A lesson to employers: Allege cause at time of termination or forever hold your peace

Employers in Alberta may terminate employees with or without just cause – but it can be difficult for them to change course after an employee is terminated, as a recent decision from Alberta’s Court of King’s Bench shows.

When an employee is terminated with just cause, employers are not required to provide notice or pay in lieu of notice. However, even when a just cause termination may be warranted, employers may choose to dismiss an employee without just cause for a variety of reasons. They may have insufficient evidence supporting just cause, a desire to assist the employee in their transition to new employment, or they may want to avoid a difficult discussion at the termination meeting.

But if an employee who was  terminated without cause later chooses to pursue litigation, can the employer defend the claim by arguing they had evidence to support a just cause termination? The Alberta Court of King’s Bench recently confirmed that employers are not permitted to “change horses” and use just cause as a defence against a wrongful dismissal action when they had evidence to support just cause at the time of termination but chose not to use it.

Employee was terminated following workplace investigation

In Alayew v The Council for the Advancement of African Canadians in Alberta, an employee was terminated without cause following a workplace bullying and harassment investigation and received termination pay pursuant to the Alberta Employment Standards Code. The employee commenced a wrongful dismissal action against the employer seeking pay in lieu of common law reasonable notice. In defence of the action, the employer alleged that it had just cause to terminate the employee and sought repayment of the termination pay.

The employer alleged that, while it was aware of the allegations against the employee prior to the dismissal, it had mistakenly relied on an investigator’s interim report to conclude that it did not have just cause to dismiss the employee. The Court rejected the employer’s argument, finding no evidence that the employer had relied on the investigator’s interim or final report in its decision to terminate without cause.

The Court also rejected the employer’s second argument that it had after-acquired cause for termination. After-acquired cause arises where an employer dismisses an employee without cause and subsequently discovers evidence of misconduct that would have warranted summary dismissal had it been known at the time of dismissal. The Court found that the employer was fully aware of all the material information concerning the employee’s alleged misconduct prior to the termination and failed to act on it, which precluded the employer from relying on after-acquired cause.

Takeaways for employers

This decision is a clear statement by the Alberta Court of King’s Bench that when an employer has evidence to support a just cause termination but instead terminates an employee without cause, the termination may not be recharacterized later on.

Employers should be aware that if they elect to terminate an employee without cause notwithstanding evidence to the contrary, they may not later allege just cause unless the evidence supporting just cause was not known and could not reasonably have been known at the time of termination.

Our labour and employment team is available to assist employers navigate wrongful dismissal actions and terminations, whether without cause or for just cause. Contact us to learn how we can help.

Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.