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British Columbia Court of Appeal upholds just cause dismissal

A branch manager of a credit union was fired for just cause after she wrote a letter to her employer that the trial judge found to be “disrespectful and defamatory”.

In the case, Grewal v. Khalsa Credit Union, the plaintiff, Grewal, had been employed with the defendant credit union since 1989. She had moved up the ranks and held the position of branch manager at the time of termination. She had an unhappy work relationship with the Chief Executive Officer of the company who had criticized her on a number of occasions for insubordination and unprofessional behaviour. The relationship became more strained when the Chief Executive Officer became suspicious of a home mortgage she had obtained from the credit union.

A meeting was held with Grewal to discuss the mortgage issue as well as other ongoing concerns. The day after the meeting, a letter was received from Grewal’s lawyer alleging that the employer had seriously infringed on her right to privacy and that the Chief Executive Officer was intentionally setting out to destroy her reputation.

Applying McKinley v BC Tel, [2001] 2 S.C.R. 161, the trial judge found there was just cause to terminate her employment. The trial judge emphasized that Grewal was in a position of trust and responsibility as a branch manager, it was essential that she maintain the confidence of her superiors. Not only did the letter accuse the Chief Executive Officer of intentionally making false allegations but it was sent to the board of directors and the credit union regulator, which was a clear attempt to cause damage to the Chief Executive Officer.

Taking into account the cumulative effect of the past strained employment relationship and the letter, the trial judge concluded it was impossible for Grewal and the Chief Executive Officer to work together and that the employment relationship had been totally undermined.  This decision was upheld by the Court of Appeal.

An employer may only terminate employment without notice, or pay in lieu, if there was just cause. The just cause standard is high and difficult for employers to prove. In general, an employer will have just cause to terminate an employee where a condition or conduct by an employee is so incompatible with the employment relationship that the employer cannot reasonably be expected to retain the employee. Cause can be established by a series of incidents or a single incident if the conduct is so serious that it utterly destroys the foundation of the employment relationship. Usually, a letter from an employee’s lawyer would not constitute just cause for termination. However, in this case, the letter was the tipping point, taking into account the employee’s past misconduct.

The court will not make a finding that there was “near cause”. If the employer cannot establish it had cause, the employee will be entitled to damages for wrongful dismissal. Employers must proceed with caution if they are terminating an employee for cause. It is prudent to seek legal advice beforehand.