Introduction

The decision of the Supreme Court of Canada in McKinley v. BC Tel has considerably broadened the scope of actions that an employer may take to discipline a wayward employee.

In the process, it has also likely reduced the ability of an employer to successfully argue just cause for termination where lesser progressive steps have not been taken.

Prior to McKinley, our courts have traditionally allowed an employee to argue actions short of dismissal, such as a lengthy or even modest suspension with or without pay, to be acts of “constructive dismissal” and hence to successfully assert that there has been a termination of a non-unionized employment relationship.

Further, the arguments of just cause have always been a winner take all argument. One party either wins or loses.

For these reasons, employers typically invoked, at best, progressive discipline based on verbal or written warnings ranging from “you messed up” to “you really messed up” to “OK, once more and I am going to get real angry and terminate you”.

This Supreme Court decision widens the scope of these alternatives.

Let’s have a look at McKinley and see what happened.

Martin McKinley was a chartered accountant. He had worked for BC Tel for 17 years on his dismissal in August of 1994. His last position was Controller, Treasurer and Assistant Secretary. He was 48 years of age on termination.

In 1993 he had become to suffer from hypertension and experienced high blood pressure. In June of 1994, on his doctor’s advice, he took a medical leave. McKinley advised his employer that while he wished to return to work, he sought a position with lesser responsibilities. The company advised that it would try to do so. Two positions opened in this time period for which McKinley was qualified. Neither was offered to him.

In late August during his disability he was called to report to the office at which time he was terminated. He was offered financial compensation which he had declined, asserting that it was inadequate. He sued for additional notice compensation and also argued that the termination was high-handed, and also sued for intentional infliction of mental distress.

He also filed an “information” with the Canadian Human Rights Commission, but, at the time of the trial, had yet to file a formal complaint.

Initially BC Tel defended the claim based on the usual defence that a fair offer had been extended and that its action were fair and reasonable.

However, three days after the trial had commenced, it argued also that McKinley had been dishonest to it about his medical condition and the treatments which he had been prescribed for it.

This assertion was based on a medical report which had been produced from the Plaintiff’s doctor – which had recommended medication known as “beta blockers”, as a treatment for the hypertension as the next treatment method. Beta blockers had not then been prescribed, but the doctor’s letter indicated that such treatment should begin on McKinley’s return to work, should his blood pressure remain high.

The company argued that this information had not been disclosed to it at the time of the illness and termination decision and that this action was deliberate, allowing the Plaintiff to conceal this medical treatment from it.

The Results in Court Trial

The trial judge, Paris, J. instructed the jury that the issue of dishonesty was such that it must be shown in this case to be of a such degree to be incompatible with the employment relationship to allow BC Tel to succeed.

Essentially the trial judge had advised the jury that there was a scale of degree of dishonesty to be weighed to determine whether even if McKinley had been dishonest. The degree of dishonesty was then to be assessed to see if there was cause for termination.

McKinley was successful at trial before the jury. He won $108,793 in damages, $100,000 for aggravated damages ( mental distress) and costs. His claim for punitive damages was not allowed to go to the jury, due to lack of evidence.

Round 2 - BC Court of Appeal

Supreme Court of Canada – (OK, we finally got here!)

The court rejected the argument that dishonesty, in itself, is always grounds for dismissal. The test must be whether the act of dishonesty created, objectively viewed, a breakdown in the employment relationship. The magic words of a “contextual approach” must be applied, which in plain English, means that all surrounding circumstances must be used to see how serious the misgivings were.

So why are we talking about all this ?

The real words of significance in this case are found in the court’s conclusion that an employer could invoke “lesser sanctions” for les serious types of misconduct. The court contemplated that an employer may be justified in docking an employee’s pay for any loss incurred by a minor misuse of company property.

Yikes – it used a bad example as such actions are a violation of the Ontario Employment Standards Act which states that pay cannot be withheld absent consent or fraud – yes I know it was a BC case but why not get it right the first time – how smart are those guys after all ?

OK let’s get to the real issue here – the Supreme Court clearly approved of lesser forms of discipline short of termination, intended to match the improper conduct of the employee.

This opens the door for the company to use any variety of disciplinary steps such as suspensions varying in length with or without pay as the circumstances may require.

Unlike the unionized context, the employee has no apparent form of grievance process to dispute the employer’s actions. No doubt the court will impose reasonable standards must be utilized, but what actions, short of suing – which I am sure that this decision was meant to discourage, can an employee take ?

Faced with perhaps a three month unpaid suspension, I would expect that many employees would challenge this action as a constructive dismissal and try their luck.

The alternative apparently would be to dispute the need for discipline, where appropriate and accept the punishment imposed.

All this presumes the employee legitimately disagrees. Of course, quite often the employer will act reasonably. The response clearly will be acceptance of the discipline and a commitment to pull up the socks.

Back to McKinley – what he did get ?

The jury at trial had determined that the employer’s actions were unfair and had tacked on a further 4 months severance on this account. The common law notice was determined to be 22 months and hence the total stood at 26 months. That award was restored.

The award of aggravated damages of $100,000 was set aside, based on the lack of any evidence to support an intent on the part of the company to harm McKinley.

The court agreed that there was no evidence on which the award of punitive damages should have gone to the jury – case over ! ( more about the punitive damages later !)