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Terminating an employee facing misconduct allegations may defy duty of fairness

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When an employer is made aware of allegations of employee misconduct, employment lawyers generally advise that they are expected to respond fairly and conduct some form of investigation before reaching any conclusion on fault for the misconduct and any resulting discipline. Given the potential duration and cost of an investigation process, an employer may be tempted to simply terminate the employee accused of the misconduct without cause and provide them with a compensation package in lieu of notice. A recent decision of the Supreme Court of Justice has suggested that the latter course of action may still leave the employer vulnerable to a wrongful dismissal lawsuit, particularly if an investigation has indeed been commenced.

The facts in Brownson v. Honda of Canada Mfg (2013 ONSC 896) are light on details, but it appears that following allegations of misconduct at Honda, Mr. Brownson was the first of 23 employees in a department to be interviewed about the allegations. During the course of Mr. Brownson’s interview, Honda became aware of other misconduct, some of which was acknowledged by Mr. Brownson. However, the Court found that Mr. Brownson was not provided an opportunity to dispute the other misconduct and no fault for the conduct was ever determined. Instead, Honda decided to terminate his employment and offered to provide him with eight months’ pay in lieu of notice. Mr. Brownson sued for wrongful dismissal, seeking lost compensation during the notice period, moral damages due to bad faith, damages for intentional infliction of mental suffering and punitive damages.

Honda moved for summary judgment, arguing that it satisfied its obligations to Mr. Brownson by terminating him without cause and providing him with reasonable notice. The Court did not agree. It wrote:

[13] If this termination had come out of the blue I might be persuaded. However, in the present case, the juxtaposition of the termination with a contemporaneous investigation of misconduct colours the ordinary procedures, such as escorting the terminated individual out of the workplace, with an innuendo that could give rise to the mental suffering alleged by the Plaintiff particular to the circumstances of the termination rather than the fact of being terminated.

[14] In the circumstances of the present case it is a triable issue whether the employer adopted the procedure intentionally to side step the criteria for fair treatment of an employee against whom cause is alleged.

It will be interesting to follow this case. Should the Court conclude that Honda behaved inappropriately in the face of allegations of misconduct, employers may be limited in their ability to sidestep an investigation process through the offer to the accused of a compensation package at the time of termination.

Cory Boyd