Written by Daniel Standing LL.B., Editor, First Reference Inc.
In Hicks and Winnipeg Exclusive Bus Tours Inc., Re, (Sept. 19, 2019), Doc. YM 2727-3941 (Can. Lab. Code Adj.) the arbitrator Bryan Schwartz was appointed by the federal Minister of Labour to hear a complaint of wrongful dismissal under the Canada Labour Code. The case provides a stark reminder to employers about the sufficiency of evidence necessary to support a claim of just cause for dismissal.
Ms. Maisie Hicks’ involvement with the employer, Winnipeg Exclusive Bus Tours Inc., began in 2012 when it was a start-up company in a highly competitive industry. She contributed $3,000 to help with start-up costs and worked without a salary for the first few months with the understanding that her “sweat equity” would eventually be recognized with an ownership stake in the company. From time to time, she suggested a written document be prepared recognizing this but the company demurred, eventually offering her an equity stake in the company in exchange for a payment of $660,000. Ms. Hicks could not afford such a payment, and, in any event her ownership interest in the company was outside the arbitrator’s mandate. However, as the arbitrator surmised, the parties’ differences of opinion about the various ownership stakes in the company may have led them to part ways eventually anyway.
At the time of her dismissal, Ms. Hicks held the middle management position of General Manager, Fixed Operations. In that role, she provided advice on various matters, such as the quality of particular buses and whether the price was appropriate for the company to purchase it. In March 2017, she was summoned to a meeting and given a letter concerning “expected performance and behaviour.” The letter covered several different matters and at the meeting, the initial allegation was that she had been indiscreet about discussing the employer’s business with a competitor. She was shocked by the allegation and did not admit to any of the allegations. She was outright dismissed on August 10, 2017. No written reasons were provided and she was told orally that the company was downsizing. She came to understand that two weeks later the company hired someone else to perform her tasks.
Just cause for dismissal?
In his reasons for the decision, the arbitrator reviewed the various reasons the company put forward at the hearing to justify the dismissal. First, it alleged that Ms. Hicks failed to keep company business confidential, stating that Ms. Hicks mentioned to a competitor that the employer was having financial difficulties. In support of this allegation, the employer submitted an email from a competitor dated June 27, 2018, which purported to substantiate the employer’s allegation. The arbitrator was not convinced by this evidence: The email was not composed at the time of the alleged incident and it was instead obtained by the company just before the hearing. Also, the official of the competitor who allegedly wrote the email was not called to testify, meaning that Ms. Hicks was unable to test the author’s evidence. The arbitrator found Ms. Hicks’ evidence to be precise and accurate, and her testimony as a whole was consistent and plausible. She testified that she recalled the incident involving the competitor but, to her recollection, she explained that in the context of her discussion about the company’s new pricing policy, she made no disclosures about Exclusive Bus’s profitability.
Second, Exclusive Bus submitted another letter at the hearing from another employee which made various allegations about Ms. Hicks’ performance as a manager. Again, this employee was not called as a witness and could not be cross-examined. Ms. Hicks refuted each of the allegations made in the letter.
Third, the company alleged that Ms. Hicks was in general “gossipy” and that she did not do enough to promote the company’s profitability. These allegations were refuted by an independent witness-a former employee of the company who had since retired. The evidence showed that Ms. Hicks was respectful and fair in dealing with others in the workplace, that she followed the company’s policies on pricing, and acted diligently and in good faith to try to keep costs down.
Fourth, the company submitted that Ms. Hicks was responsible for ensuring compliance with Canadian and American transport regulations, and that two violations which resulted in civil penalties were her fault. However, again, the allegations were refuted with evidence that the violations that occurred were due to transitions in various roles at the company and to problems with the timeliness of internal communications. There was no evidence that Ms. Hicks was personally responsible for the mistakes that occurred. There was no proof of any lack of diligence on her part or any unwillingness to follow instructions.
As a result, the arbitrator concluded that Ms. Hicks had been unjustly dismissed and awarded compensation to her in the amount of $14,000, approximately equivalent to 10 weeks’ pay.
Takeaways for employers
Employers need to be cognizant that a termination in which it alleges just cause is likely to fail if the evidence is equivocal at best and capable of being refuted at every turn. In this case, the employer’s lack of reasons at the time of the dismissal and its efforts to produce evidence in support of its actions at the hearing itself demonstrated a fundamental weakness in its position. Even where mistakes occur in the course of an employee’s supervisory or managerial tasks, they may not amount to just cause where the employee played no blameworthy part in the mistakes. In the absence of blameworthy incidents to document in the employee’s file in a timely way, the company in this case would have been better off providing this employee reasonable notice of termination and saving itself significant legal costs before arriving at the inevitable outcome.