Canadian Employment Law Today

February 5, 2014

Focuses on human resources law from a business perspective, featuring news and cases from the courts, in-depth articles on legal trends and insights from top employment lawyers across Canada.

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CANADIAN EMPLOYMENT LAW TODAY 12 months notice for employee fired without investigation Employee was fired for making anti-Semitic comments against owners but employer didn't bother investigating hearsay evidence | BY JEFFREY R. SMITH | AN ONTARIO company owes a former employee 12 months' pay in lieu of notice after failing to properly investigate and find evidence of allegations of antiSemitic remarks against the owners, the Ontario Superior Court of Justice has ruled. Richard Ludchen was a plant superintendent for Stelcrete Industries, a manufacturer of reinforcing and structural steel components such as rebar, in Welland, Ont. Ludchen was hired in January 1997 as a welder and worked his way up to become a superintendent in charge of the rebar assembly division in a new plant that opened in 2007. He supervised around 16 full-time production welders and was responsible for hiring, firing and disciplining employees in his division. In February 2008, the Ontario government implemented a new holiday — Family Day. However, employers who already provided the minimum number of paid holidays specified in employment standards legislation were not required to make Family Day a holiday. Stelcrete was one of those employers and chose not to recognize Family Day as a holiday. Employee not happy with decision to not recognize new holiday A month before Family Day, on Jan. 17, 2008, Ludchen received an email from the HR department asking him to post an announcement that Family Day would be a regular business day but the company would be providing an additional paid holiday during the Christmas season. When he saw the email in his office, Ludchen had an angry outburst in front of some of his subordinate employees, calling Stelcrete's owners "cheap f---ing Jews." At the time a private investigator was working undercover at the plant to investigate drug use at work by employees. The investigator went to the director of HR and Stelcrete's general manager and told them some employees had told her Ludchek had a "freak out" and made the remark in response to the Family Day decision. There was no independent investigation, but the HR director and general manager said they were "astounded" by the comment, since Ludchen was in a position of leadership with a high standard of conduct required. On Feb. 4, Stelcrete terminated Ludchen for cause. His letter of termination stated he made anti-Semitic remarks and denounced the company's decision "in front of a number of employees." Ludchen asked if there was something he could do to make it better, but was told there wasn't. The next day, Ludchen called the director of HR and told her he knew what he did was wrong and wanted to write a letter of apology to the owners. The HR director told him the decision was made and it wouldn't do any good to contact the owners. The employer had no direct knowledge of the comments and the only evidence they had was 'double hearsay.' Without investigating more, the court said it was 'unwise' to terminate employment. A month later, the investigator left Stelcrete and later filed a report about Ludchen saying she had heard him make anti-Semitic remarks on other occasions. When Ludchen filed a wrongful dismissal suit, the investigator testified several employees had told her Ludchen had slammed a door, thrown a garbage can and everyone on his shift had heard his comments. Ludchen said there were only three people in his office when he received the email announcement and told them he wasn't happy with it. He denied making anti-Semitic comments and claimed he reminded the employees Stelcrete was still a good company to work for. He also testified he got along well with Stelcrete's owners. The next he heard about it was his termination meeting on Nov. 4. Company failed to find real evidence of misconduct The court found the investigator had lit- tle credibility due to inconsistency in her accounts and her demeanour in testifying. If she had heard Ludchen make anti-Semitic remarks on other occasions, it didn't make sense why she waited until the Family Day incident to report them. Other employees contradicted her claim that everyone on the shift heard the remarks —every person from Ludchen's shift who testified said they didn't hear the remarks and didn't tell the investigator anything — and she didn't have notes. The court found it couldn't rely on any of the investigator's account of events. The court found that the HR director and general manager had no direct knowledge of what happened on Jan. 17, 2008, and the only evidence they had was "double hearsay" that the investigator said other employees had told her. Without investigating more into the allegation of misconduct and finding out the names of the employees who made such allegations, the court said it was "unwise" to terminate Ludchen's employment with such thin evidence. "It would have been prudent for management to confront Ludchen with the allegations and give him an opportunity to respond," said the court. Stelcrete took Ludchen's request to apologize to the owners as an admission of his misconduct, but Ludchen wasn't told specifically what he was accused of saying and he wasn't asked if he made the remarks. Without being told what he was accused of doing, his request to apologize could not be taken as an admission, said the court. The court found Stelcrete was unable to prove Ludchen and an angry outburst in front of employees and made anti-Semitic remarks. Therefore, it was unable to prove just cause for dismissal without notice. Stelcrete was ordered to pay Ludchen 12 months' salary in lieu of notice. Less income and benefits he received from employment he found during the notice period. The court denied Ludchen's claim for bad-faith damages, determining there was no evidence of mental distress suffered by Ludchen as a result of Stelcrete's conduct. For more information see: •Ludchen v. Stelcrete Industries Ltd., 2013 CarswellOnt 17334 (Ont. S.C.J.). Published by Canadian HR Reporter, a Thomson Reuters business 2014 3

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