Canadian HR Reporter

16 www.hrreporter.com F E A T U R E S Tamara Ticoll is counsel in the Employment and Labour Group at Stikeman Elliott in Toronto. The author would like to acknowledge the support and assistance of Alexandra Mathieu, summer student at law. For more information, visit www.stikeman.com. Disclaimer: This publication is intended to convey general information about legal issues and developments as of the indicated date. It does not constitute legal advice and must not be treated or relied on as such. THE Ontario Superior Court has released a decision, Goruk v. Greater Barrie Chamber of Commerce, 2021 ONSC 5005, in which a series of individual acts of misconduct, poor judgment and dishonesty were found to cumulatively justify an executive direc- tor's termination for cause. The Goruk decision provides a helpful example for employers of a situation in which an employee in a fiduciary position may be terminated for cause without relying on standard progressive discipline. The case is also noteworthy because of its finding that the indi- vidual acts of misconduct at issue, taken in isolation, would not have provided grounds to terminate for cause. Background Goruk concerned an executive director who had been employed with the Greater Barrie Chamber of Commerce, a not-for-profit organization, for 17 years. Sybil Goruk held a position of trust with the organization, which was governed by a volunteer board of directors who relied entirely on her for the chamber's day-to-day management. In particular, the board relied exten- sively on her honesty and integrity. Goruk was placed on paid adminis- trative leave pending the results of an investigation into certain financial irregularities. This suspension followed her decision to allow a controversial e-broadcast to be circulated, challenging the investigation. She was not provided with any warnings or opportunity to correct in connection with the above- noted incidents. The decision Justice Cary Boswell addressed each of the issues supporting the board's decision to terminate the executive director. Separately, none of the acts supported termination for cause. However, he found that the culmination of the incidents did amount to cause for termination. Specifically, Boswell took into consideration Goruk's decision to circ ulate the e-broadcast, which was found to have undermined the board's proposed amendments to the constitution, as well as her impediments to the treasurer's access to financial records. The falsification of bank documents and unauthorized raise were both found to be acts of misfeasance which, though arguably "not major," were dishonest. Goruk was also found to have a tendency to exercise "very poor judgment," which was demonstrated in her conduct vis à vis the treasurer and the e-broadcast, and in her decision to take out vacation pay in cash without proper approval. Critically, Boswell reasoned that Goruk stood in the position of a fiduciary to the chamber and the board and, as such, she owed them duties of loyalty, honesty and good faith. These duties were particularly important given that the the board's proposed constitutional amendments. The investigation revealed several concerning incidents, which resulted in Goruk's termination for cause without notice or compensation. The indepen- dent incidents included, among other things, that she: uttered a falsified docu- ment to the chamber's bank (though the chamber suffered no loss as a result); took out vacation pay in cash on an unauthorized basis; granted herself an unauthorized pay raise (the result of a bookkeeping error which she failed to correct); and awarded contracts to her sons without following the appropriate procedure and without disclosing the transactions to the chamber's auditor. Moreover, issues had arisen between Goruk and the chamber's new treasurer after she impeded access to financial statements that hindered the treasurer's ability to prepare monthly reports for the board's review. Goruk was immediately terminated for cause following the conclusion of Multiple incidents of misconduct that occur around the same time may amount to a repudiation of the employment contract so that progressive discipline is not required, says Tamara Ticoll of Stikeman Elliott TERMINATION FOR CAUSE CLARIFIED organization was a not-for-profit one that served the community. Goruk's termination was a direct result of a loss of faith and trust in her ability to continue to carry out her responsibilities. Boswell noted that because the board was unable to supervise her actions, if they could not trust her implicitly, she simply could not continue to hold the role. Boswell also found that because the issues that led to the termination of Goruk's employment "came to a head at or around the same time period," this situation was distinct from the more typical cases in which warnings and the use of escalating forms of discipline are the appropriate and proportionate response to repeated misconduct. Takeaways for employers This case provides several important considerations for employers when faced with a possible for cause termina- tion, particularly in respect of employees who are fiduciaries or otherwise occupy positions of trust. First, acts of poor judgment and misfeasance that independently do not amount to just cause for termination, may, when taken together, amount to just cause for termination. Second, an employee in a position of trust and autonomy may be terminated for cause if it is determined that they repeatedly failed to act with honesty when discharging their duties. Third, proportionate discipline will usually involve warnings and the opportunity for correction, or a ladder approach to discipline. However, this case illustrates that multiple incidents of misconduct that occur around the same time period may amount to a repudiation of the employment contract such that progressive discipline is not required. The findings in G oruk do not change the fact that the threshold for terminating an employee for cause is extremely high, and that the facts and strategy in each case must be evaluated on an individual basis. CHRR An employee in a position of trust and autonomy may be terminated for cause if they repeatedly failed to act with honesty when discharging their duties. E M P L O Y M E N T L AW

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