Fired Employee Still Entitled to Termination Pay

Fired Employee Still Entitled to Termination Pay

The history of employment case law implies that an employer can fire an employee without termination pay if the employee was fired for cause. The following recent case raises a measure of caution. The Ontario court recently found that an employee dismissed for cause was still entitled to termination and severance pay under the Employments Standards Act, 2000, but not under common law. This case appears to be a breakaway from the norm and it will be interesting to watch whether the case is appealed or other cases distinguish or support this decision.

Age 53 (Mr. Oosterbosch)
Years of Employment 18.3 years
Position Machine operator
Company Fag Aerospace Inc.
Wage/Salary $24.70 per hour (40 hour work week)
Issue Can an employee dismissed for cause and not entitled to any common law termination pay still be entitled to termination pay and severance pay under the Employment Standards Act, 2000?
Court’s Decision Yes.
Case Name Oosterbosch v. FAG Aerospace Inc., 2011 ONSC 1538 (CanLII)

FAG Aerospace Inc. manufactures bearings for the aerospace industry. Quality control is of vital importance as failure of parts can be catastrophic. FAG had a progressive discipline policy to ensure quality control. After four written warnings within a 12 month period, the policy dictated that the employee would be dismissed.

Mr. Oosterbosch received the following warnings resulting in his dismissal on April 1, 2008:

  1. August 22, 2007 – Mr. O ran 30 defective pieces. The defect should have been noticed after 1 or 2 pieces.
  2. September 14, 2007 – Mr. O took an extended break. His explanation is that he had fallen asleep in his truck while on break.
  3. October 1, 2007 – Mr. O took an unscheduled break.
  4. November 27, 2007 – Mr. O was late for work.
  5. March 20, 2008 – Mr. O participated in producing 77 non-conforming pieces. Mr. O. admitted that he misread the blueprint and measuring device.
  6. March 28, 2008 – Mr. O ran parts with an incorrect drill diameter and falsified records.

Even though FAG had a policy which justified Mr. O’s dismissal, FAG must still prove to the court that Mr. O’s misconduct should result in his termination. The court found that Mr. O’s misconduct warranted dismissal such that he was not entitled to common law notice. However, the court found that Mr. O was still entitled to termination pay and severance pay under the Employment Standards Act, 2000, because his misconduct was not “wilful”. His conduct was careless and persistent but did not meet the higher standard required under the Act to avoid the payment of statutory termination pay and severance pay. FAG had to pay Mr. O 8 weeks’ termination pay and over $17,000 in severance pay reflecting 1 week pay for each year of service.

  Practical Considerations...........

............for the Employer ...........for the Employee
  • Do have a discipline policy that clearly sets out unacceptable conduct and a progressive plan for dealing with repeated offences
  • Do give employees well documented written warnings with a view to improving the employee’s performance
  • If you are terminating an employee for cause, consider whether the misconduct reached the level of being so reckless that there was no regard for the outcome or resulting consequences. If not, you may want to consider whether the employee should receive the minimum statutory termination pay required by the Employment Standards Act, 2000.
  • Keep an eye on the developing case law that follows this case as subsequent cases may overturn or otherwise distinguish this decision.
  • Understand your work discipline policy and actively participate in improving misconduct by following up with your supervisor and keeping your own notes
  • Should your employer fire you and you have not been purposely breaking the rules, consider asking your employer for statutory termination and severance pay