Ending an Employment Relationship With a Problem Employee

Municipal and regional district employees are often the public’s first and only personal point of contact with their local government.  These interactions are important as they have an impact on the reputation and accountability of elected officials and local government staff.  Like any employer, local governments are not legally required to tolerate a problem employee in the workplace indefinitely.

The employer always has the option to dismiss such an employee on reasonable notice or pay in lieu thereof, subject to the terms of any written contract of employment. However, there can be circumstances where an insubordinate employee can be dismissed immediately for cause, without any further compensation.  This is called “just cause”.  Just cause is often an appealing route to elected officials and managers faced with the prospect a substantial amount of taxpayer dollars for severance pay, especially if the employee’s conduct is egregious.

The Supreme Court of British Columbia recently decided a wrongful dismissal claim where an employer alleged just cause in the termination of one of its senior employees. In Kokilev v. Picquic Tool Company Inc., [2010] B.C.J. No. 1973 (S.C.), Madam Justice Linda Loo found that the employer (“Picquic”) did not prove just cause in terminating its employee (“Mr. Kokilev”). The case is illustrative of the difficulty an employer faces in successfully proving just cause.   However, the case also provides some direction on what may be necessary to successfully defend a claim on the basis of just cause.  Finally, it serves as a sober reminder that damages for wrongful dismissal can be substantial to an employer and that proper advance planning and decision making can help mitigate this risk.

Mr. Kokilev was the Vice President of Finance for the employer, Picquic.  Mr. Kokilev and the employer’s president and CEO, Mr. McKenzie, did not always get along and the two openly disagreed with each other in front of other employees.  The disagreements included: whether Picquic employees should be sent home following a flood; Mr. Kokilev’s criticism of Picquic’s bonus scheme; and Mr. Kokilev questioning Mr. McKenzie’s judgment regarding decisions impacting the company.

Picquic terminated Mr. Kokilev and took the position that it had just cause because Mr. Kokilev was unwilling to accept supervision, he had publicly undermined Mr. McKenzie rather than being supportive of his decisions, and he was generally insolent.

Madam Justice Loo found that employers have  “a heavy onus to overcome” in order to establish just cause.  She further held that:

“In order to establish cause for dismissal without notice, the employer must prove that the employee’s conduct, when viewed in all of the circumstances, was seriously incompatible with his or her duties, and that the conduct went to the root of the employment relationship.

The approach to assessing whether the employee’s conduct provides cause for dismissal is objective.”

Madam Justice Loo explained that the Court’s approach to these matters is not only objective, but that it is also contextual. In other words, the Court will look at factors such as the nature and degree of the misconduct and whether it violates the “essential conditions” of the employment contract or “breaches [the] employer’s faith in the employee”.  Furthermore, the contextual approach is founded on “the principle of proportionality”. The Court will strive to achieve balance between the degree of the employee’s misconduct and the subsequent disciplinary penalty issued by the employer.

In her conclusion that the employer did not have just cause to dismiss Mr. Kokilev, Madam Justice Loo stated:

“While no doubt someone in the position of Mr. McKenzie wants to be supported by those who support his views (and make him look good), disagreeing with his point of view does not give rise to … just cause to terminate for disobedience or insubordination.”

Local governments, and especially their chief administrative officers, should take heed of this decision when dealing with staff who maintain viewpoints different than their own on matters involving the workplace.  Moreover, all employers should consider that a single act of insubordination, including public disagreement over business decisions, will rarely be sufficient to establish just cause. The question that the employer must ask, being as objective as possible, is whether the employee’s misconduct gave rise to a fundamental breakdown in the employment relationship.  This breakdown will be considered in the context of the overall relationship and the circumstances in which the alleged misconduct took place.

As each employment relationship is different, it is important for employers to (a) carefully consider the decision to terminate, (b) whether just cause can reasonably be alleged, and (c) obtain professional legal advice before taking any steps.  One of the greatest difficulties in making a sound decision in compliance with the law, for an employer who is caught up in the day-to-day management of a problem employee, is to view the facts of the situation objectively.

Accordingly, the first step a local government should take before making any decision to terminate is to seek the opinion of a qualified lawyer.  A lawyer can interpret the facts objectively, apply the most up-to-date law to those facts, and then provide the local government with legal advice on the best options to move forward. This advice limits the risks and helps the employer achieve its goal of a healthy and productive workforce as quickly and financially painlessly as possible.