Employers Should Not Rely on Hearsay to Prove Cause for Dismissal

Financial Post: January 27, 2014.  All Rights Reserved.

Even when a dismissed employee lies on the witness stand, the employee may still come out ahead.

That’s the lesson Stelcrete Industries, and its owners Larry Cohen and his son, Steven, learned. Richard Ludchen began working at the company, which makes and assembles rebar, as a welder and rose to plant superintendent of the Welland, Ont. facility, supervising 16 staff.

When the Ontario Government introduced Family Day, Stelcrete exercised its statutory option to provide employees an additional paid holiday during Christmas instead of the day in February. Ludchen was told to post this announcement at the plant.

Unbenownst to its employees or Ludchen, Stelcrete had retained an undercover detective, Stacey Avlonitis, to investigate employee drug use. Her cover was as an ergonomics expert. Avlonitis reported to management that she had been told that, upon hearing employees would have to work on Family Day, Ludchen had a tantrum – slammed a door, threw a garbage can and called the owners “cheap Jewish bastards.”

Astounded by these comments from someone in his position, Ludchen was fired immediately. After being told the decision was final and there was nothing he could do to keep his job, he sued.

At the trial before Mr Justice Joseph Henderson of the Ontario Superior Court, Ludchen denied making anti-Semitic comments, instead, testifying that upon receiving the holiday announcement, he praised the company to his staff. Additionally, after being dismissed, he said he wanted to write a letter thanking the employer.

The judge disbelieved Ludchen, but neither did he accept Avlonitis’s evidence. She had not personally heard the comments. She had no reliable documentation to corroborate her allegations. And the staff on Ludchen’s shift, who were called as witnesses, testified they had not heard such comments.

Critical of Stelcrete for having failed to identify any witnesses before firing Ludchen, the court found the allegations were not proven and Stelcrete was ordered to pay wrongful dismissal damages and legal costs.

The outcome would have been different had Stelcrete followed some essential components of building a case:

Identify the allegations What is the employee accused of, in what context and when?

Interview the relevant witnesses A report from an investigator is not admissible evidence and does not replace the need for actual first-hand witnesses at trial. Before Stelcrete dismissed Ludchen for cause, it should have interviewed his direct reports to determine whether the allegations were corroborated. Had it done so, it would have learned that Avlonitis’ report was unreliable and would not have acted so precipitously.

Get the employee’s side Stelcrete did not interview Ludchen before dismissing him. The advantage of doing so is not only to be fair to the employee but to give the employer an idea about what potential defences might be mounted, who should be interviewed and effectively precludes the employee from re-inventing evidence later.

Obtained signed statements An investigation process is not complete unless the witnesses record and sign statements confirming their prospective evidence. By committing them to a position, they too will have an uphill battle if they wish to change their story.

Weigh the evidence In this case, the court ruled that there would have been just cause had Stelcrete proven the comments. But generally, an employer needs to consider the context: Was this an isolated incident or part of a pattern? Was there an acknowledgement of wrongdoing? Was there an apology and expression of remorse? Conducting this analysis with the assistance of employment law counsel will keep an employer out of litigation