Condoning Bad Behaviour: Theft Not Cause For Termination Without Notice

The Employment Standards Act prohibits an employer from terminating an employee without providing the employee with appropriate notice, or pay in lieu of notice. There are certain circumstances, however, in which neither notice nor termination pay are required. The Act and its associated Termination and Severance of Employment Regulation provide that an employee who is guilty of serious, wilful misconduct that is not condoned by his or her employer is not entitled to notice of termination or termination pay. It might be assumed that an employee who commits theft is, therefore, not entitled to either notice or termination pay. However, the following elements must first be established in order to avoid the notice requirement:

1. the employee’s misconduct must have been wilful;
2. the employee’s misconduct must have been serious; and
3. the employee’s misconduct must not have been condoned by the employer.

The position of the Ontario Labour Relations Board (“OLRB”) is clear with respect to the seriousness of theft in that it considers theft to be an act which, standing on its own, is almost certain to meet the standard of seriousness required to deny notice of termination. However, the OLRB is equally clear that the employee must wilfully engage in the misconduct at issue in order to relinquish his or her right to notice, stating that “careless, thoughtless, heedless or inadvertent conduct, no matter how serious, does not meet the standard.” Therefore, to avoid disbursing termination pay and notice, the employer must prove the existence of one of the two following scenarios:

1. there were no prior instances of the serious misconduct at issue; or
2. the employee was made aware at any prior instance of the serious misconduct at issue of the specific consequences (i.e. termination) of a subsequent occurrence of the misconduct.

If the employee puts forward evidence sufficient to demonstrate that adequate warning of termination was not provided, or that a warning of termination was provided but allowances were subsequently made by the employer with respect to the misconduct at issue, there is a real risk that the OLRB would equate the lack of sufficient warning and/or allowances as condoning the employee’s misconduct, in which case immediate termination would likely not be warranted without termination pay. In order to avoid paying out termination pay to employees who engage in serious misconduct, employers would be well advised to implement and enforce a defined system of progressive discipline.