An Alberta court has shot down an employer’s attempt to “change horses” and allege just cause after it terminated its executive-director without cause.
When the executive-director sued for wrongful dismissal, the employer — which had all the facts before it when it made its termination decision — tried to change tact.
“Can a without-cause dismissal be recharacterized later for cause when the material circumstances were known to the employer before dismissal? The answer is no,” the Court of King’s Bench said.
Background
The worker, TA, was the executive-director of The Council for the Advancement of African Canadians in Alberta (Africa Centre or AC) for about 10 years.
In late 2017, the Africa Centre’s accountant quit, alleging mistreatment at the hands of the executive-director. The board of the AC retained an employment lawyer to conduct an investigation into those allegations and others that surfaced from staff.
In January, it decided to suspend TA without pay. In mid-March, it terminated his employment after it received the details of various allegations from three current or former employees. Those allegations were made to the employer directly or as part of the interim report prepared by the investigator.
Africa Centre offered to pay him eight weeks’ severance immediately in recognition of his 10 years’ service and the requirements under Alberta’s Employment Standards Code. It offered an additional one month’s pay if he released the board from all claims related to his dismissal.
TA did not sign the release, and did not receive the additional one month’s pay. In response to his lawsuit for additional severance, the Africa Centre reversed its position and defended its decision on the basis of just cause.
“Which raises the threshold issue of whether, having dismissed (TA) in the manner it did, and being aware of all the allegations against him, the board can effectively “change horses” and defend on the basis of just cause,” the court said.
If just cause existed, the Africa Centre sought a return of the severance it paid to TA. If it did not have just cause, then the court would need to address the reasonable notice period, mitigation and aggravated damages.
Without cause to just cause
The onus was on the Africa Centre to prove its case to switch from without cause to just cause. The employer made two main arguments.
First, it said it made a mistake in dismissing TA without just cause. Second, it discovered new information about his pre-termination conduct that constituted just cause.
The report it commissioned was made available on March 15 as an interim report for the meeting it held about TA’s termination. The final report was issued on March 23, one week after the without-cause termination.
“The thrust of both reports (interim and final) was that the investigator was unable to find corroboration for the principal allegations against (TA) (made by the accountant who resigned), leading the investigator to conclude that (TA) had not abused, harassed or otherwise mistreated that person,” the court said.
Further, the board didn’t even rely on the interim report to reach its conclusion, the court noted.
In fact, the Africa Centre “did not actually say why the board decided to terminate without cause,” the court said.
“With no explanation offered or even suggested, it is possible the board believed it had a just-cause basis for dismissal but decided, for its own reasons, to dismiss without cause. An employer aware of just cause is obviously not compelled to dismiss for cause,” the court said.
In other words, to back up the assertion it made a “mistake” it would have to provide evidence of its mistake. “As noted, it provided no such evidence,” the court said.
The Africa Centre had all the information at its disposal when it made the decision to terminate without cause — there was no evidence to support its position that it discovered new information on conduct that would justify just cause, the court said.
Last-ditch argument
It made what the court called a “last ditch” argument about a “freestanding right” to later recharacterize a dismissal for cause. That argument failed to sway the court.
The Africa Centre did not point to any case standing for that proposition, it noted.
“And when it comes to its last-ditch argument about a freestanding right to disavow, regardless of the payment of severance, it had the onus of unearthing case law supporting that right or, in any case, of offering some persuasive rationale for disavowal in these circumstances,” the court said. “It did neither.”
Reasonable notice period
TA, who was 62 at the time of dismissal with a salary of $83,150, sought 24 months’ notice in his statement of claim, reducing it to 18 months at trial.
The court settled on 14 months and said there was no failure to mitigate his damages. TA decided that, in light of the adverse publicity surrounding his dismissal and the uncertainty about the litigation, his best option was driving a taxi.
Aggravated and punitive damages
TA sought $200,000 in aggravated damages and $100,000 in punitive damages. At trial, there was no arguments from his counsel – oral or written – on the matter of punitive damages, so the court inferred that he abandoned that claim.
To support the aggravated damages claim, he referenced the fact his “name had been tarnished all over the newspapers (with references to) sexual harassment. Every (potential) employer would Google me and find out who I am.”
He said that “everything I built for 25 years was shattered in one blow (in part by) them throwing my name out there. How (could) I get a (new) job?”
The court declined to award aggravated damages. Only one article was entered into evidence, from Diversity Magazine, and the comments attributed to the Africa Centre were “neutral,” it said. There was no confirmation or other mention of alleged sexual harassment, other grounds or even concerns. It simply confirmed the third-party investigation and an administrative leave.
It accepted that TA experienced stress, sleep and skin-condition problems. But he didn’t detail the severity of those conditions or whether he sought medical attention.
“Fundamentally, the AC adopted a litigation stance that it could establish just cause. In support of that stance, it gathered information to try to build a just-cause case. In the end, I ruled that the AC could not pursue a just-cause defence in the face of the clear without-cause dismissal accompanied by severance,” the court said.
“But that does not mean that the pursuit of that defence was outrageous, egregious, or capricious.”
For more information, see Alayew v The Council for the Advancement of African Canadians in Alberta, 2023 ABKB 113 (CanLII).
