For Employers, Sometimes Silence Is The Best Defence

May 21, 2014

Should an employer participate in Employment Insurance (“E.I.”) proceedings to determine the E.I. eligibility of a recently terminated employee when the employer has alleged just cause for termination? If the employer does participate, and the employee is found to be entitled to E.I. benefits, will this prevent the employer from relying on a just cause defence in a wrongful dismissal or discharge claim?

The answers to these questions depend on whether or not the employee is unionized and employed under a collective agreement.

If the employee is unionized and subject to a collective agreement, wrongful discharge grievances typically go to grievance arbitration. Arbitrators have ruled that an employer may participate in E.I. proceedings and not be prevented from asserting a just cause defence at a grievance arbitration. This is in part because the issues are not the same (i.e. “misconduct” in E.I. proceedings v. “just cause” for discharge and if termination is an appropriate penalty) and the parties are not the same (i.e. employee/ employer in E.I. proceedings v. union/ employer in grievance arbitration).

On the other hand, if the employee is not unionized, wrongful dismissal claims typically go to court. Judges have held that an employer may be prevented from asserting a just cause defence where the employer participated in the employee’s E.I. proceeding. This is in part because judges have held that just cause and misconduct are the same issue and thus an employer should not be allowed to “take a second kick at the can” in alleging just cause to terminate.

As you can see, it is very risky for an employer to participate in E.I. proceedings. The law in this area is complex and carries significant ramifications for employers. This is why we recommend an employer get legal advice prior to terminating an employee and before participating in a terminated employee’s E.I. proceedings.