Employer Fails in Attempt to “Change Horses” To Just Cause
Alayew v The Council for the Advancement of African Canadians in Alberta, 2023 ABKB 113 (Lema) is a new Alberta Court of King’s Bench decision where an employer initially terminated an employee’s employment on a without cause basis, and then later tried to claim it had just cause for dismissal. The Court disagreed, and awarded the 10 year employee 14 months’ reasonable notice of termination.
This case is important because it provides some clarity on when an employer can “change horses” and allege just cause, and it involves a somewhat novel argument by the employer of mistake in failing to allege cause.
The following are the pertinent facts summarized by the Alberta Court of King’s Bench:
- The plaintiff employee, Mr. Alayew, worked as the Executive Director for the defendant, The Council for the Advancement of African Canadians (“AC”), for about 10 years
- Some employees made harassment complaints against Mr. Alayew and he was suspended without pay pending an investigation
- The investigation resulted in an interim report and a final report, both of which concluded that the allegations of harassment, etc., against the plaintiff were unfounded
- Ultimately, the employer terminated Mr. Alayew’s employment. The termination letter indicated that Mr. Alayew’s employment was being terminated “without cause”. It also indicated he was being provided with his statutory termination pay, and offered an additional amount in exchange for a release in favor of the defendant
- Alayew did not take that offer, but instead sued for wrongful dismissal
- The AC took the position in litigation that the AC had just cause to terminate Mr. Alayew’s employment, and that they therefore did not owe him any severance
Analysis / Conclusion
Justice Lema noted that one of the core issues was whether or not the employer, having knowledge of the allegations against the plaintiff at the time of termination of employment, “can effectively “change horses” and defend on the basis of just cause”.
The AC had two arguments for why it should be entitled to “change horses” and assert just cause:
- They mistakenly terminated employment without just cause; and
- They discovered more information after termination about pre-termination misconduct (this is called “after-acquired cause”).
The AC’s argument on mistake was that it had relied on the investigator’s interim report conclusion of “all clear” in the interim report when it decided to terminate without just cause. However, the evidence at trial was that the AC board never agreed with the conclusion of the investigator in that interim report, which led Justice Lema to conclude that the AC did not rely on that report when it made the decision to terminate without cause. The ABKB concluded on this issue that it is possible the AC believed it had just cause when it terminated employee’s employment without cause, but the AC did not satisfy the court that it had made a mistake when it stated it was without cause.
The ABKB noted that there was no mistake proven, and that there was no caselaw offered by the defence that would have supported the position that an employer could change its position to assert “just cause” in any event.
The ABKB also found that there was no material evidence the AC came into possession of post-termination which it did not already have pre-termination, but even if there was any it was not enough for just cause.
Justice Lema concluded there was no just cause for dismissal, and awarded 14 months reasonable notice (severance) to this senior manager with 10 years of service.
It is fairly well-established that when an employer does not assert just cause at the time of termination, it will be challenging for the employer to assert it in litigation. There have been cases which state otherwise, but the weight of authority certain supports this general rule. The Alayew case makes a fairly strong statement that an employer will almost never be successful in changing positions from without cause to “with cause”.
The main exception to that general rule is when, after termination of employment, an employer comes into evidence of significant misconduct which occurred prior to termination of employment. This is called after-acquired cause, and it has its own special rules.
An interesting aspect of the Alayew case, to me, is the mistake argument raised by the defence. I personally think that argument would make sense on the right facts – because employment law is really just a special subset of contract law, where mistake can in some cases be a defense. The argument was not successful this time but I would not be surprised if someone else tries this one on different facts.
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