A recent decision of the Ontario Court of Appeal confirms that even a single incident of workplace sexual harassment can constitute just cause for dismissal at common law. However, the conduct was not found to constitute wilful misconduct under the Employment Standards Act, 2000 (“ESA”), highlighting the difference between the two legal standards.
The decision in Render v. ThyssenKrupp Elevator (Canada) Limited (April 2022) marks a continuing evolution in the judicial approach to workplace sexual harassment. In the past, incidents of workplace sexual harassment were viewed as existing on a spectrum that ranges from less serious on the lower end of the spectrum to very serious on the higher end of the spectrum. As indicated in Render v. ThyssenKrupp, the more recent judicial trend is to view all such incidents, including isolated incidents, as serious.
By way of background, Mr. Render was employed as an operations manager with ThyssenKrupp Elevators. At the time of his dismissal, Mr. Render had 30 years of service and a flawless employment record with no incidents of discipline. The workplace was an office in Mississauga with 13 employees – 10 men and 3 women. The Mississauga office was described as a “friendly and joking environment” with the employees engaging in regular banter that included inappropriate jokes and comments.
The events giving rise to the termination occurred on February 28, 2014, incidentally just 8 days after the Employer introduced a “zero tolerance” workplace harassment and discrimination policy. Mr. Render and a number of co-workers were gathered in an office. Following an exchange of what appears to have been typical banter between Mr. Render and a female co-worker, Mr. Render slapped his co-worker on the buttocks. His co-worker immediately reacted with shock and disbelief. She reported the incident to the office manager and made a formal complaint to the HR department.
In early March of 2014, the HR manager conducted an investigation and reported the findings to the Employer. The Employer made the decision to terminate Mr. Render’s employment based solely on the event of February 28, 2014. As the termination was alleged to be “for cause”, Mr. Render received no severance, termination or vacation pay.
Mr. Render brought an action to challenge the dismissal alleging that the termination was without cause. The trial judge disagreed, finding that Mr. Render’s actions were an attack on the dignity and self-respect of his co-worker and therefore unacceptable in a modern workplace. The trial judge went on to find that the incident caused a breakdown in the employment relationship that justified termination for cause.
Mr. Render appealed the judgment, in part arguing that the trial judge erred in law in concluding that there was just cause for his termination. Mr. Render also claimed that he was entitled to termination and severance benefits under the ESA.
Ontario Court of Appeal upholds just cause for termination
In considering whether there was just cause for termination, the Ontario Court of Appeal noted the Supreme Court of Canada (“SCC”) decision in McKinley v. BC Tel, 2001 (“McKinley”). In McKinley, the SCC held that the governing rule in termination for cause cases is proportionality – the termination for cause must be proportionate to the employee’s misconduct.
The application of the McKinley standard was clarified in the Ontario Court of Appeal decision in Dowling v. Ontario (Workplace Safety & Insurance Board (2004). The Dowling decision recognized the reasoning in McKinley that since termination for cause is without notice and without pay in lieu of notice, termination for cause is reserved for those instances in which the employee’s misconduct is incompatible with the fundamental terms of the employment relationship such that the relationship cannot be sustained. The Dowling decision set out the following three-part test for applying the McKinley standard:
Application of the standard consists of:
- Determining the nature and extent of the misconduct;
- Considering the surrounding circumstances; and
- Deciding whether dismissal is warranted (i.e. whether dismissal is a proportional response).
The Ontario Court of Appeal examined the lower level decision and concluded that the trial judge properly applied the above test, and properly weighed and considered the relevant factors. The trial judge’s decision referred to the Employer’s harassment and discrimination policy and noted that Mr. Render was a manager responsible for implementing the policy. The trial judge took into account the sexual nature of the impugned contact and Mr. Render’s lack of appreciation of the seriousness of his conduct. Mitigating factors, including Mr. Render’s long and unblemished employment history, were also considered by the trial judge. The Ontario Court of Appeal went on to conclude that there was no error in the trial judge’s approach or analysis and that his finding of just cause termination was entitled to deference.
Court of Appeal confirms ESA entitlements – higher threshold for ESA wilful misconduct
After upholding the termination for cause, the Ontario Court of Appeal next considered Mr. Render’s claim that he should have been awarded statutory ESA entitlements, specifically termination and severance pay. The ESA provides that, subject to certain conditions, dismissed employees are entitled to termination and severance pay unless they are “prescribed” employees. Ontario Regulation 288/01 – Termination and Severance of Employment (“O.Reg. 288/01”), made under the ESA, prescribes the employees that are disentitled to termination and severance pay. Pursuant to O.Reg. 288/01, one such prescribed and therefore disentitled employee is:
“An employee who has been guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.”
The Employer argued (in part) that Mr. Render was not entitled to ESA entitlements since he was dismissed for cause and was therefore a prescribed employee for the purposes of O.Reg. 288/01 and disentitled to termination and severance pay.
The Court of Appeal disagreed. It relied on the decision in Plester v. Polyone Canada Inc., (2011) for the principle that the disentitlement under O.Reg. 288/01 requires more than what is required for just cause dismissal at common law:
“In addition to providing that the misconduct is serious, the employer must demonstrate, and this is the aspect of the standard which distinguishes it from ‘just cause’, that the conduct complained of is ‘wilful’. Careless, thoughtless, heedless, or inadvertent conduct, no matter how serious, does not meet the standard. Rather, the employer must show that the misconduct was intentional or deliberate. The employer must show that the employee purposefully engaged in conduct that he or she knew to be serious misconduct. It is, to put it colloquially, being bad on purpose.”
This higher threshold for ESA disentitlement was also discussed in the Ministry of Labour’s Employment Standards Act Policy and Interpretation Manual (2020):
“[T]his exemption is narrower than the just cause concept applied in the common law and in collective agreement disputes. In other words, an arbitrator or a judge may find that there was just cause to dismiss an employee, but this does not necessarily mean that the exemption in paragraph 3 of s. 2(1) applies.”
In applying these concepts to Mr. Render’s circumstances, the Ontario Court of Appeal concluded that Mr. Render’s conduct did not rise to the level of wilful misconduct required by O.Reg. 288/01. The decision noted that while the trial judge found that the touching was not accidental, there was no finding that the conduct was preplanned. Instead, the trial judge’s findings were consistent with the fact that Mr. Render’s conduct was done in the heat of the moment. In the Court of Appeal’s view, while Mr. Render’s conduct warranted dismissal for cause, it was not the type of conduct in the circumstances that was intended to deprive him of his ESA benefits.
The Court of Appeal proceeded to allow this part of Mr. Render’s claim and awarded eight weeks of termination pay. As there was no evidence that the employer had a $2.5 million payroll, as required by s. 64(1)(b) of the ESA for the purposes of entitlement to severance pay, the Court of Appeal did not award severance pay.
In Our View
The decision in Render v. ThyssenKrupp is important for a number of reasons. First, it confirms that in certain circumstances even a single incident of sexual harassment can constitute just cause for termination at common law. Second, it provides a valuable comparison of just cause termination under the common law versus wilful misconduct under the ESA, confirming the higher threshold for the latter. Finally, it provides employers with a grave caution relating to “overly familiar” workplaces with “inappropriate workplace atmosphere[s]” that are “allowed to get out of hand”:
“As this court said in Bannister almost 25 years ago, it is a workplace atmosphere that can no longer be tolerated. Although some may perceive it to be benign and all in good fun, those on the receiving end of personal “jokes” do not view it that way. And when things go too far, as they did in this case, the legal consequences can be severe. Every workplace should be based on mutual respect among co-workers. An atmosphere of mutual respect will naturally generate the boundaries of behaviour that should not be crossed.”