Employment terminations can involve complex issues and circumstances. They require a delicate balance between employer rights and employee protection. When it comes to ‘just cause’ dismissals, an employer may terminate an employee’s employment contract due to a valid reason that is generally related to the employee’s workplace conduct or performance. In today’s dynamic work environment, understanding the parameters and implications of ‘just cause’ dismissals is crucial for both employers and employees.

This blog will explore what constitutes ‘just cause’ and what employers must establish in order to justify a ‘just cause’ termination, in light of a recent decision from the Ontario Superior Court of Justice.

Employee signs employment contract with bank

In the case of Pirani v. CIBC, the plaintiff employee (“NP”) began employment with the defendant employee (“CIBC”) on December 13, 2004, as a Senior Financial Advisor when she was 49 years old. She signed offers of employment and employment agreements, the most recent being from March of 2012, with CIBC outlining the terms of her employment.

NP worked at different branches during her employment. In her role, NP’s job duties included assisting clients with “short and long term financial needs” by recommending a full range of solutions, and “accurately capturing and validating clients’ personal and financial information.”

Employee receives two written warnings from employer

NP began working at a new branch on February 1, 2010, which was shortly after her son-in-law had been diagnosed with cancer, and while her daughter was pregnant. Her son-in-law passed away in April 2010.

During the course of her employment, NP received two written warnings in November 2010 and February 2013 relating to issues concerning her compliance with CIBC’s . The November 17, 2010, warning came about due to NP’s failure to review overdraft reports, which followed a previous discussion. The warning indicated that NP was “expected to immediately…adhere to all procedures; not just limited to the review and action of the overdraft report” and noted that ongoing reviews would be conducted to ensure maintained compliance.

Employee goes on sick leave

On November 18, 2010, NP went on sick leave from work. From November 2010 to June 2011, NP was on medical leave, and was then on short-term disability, and subsequently long-term disability until she returned to work full time on January 3, 2012.

On March 17, 2012, NP accepted the role of Senior Financial Services Representative. In this position, she was responsible for identifying clients’ financial needs and referring clients to the employer’s services and employees who were best suited to meet those financial needs.

Employer terminates employee “for cause” following three warnings

After over eight years with CIBC, NP was terminated in July 2013. At the time of her termination, she was 58 years old, earning an annual salary of $55,000 and was eligible for discretionary bonuses. NP commenced a claim for wrongful dismissal and sought damages from CIBC. At the time of trial, NP was 68 years old.

CIBC, on the other hand, argued that there was ‘just cause’ for NP’s dismissal due to her “repeated breaches of the bank’s Code of Conduct, policies, and procedures” and sought for the action to be dismissed. CIBC also asserted that NP had received two written warnings along with a final warning, following which she was dismissed for cause. Ultimately, the “serious” breaches led to an “irreparable breakdown of the employment relationship.”

Employee commences claim for wrongful dismissal

When the matter came before the Court, NP claimed that her termination was unwarranted and that CIBC did not have cause to terminate her position. She also claimed that the only issues with her conduct while she was an employee was related to scheduling issues, which occurred in July 2013, due to a “miscommunication and a misunderstanding.” She argued that she was under stress in 2010 and when the new manager began at her branch, he “harassed her and contributed to her stress caused by her son-in-law’s death, the birth of her grandchild, and taking care of her grieving daughter.” NP also argued that since CIBC reported her to the Ontario Securities Commission, she has suffered immensely and it has made it difficult for her to find similar employment.

CIBC sought for the action to be dismissed with costs and, in the alternative, submitted that NP should be awarded her entitlements under the employment agreement, totalling $16,923.04, or common law damages between $36,458.31 to $43,825.47 in lieu of 7 to 9 months reasonable notice, less her mitigation earnings during that time. CIBC stated that although NP was a

“valued employee” her misconduct was serious as she “repeatedly breached clear and common-sense policies and procedures designed to protect the bank and its clients” and, therefore, it had just cause to dismiss her.

Employer must prove employee’s conduct constituted severe breach of their duties

The Court noted that in order to justify a dismissal ‘for cause’, the employer must prove that the employee’s conduct constituted a severe breach of their duties. The Court noted that there were express and implied terms that NP’s employment relationship with her employer was “based on a high level of professionalism, trust, honesty, and integrity” and found that this is of “particular importance to the banking industry.” The Court also noted that these principles were incorporated into the employment agreement, and therefore, a bank employer is “entitled to expect that its employees will act in accordance with its policies with the utmost honesty and integrity.”

Regarding NP’s warnings, the Court found that there was “progressive discipline” due to her repeatedly exposing CIBC to “complaints of privacy breaches, potential fraud (by processing a credit application without ever meeting the client) and reputational and other risks.” As such, her misconduct was “serious, involved a blatant disregard for policies and procedures, exposed CIBC to monetary and reputational loss, and led to an irreparable breakdown of the employment relationship” and breached the Canada Labour Code.

Court dismisses wrongful dismissal action

The Court acknowledged that the policies and procedures put in place by the employer were reasonable and designed to protect privacy of both the employer and its clients. Further, NP was aware of CIBC’s policies and procedures, as well as the consequences of her misconduct. The Court found that CIBC “took adherence to the Code and procedures seriously” and “consistently enforced the expectation that all employees adhere to the Code and its procedures.” As such, failing to carry out her job duties per the employer’s procedures and committing further breaches resulted in dismissal being a “proportional response.”

Ultimately, the Court found that the “breakdown in the employment relationship was beyond repair” and NP’s testimony at trial “merely highlights that she did not embrace the trust and honesty principles in her Employment Agreement.” After finding that CIBC had cause to terminate NP, the Court determined that there was no basis to award any other damages other than damages for pay in lieu of reasonable notice, as well as benefits during the notice period.

Key Takeaways for Employers and Employees

This case provides insights into the complex dynamics of employment relationships and sheds light on the legal thresholds for terminations. It also highlights the importance of policy procedure in the workplace and the accompanying consequences of non-compliance. It also provides insight into the role of personal circumstances and their impacts on one’s employment. Although personal circumstances may affect work performance, they do not always excuse non-compliance with workplace rules and protocols.

For employers, this case highlights the importance of having clear, comprehensive and documented policies and procedures for employees and stresses the need for maintaining comprehensive records of employee misconduct.

For employees, this decision serves as a reminder of the importance of complying with workplace policies and procedures, particularly in industries where such compliance is critical, such as the banking sector. It also reminds employees to engage in required training sessions, seeking clarification on policy changes, and taking other crucial steps to maintain compliance.

Contact the Lawyers at Grosman Gale Fletcher Hopkins LLP in Toronto for Trusted Advice on Terminations With Cause

At Grosman Gale Fletcher Hopkins LLP, our team of experienced Toronto labour and employment lawyers regularly advise employers and employees on employment law issues relating to terminations, including wrongful termination claims, mitigation requirements, terminations with cause, and constructive dismissal. Whether you are an employer seeking proactive legal advice on terminations, or an employee who believes they have been wrongfully terminated, our team can help. To schedule a consultation and learn how we can assist you, contact us by phone at 416.364.9599 or reach out to us online.