the employee wasn’t a good fit anymore, but these reasons didn’t constitute just cause for dismissal under the Canada Labour Code, an adjudicator has ruled.

Huron Commodities is a provider of custom-sourced grain, bean, and seed products based in Clinton, Ont. Huron hired Paul Alexander, 59, in 2012 as a procurement and commodity originator, a position charged with arranging contracts with farmers for Huron to purchase their produce — mostly soybeans — for the company to sell to customers in Asia.

When Alexander was hired, he was one of only two originators for the company and he had an area in southwestern Ontario in which to procure contracts from farmers. He received good performance reviews in his first few years with Huron with no discipline on his record. However, the company eventually hired two more originators, reducing Alexander’s area, and his sales the following year decreased. This happened a second time in 2017.

Also in 2017, Huron adopted a new performance evaluation form. Alexander’s performance was rated as satisfactory on the new form.

Concerns with job performance and fuel use

By early 2018, Huron’s operations manager — who was also the son of the company president — was concerned with Alexander’s job performance, as the number of contracts Alexander had procured and total crop acreage was lower the other three originators. He also discovered that Alexander was using more fuel in his company truck per 100 kilometres than the others. The operations manager suspected Alexander was either using company-paid fuel for his own use or the fuel was being stolen.

The operations manager and the president met with Alexander on Jan. 24, 2018, to discuss their concerns. They prepared a termination letter, agreement, and release in advance, but wanted to hear Alexander’s response to their concerns before making a final decision.

However, when the issue of fuel use was raised, Alexander didn’t have an explanation satisfactory to management, saying only he had suspected that his neighbour was stealing gas from him “for years.” The operations manager and president didn’t believe this excuse and felt they couldn’t trust him with using company vehicles and working away from the office. They decided to terminate Alexander’s employment and provided him with the termination letter, agreement, and release.

No reason for termination was given in either the letter or the release, which Alexander was asked to sign in exchange for two additional weeks’ wages. Alexander was given a cheque for pay in lieu of notice, but he refused to sign the termination agreement or release, so he didn’t receive the second cheque for the additional two weeks of pay. One week later, the company provided a record of employment stating the reason for the document was dismissal.

Alexander applied for employment insurance (EI) benefits. When the EI officer dealing with his claim contacted Huron’s operations manager, the manager said Alexander had been dismissed for “several things” including missing fuel and performance. He said the company hadn’t looked into the missing fuel and they felt Alexander wasn’t performing to their expectations. The officer prodded for more details, but the manager just said Alexander “wasn’t a good fit, that’s all.”

The EI officer determined Alexander had not been dismissed for misconduct and was eligible for EI benefits. However, Alexander commenced an unjust dismissal complaint against Huron under the Canada Labour Code.

The adjudicator noted that just cause for dismissal under the code was traditionally evaluated by considering whether there was reason for a disciplinary response by the employer, was the decision to dismiss excessive, and if so, what discipline should be substituted. In this case, Huron raised a potential cause related to the possibility that Alexander stole fuel, though it didn’t include that as a reason for dismissal in the termination letter.

However, the EI officer, in evaluating Alexander’s EI claim, determined that Alexander had not been dismissed for misconduct. As a result, there was no issue of dismissal for misconduct, said the adjudicator.

Huron also mentioned Alexander’s job performance as an issue, both in the termination meeting and in discussion with the EI officer, but Huron didn’t pursue this as a cause for dismissal, focusing on the loss of trust issue.

Without-cause termination planned

The adjudicator found Huron did lose some trust in Alexander based in the fuel issue and Alexander’s response to it in the meeting, but it wasn’t enough to support a conclusion that it was the reason for dismissal. Huron management prepared the termination documents before the meeting with Alexander on the understanding it would be a dismissal with notice rather than cause. It was only during the meeting that they decided the loss of trust would be a reason.

In addition, the operations manager did not give loss of trust as a reason for dismissal when discussing it with the EI officer. Instead, he mentioned “several things” including missing fuel, but the latter wasn’t investigated. Ultimately, the manager said the dismissal was due a failure to meet their expectations and Alexander wasn’t a good fit, which were related to job performance — a different reason than was supposedly decided on at the termination meeting and not consistent with previous performance reviews, said the adjudicator.

The adjudicator found that there was no evidence of misconduct by Alexander, and without such evidence, employer loss of trust could not constitute legitimate cause for dismissal under the code. Dismissal under the code must be for cause, and cause requires proof, said the adjudicator.

“At some level, ‘we lost trust’ means nothing more than ‘we decided to dismiss,’” the adjudicator said. “Employer loss of trust is not cause for employee discipline.”

Without cause for any form of discipline, let alone dismissal, Huron Commodities was ordered to reinstate Alexander with compensation for all lost income and benefits since his dismissal, plus costs.

For more information see:

• Huron Commodities Inc. and Alexander, Re, 2019 CarswellNat 1957 (Can. Lab. Code Adj.).

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