Just Cause is Not the Easiest Thing to Demonstrate: Trading Barbs with Boss Not Enough to Justify Treatment

Financial Post: 3 August 2005 All Rights Reserved.

Telling their boss off is a pleasure most employees can only fantasize about.

But not Christine Carscallen.

A marketing executive for FRI Corp., Carscallen reported to its president and CEO, Eligio Gaudio.

Both freely spoke their minds to the other. The result was a tumultuous relationship of more than 15 years.

When FRI enrolled in a tradeshow in Barcelona, Carscallen was charged with delivering the booth and materials. Only five days before they had to be set up, she sent them via courier, which guaranteed delivery within two days.

When Gaudio arrived in Barcelona, the shipment had not arrived.

He called the Toronto office but did not reach Carscallen. By the date the booth had to be erected, everything was still held up in Spanish customs.

It did not arrive in time for the tradeshow.

Gaudio emailed Carscallen, demanding an explanation.

She proceeded to shift some of the blame on to him: Since he knew the package had not arrived, he should have left her a message.

She suggested her boss had a sporadic tendency of not leaving voicemails on critical issues, and proceeded to criticize the spending on the tradeshow.

Offended, Gaudio accused Carscallen of “astounding arrogance,” contending that it was clear the real issue was that the booth had not arrived and she was not accepting responsibility. Carscallen replied:

“Why is that I am arrogant and you are offended when I respond to the accusations you are hurling at me, but because you are CEO it’s okay for you to be arrogant and I’m not supposed to be offended?”

Gaudio had had enough. Carscallen was suspended for a week without pay.

She was then demoted to “Manager of Marketing”: she would no longer be granted flex hours and was assigned to a cubicle to be shared with a subordinate.

Carscallen refused to resume work.

FRI then sent her a letter warning that, if she did not return, she would be treated as having abandoned her employment and would be dismissed for just cause.

Carscallen sued.

Gaudio’s thirst for blood and apparent desire to dismiss Carscallen prompted FRI’s conduct, according to Mr. Justice Echlin of the Ontario Superior Court. He noted that FRI did not follow its own policy on discipline.

With Gaudio demonstrating that he was intent on humiliating Carscallen, the employee had no legal obligation to return to the demoted position.

Although the court agreed that her communications with her boss were out of line and that Carcallen was less than diligent in monitoring the booth’s set up, her conduct did not amount to just cause.

More significantly, without a specific term in an employment agreement or corporate policy permitting a suspension, employers have no right to suspend non-union employees.

FRI was ordered to pay damages for wrongful dismissal and additional bad faith damages for its high-handed conduct.

This decision illustrates the increasingly impatient attitude of the courts to overbearing employers and expands the law respecting suspensions:

1. The traditional employment relationship, where the employee is expected to be uniformly respectful of her manager, is obsolete. Managers and executives must endure language which only a decade ago would have been regarded as insubordinate and cause for dismissal;
2. Unless a specific term in its contract of employment permits suspensions without pay, it will be considered a constructive dismissal. Employers must be cautious before suspending;
3. Resist the temptation of terminating employees in the heat of the moment, even if direly provoked;
4. The courts expect employers’ discipline policies to be followed;
5. An employee may not be required to accept a reassignment when it follows an inappropriate suspension or entails a reduction in status;
6. The test for just cause is stringent and evolving. The consequences of alleging it unsuccessfully can be significant. A specialist should be consulted before its assertion.