Frustration of Contract vs. Just Cause: What is the difference?

| November 1st, 2017 | No Comments »

There are various ways an employer may end an employment relation. An employer may end a contact by offering an employee advanced notice or equivalent payment of wage and benefits required under legislation or common law. Another way is dismissing an employee for just cause or by establishing the contract has been ‘frustrated’. In each of these scenarios, there is no payment or notice required. There is an onus on the employer to prove there is just cause to dismiss or that the contract has been frustrated, which makes it important to understand the difference of each principle.

The principle of ‘just cause’ requires an employer to show that an employee has done wrongdoing to the point that continued employment is unfeasible. For single instances of wrongdoing, the wrongful act must result in violating an essential characteristic of the employment relation. For instance, if a mortgage broker was found to commit mortgage fraud, this would undeniably violate an essential element of trust required between a mortgage broker and the brokerage firm (employer). Another scenario of just cause is where an employee has repeatedly failed to correct an undesirable behaviour after several corrective measures have been taken by the employer. This must include a series of progressive discipline consisting of, for instance, a verbal warning, then written warning, paid suspension and then termination, with each stage specifying the wrongful behaviour and next possible steps of discipline.

Conversely, frustration of contract results when an employee no longer is able to perform as intended when the parties each entered into the employment agreement. The changes in performance must be significant in order for dismissal to be lawful. Such a scenario may take place when an employee has fell ill to the point where he/she cannot perform the essential duties of the job. To establish frustration of the contract, analysis of the job duties and nature of the frustration must be carefully considered. For instance, if the employee occupied a distinct position with no other employees occupying a similar function, a long term absence will cause more frustration than if there were many employees able to cover the tasks of the employee during the absence. Whatever the case may be, careful examination and consideration must be given. Always seek services from an employment lawyer as errors in legal obligations may result in significant costs and harm to each party.

Drunkenly Crashing Company Vehicle Just Cause for Dismissing Long-Term Employee

| September 20th, 2013 | No Comments »

Just Cause For Dismissing Long-Term Employee

A senior employee with a previously spotless employment record was dismissed for cause after he got drunk at lunch and crashed a company vehicle on the drive back to the office. On September 16th, 2013, the employee lost his appeal to the Ontario Court of Appeal, which upheld the trial court’s decision that the single incident constituted just cause for his employer to fire him.

Jaroslaw Dziecielski was a 23-year employee and one of the Vice Presidents of Lighting Dimensions. After visiting a client, he stopped for lunch on his way back to the office, and consumed several beers. He then resumed driving, and had a single-vehicle accident, which totaled the vehicle. Mr. Dziecielski pleaded guilty to a criminal drunk driving offense. He had also been driving the company vehicle without proper authorization from the employer.

Suing for Wrongful Dismissal

Lighting Dimensions terminated Mr. Dziecielski with cause as a result of this incident. Mr. Dziecielski sued for wrongful dismissal, arguing that he could not be terminated for cause on the strength of a single, isolated incident, particularly given his long service and clean disciplinary and performance record up to that point.

The courts agreed that, in ordinary circumstances, a single and isolated incident is not sufficient cause to dismiss a long service employee, particularly one with a clean record. However, if a single event is particularly egregious, it may constitute grounds for dismissal with cause. In this case, the Court upheld that the employee’s conduct was sufficient to make dismissal appropriate in the circumstances, due to the misconduct being serious, dangerous, having attracted a criminal conviction, and the employee having put the company at risk of lawsuits and potentially damaging its reputation.

Just Cause For Dismissing Long-Term Employee Must be Determined Contextually

The lesson to take from this case is that just cause must be determined contextually. The employee’s penalty must be proportional to their misconduct. An employee admitting to misconduct not automatically establish just cause, and a single incident of misconduct might constitute just cause if the incident is serious enough.

For example, intoxication alone is not always sufficient to establish just cause: it would not be in a workplace where employees are encouraged to drink and socialize with clients, whereas it would certainly amount to just cause for an airline pilot. Employers would be well served to consult with an employment lawyer before terminating an employee for cause, even if the employee has clearly committed wrongdoing. Employees who have been purportedly dismissed for cause should consider speaking to a lawyer to discuss their possible options.