The Ontario Court of Appeal in Roden et al. v. Toronto Humane Society (September 22, 2005, Ont. C.A.) recently reviewed a number of important employment law issues.
The plaintiffs were, purportedly terminated for cause, "after they repeatedly refused to implement the Society’s policies in respect of accepting stray animals". They were provided with 2 weeks termination pay and certain benefits were continued for a specified period.
The trial judge found that they were terminated for just cause and, if not, that the provisions in their contracts of employment were "valid and enforceable and that the Society had made payment in accordance with those notice provisions". The employees appealed.
After making short work of the argument that, in the circumstances, the employer was prevented from arguing that the employees were terminated for just cause, the court moved on to consider whether just cause existed. Specifically the Court considered the trial judge's conclusion that the employees’ "refusals to discharge their responsibilities amounted to serious and wilful misconduct justifying dismissal for cause." The Court of Appeal said that "based on the trial judge’s findings, the applicable principles are those that govern repudiation of employment contracts rather than misconduct."
What's the difference between "repudiation" and "just cause"? According to the Court of Appeal:
Although there is little jurisprudence on repudiation, that which exists is consistent with that description. For example, in Dowling v. Ontario (Workplace Safety and Insurance Board) (2004), 246 D.L.R. (4th) 65 this court held, at para. 72, that “[the employee] Mr. Dowling repudiated the employment contract by engaging in conduct incompatible with the obligations that he owed thereunder. This constituted a fundamental breach of his employment obligations.” Similarly, the Newfoundland Court of Appeal in Sparkes v. Enterprise Newfoundland and Labrador Corp. (1998), 167 Nfld. & P.E.I.R. 218, at para. 23, cited the following passage with approval:
The employee's conduct, and the character it reveals, must be such as to undermine, or seriously impair, the essential trust and confidence the employer is entitled to place in the employee in the circumstances of their particular relationship. The employee's behaviour must show that he is repudiating the contract of employment or one of its essential conditions. It must be conduct to which the employer could point as a good reason for having lost confidence in the employee's ability faithfully to discharge his duties.
See also Peterson v. Cowichan School District No. 65 (1988), 22 B.C.L.R. (2d) 98 (C.A.), Middelkoop (Trustee of) v. Canada Safeway Ltd. (2000), 148 Man.R. (2d) 30 (C.A.), Pombert v. Brunswick Mining and Smelting Corp. (1987), 84 N.B.R. (2d) 296 (C.A.) to the same effect
The Court reviewed the Supreme Court of Canada decision of McKinsey v. BC Tel  2 S.C.R. 161, the Supreme Court of Canada held that a contextual approach was required when deciding whether an employee’s dishonesty provides just cause for dismissal:
[W]hether an employer is justified in dismissing an employee on the grounds of dishonesty is a question that requires an assessment of the context of the alleged misconduct. More specifically, the test is whether the employee’s dishonesty gave rise to a breakdown in the employment relationship. This test can be expressed in different ways. One could say, for example, that just cause for dismissal exists where the dishonesty violates an essential condition of the employment contract, breaches the faith inherent in the work relationship, or is fundamentally or directly inconsistent with the employee’s obligations to his or her employer.
The Court of Appeal said that a similar approach was warranted when looking at the issue of repudiation.
"Whether an employer is justified in terminating the employment relationship based on repudiation requires an assessment of the context of the employee’s refusal, in order to determine whether the employee refused to perform an essential condition of the employment contract or whether the refusal to perform job responsibilities was directly incompatible with his or her obligations to the employer.
However, there is a crucial distinction between dismissal for misconduct and termination for repudiation. When an employer claims to have dismissed an employee for cause based on serious misconduct, the employer must point to conduct that took place prior to dismissal. It is then for the courts to determine whether the conduct was sufficiently serious so as to constitute cause. Repudiation, on the other hand, takes place when an employee refuses to perform an essential part of his or her job duties in the future. In such a situation, the employer is entitled to accept the repudiation and treat the employment relationship as terminated because the parties no longer agree on the fundamental terms of the contract."
In the circumstances, the employees' "refusals on June 25, 2002, to perform their job duties amounted to repudiation of their employment contracts". The Court observed that "where an employee has a reasonable excuse for refusing to perform, such a refusal may not constitute repudiation". In the circumstances, this exception did not apply.
In addition, there is no duty to warn where repudiation is argued as contrasted with some cases of just cause.
The Court went on to consider the situation in the event that the employees' were terminated without just cause and their contract that provided that:
Otherwise, the Employer may terminate the Employee’s employment at any other time, without cause, upon providing the Employee with the minimum amount of advance notice or payment in lieu thereof as required by the applicable employment standards legislation.
The appellants argued, among other things, that the clause failed to comply with the minimum standards in the Employment Standards Act and was, therefore, void. The Court disagreed.
This is a significant case whose consequences can be widespread. We'll have to wait to see how this pans out.