When Just Cause becomes Wilful Misconduct: Intentional Acts and their Consequences
When an employee engages in misconduct, an employer can dismiss the employee for “just cause” at common law. If upheld, a “just cause” termination will absolve an employer from the obligation to provide its dismissed employee with common law notice of termination or pay in lieu of such notice [which notice usually extends far beyond the notice period guaranteed to employees under the Employment Standards Act, 2000 (the “ESA”)].
Does “just cause” absolve an employer from the obligation to provide its dismissed employee with notice of termination or pay in lieu of such notice under the ESA? The answer is “no”. The ESA disqualifies employees from such notice for performance reasons only if they have engaged in “wilful misconduct, disobedience or wilful neglect of duty” that is not trivial and has not been condoned by the employer. Courts have held that summary terminations under the common law must meet a high standard of misconduct; under the ESA, the standard is even higher.
One important question that many employers have is the distinction between the common law standard and the ESA standard. The recent trial decision of Park v. Costco Wholesale Canada Ltd., 2023 ONSC 1013 (“Park”) sheds light into the difference between just cause at common law and wilful misconduct under the ESA and provides an excellent example of the circumstances in which the very high ESA standard can be met. In that case, the court upheld the dismissal of a long-service employee for “wilful misconduct.” The case also highlights circumstances when an employer does not need to confront an employee in an investigation before dismissing the employee summarily.
Park involved the dismissal of Robert Park for his wilful and intentional deletion of a website he created for Costco as well as his insubordinate behaviour towards management.
Over his 20-year tenure with the Company, Mr. Park received a series of promotions and became an Assistant Buyer in 2011 of the toys department. The Assistant Buyer position was managerial-level and granted Mr. Park access to the Company’s pricing database. As a managerial employee, Mr. Park was subject to Costco’s “Standard of Ethics”, which required, among other things, for Mr. Park to always act with “honesty and forthrightness”. Mr. Park’s employment agreement also outlined circumstances in which his employment could be terminated without notice for just cause. Such circumstances included (i) wilful damage or destruction of Company property; and (ii) any act of insubordination, including but not limited to refusing direct instructions or engaging in contemptuous behaviour or remarks to a manager.
In February 2012, Mr. Park was promoted to Buyer-in-Training, but was re-assigned back to his previous position as Assistant Buyer five months later. Mr. Park felt Costco forced a demotion on him. His return to his previous position fuelled Mr. Park’s active dislike of his superiors and he harboured negative feelings over others who received promotions.
With mounting frustrations, Mr. Park took two medical leaves of absences for several weeks at a time. Both Mr. Park’s physician and Costco’s insurer, Manulife, recommended Mr. Park be transferred into a different department. Costco immediately took steps to arrange a department change.
Following Mr. Park’s transfer into a new department, he received an e-mail from one of his superiors requesting Mr. Park transfer ownership of a cloud-based Google website he had been working on since 2014. Mr. Park had created the website during work hours to provide employees of the toy department a platform to easily share files with one another. There was no dispute that the website was Company property. With his superiors’ blessing, Mr. Park had previously sent a link to the website to local, regional, and international management for their use. However, Mr. Park never received feedback on the website, and he believed this meant management did not value the website.
At trial, Mr. Park admitted he was furious by his supervisor’s request. Immediately after receiving the request, Mr. Park deleted the website because he believed the request for ownership was Costco’s acting in “revenge” or “out of spite.” A few minutes later, Mr. Park responded to his superior’s e-mail and stated that he had deleted the website because he believed no one was interested in it. Mr. Park’s e-mail suggested he deleted the site sometime in the past instead of immediately after receiving his superior’s request.
In response, Mr. Park’s superior expressed his disappointment and told Mr. Park that he (Mr. Park) must consult with his superiors before taking steps like deleting a website. In response, Mr. Park wrote that management was not attentive enough. He accused them of being unable to manage workloads, and stated he “shouldn’t have to babysit.”
Costco’s IT department was able to restore the website. Just before Mr. Park’s superior informed Mr. Park via e-mail that the website had been restored, Mr. Park intentionally deleted the website a second time.
Following an internal investigation, Costco found Mr. Park deleted the website twice and dismissed him for just cause. Mr. Park brought an action for wrongful dismissal damages.
Decision of the Court
At trial, the core question before the Court was whether Mr. Park engaged in misconduct that was incompatible with the fundamental terms of the employment relationship. To answer this question, the Court considered the following three factors:
- the nature and extent of the misconduct
- the surrounding circumstances; and
- whether dismissal was warranted.
The Court applied the first factor and found Mr. Park’s misconduct was intentional, and he engaged in the following four discrete acts of misconduct:
- Park’s first deletion of the website was deliberate, done without authorization, and amounted to damage or destruction of Costco’s property, contrary to his employment agreement
- Park’s e-mail to his supervisor, in which he implied he deleted the website sometime in the past, was misleading and violated Costco’s standards of ethics because Mr. Park did not act with integrity and honesty;
- Park’s e-mail to his supervisor, in which Mr. Park accused management of being unable to manage their workload and that he “shouldn’t have to babysit”, was insubordinate, disrespectful, and contemptuous; and
- Park’s second deletion of the website was deliberate, done without authorization, and amounted to damage or destruction of Costco’s property, contrary to his employment agreement.
In applying the second factor, the Court found the surrounding circumstances held little weight to justify Mr. Park’s actions. Mr. Park’s ill feelings towards his co-workers and superiors in no way justified destruction of Company property. Mr. Park also admitted at trial that, as a manager, he was held to a higher standard and was expected to lead by example.
In applying the third factor, the Court held that terminating Mr. Park’s employment for just cause at common law was a proportional response to his misconduct. Mr. Park’s misconduct was serious, consisted of four discrete acts, and Costco could no longer trust him.
Just Cause and Wilful Misconduct
In addition to meeting the standard for just cause at common law, the Court held that Mr. Park’s misconduct met the higher standard of wilful misconduct under the ESA. The Court held that for misconduct to qualify as wilful misconduct, an employer must show that an employee’s misconduct was intentional or deliberate, and that the employee purposefully engaged in conduct that he or she knew was serious misconduct. Careless, thoughtless, or inadvertent conduct, no matter how serious, does not meet the standard. Put simply, to meet the standard, an employer must show the employee was being bad on purpose.
Applying the principles above, the Court held Mr. Park’s intentional deletion of the website twice was a deliberate act, as were the misleading and insubordinate e-mails he sent to his supervisors.
Duty to Include Employee in Investigation
At trial, Mr. Park argued that Costco’s decision to terminate his employment was flawed, because Costco did not involve Mr. Park in its internal investigation into his misconduct. The Court disagreed. The Court held that while an employer has no obligation to conduct a particular type of investigation before deciding to dismiss an employee for just cause, the employer must make a decision on the basis of all the relevant facts and considerations. The Court held that Costco met this obligation: it had the relevant e-mails showcasing Mr. Park’s insubordination and misleading comments to his superiors, and confirmation that he deleted the website twice.
The Court also rejected Mr. Park’s allegation that Costco failed to consider his mental health and “history of interpersonal conflict” with superiors when conducting its investigation. The Court held Mr. Park’s dismissal was based on his actions and insubordination, and was not retaliation for his mental health concerns.
Takeaways for Employers
While the thresholds for just cause at common law and the ESA standard for wilful misconduct are extremely high, the Park case demonstrates that these thresholds can be met in certain cases, especially when there are multiple, clear, and intentional acts of misconduct. Terminations under either standard should only be used in the clearest of cases.
The Park case also highlights the importance of employers’ implementing policies that clearly communicate the expectations of employee conduct, especially for managerial-level employees. These policies, as well as evidence of an employee’s knowledge of them and evidence of his or her misconduct, can be important in determining whether these standards have been met.
Finally, this case is a useful example of the Court upholding the dismissal a long-service employee’s dismissal without the employer’s having included the employee in its investigation into the misconduct. However, employers should take note that while a specific type of investigation is not required to establish an employee’s dismissal for cause, employers must ensure they base their decision on all the relevant facts and considerations. In some cases, this obligation may require an employer’s including the employee in its investigation.
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