Discrimination law

Terminating for legitimate business reasons

By Michelle MacGillivray and Evan VanDyk

When deciding to terminate an individual’s employment, many employers are unaware of the potential human rights implications of this decision. A terminated employee who believes that the decision to terminate their employment may have been based on a prohibited ground of discrimination (such as race, religion, disability or others) may file a claim at the Human Rights Tribunal (the “Tribunal”). The Tribunal will then examine the employer’s actions to determine whether there was any discriminatory motivation underlying the termination, even in part.

The issue of discrimination

Even where there is no direct evidence of discrimination, the timing of an employee’s termination may raise an inference that it was discriminatory. For example, if an employee is terminated shortly after a disabling accident requiring leave or other accommodations, or after taking a parental or sick leave, it may appear as though the employee was terminated because of these events. Employees who are terminated in this manner often file discrimination claims at the Tribunal to seek compensation for lost wages, as well as general damages for the infringement of their human rights.

The Tribunal has a well-established method of evaluating whether an employee was terminated for discriminatory reasons. The protected ground only has to be one factor in the decision to terminate, and the decision will be found to be discriminatory even where there are other, more important factors. A recent application before the Tribunal, Hummel v. Transport Training Centres of Canada Inc., 2012 HRTO 1489 (CanLII) (“Hummel”) illustrates some of the principles that employers should understand before terminating an employee who may allege a breach of his or her human rights.

Legitimate firing

In Hummel, an employee was terminated two weeks after suffering a concussion from a slip and fall accident at the workplace which resulted in an inability to perform work. The employee filed an application with the Tribunal. The Tribunal found that the employee was disabled at the time of his termination. As a result, the Tribunal focused on whether the employee’s disability was a factor in the decision to terminate his employment.

The employer claimed that it had decided to terminate the employee a month before his accident because his position was no longer needed. The employee had continued to work for another month while the employer attempted to find an alternate position for him, but it turned out that he was not qualified for any available position

After hearing from the employer and examining the documentary evidence, the Tribunal determined that the employee was terminated for legitimate business reasons, and not because of his disability. In coming to this conclusion, the Tribunal looked at several elements of the employer’s decision to terminate his employment:

Timing:The employer made the decision to terminate the employee at least a month before the accident. It provided e-mails to corroborate its testimony to that effect. While the employee claimed he had not received any notice of his termination, and had received an order to force the employer to pay him termination pay, the Tribunal does not look at whether the employee is treated fairly and appropriately. Rather, the Tribunal is only concerned with whether the employee was terminated because of his disability.

Legitimate business reason: The employer explained that it decided to terminate the employee because of a restructuring of its workforce. Until shortly before the termination, the employee had worked for a different company, which the current employer acquired in 2009. The current employer’s business model supported fewer employees than the previous company, and so the employee was terminated because his position was no longer necessary. This leaner business model existed at other locations, and so the employer could demonstrate that it acted according to its normal business procedure when implementing this model at the employee’s location.

Post-termination behaviour:The employer continued to act consistently with its business reason for terminating the employee. It carried out similar restructuring at other locations, and did not hire a replacement for the employee.

No evidence of discrimination: The employee did not present any evidence of discrimination. While the Tribunal stated that the “termination of the employee’s employment within two weeks after his slip and fall accident may raise suspicions of discrimination, and understandably so,” this timing alone was not enough to establish that the employer had acted for discriminatory reasons where the employer had established other legitimate business reasons for the decision.

Based on these factors, the Tribunal determined that the employee was not terminated for a discriminatory reason.

As this case illustrates, a finding of discrimination is necessary for any human rights application to succeed. If the Tribunal finds that there was no discrimination, the Tribunal has no power to award the employee any lost wages or damages. Even if the employee was treated unfairly, the Tribunal cannot award compensation to an employee who was dismissed for a non-discriminatory reason.

 Not about fairness

An employer also does not need to accommodate an employee who is dismissed for a non-discriminatory reason. The Tribunal in this case did not evaluate the employer’s efforts to find another position for the employee when his original position was eliminated, because the employer had no duty to accommodate the employee.

This case illustrates several factors for employers to consider when deciding to terminate an employee:

•   Terminating an employee shortly after the employee becomes disabled, takes a sick leave, or otherwise engages a human rights issue will raise concerns for the Tribunal. While the Tribunal will likely require more evidence of discrimination, the timing of a termination is a factor that will influence the Tribunal’s decision. Legitimate explanations will have to be provided to relieve these concerns.

•  When an employee is terminated for legitimate business reasons, the employer must be able to substantiate these reasons. For example, the employer may provide evidence of similar practices at other locations, or financial records indicating that the termination was motivated by economic concerns.

•   The employer must continue to follow the business reasons cited for the employee’s termination. Hiring someone to replace the terminated employee supports an inference that the termination was discriminatory, rather than for legitimate business reasons.

•   Business reasons cannot be used to mask discrimination. If discriminatory reasons influence the employer’s decision to terminate an employee, even if there are other factors and discrimination is not the primary factor, the Tribunal will find that the termination was discriminatory. Employers should therefore be cautious when dismissing employees who may raise a human rights complaint, as an appearance that the given reasons are not legitimate may be enough to allow an inference of discrimination in an application before the Tribunal.

Michelle MacGillivray and Evan VanDyk practice labour and employment law in the Toronto office of Heenan Blaikie LLP. The assistance of Emily Shepard, Articling Student at Heenan Blaikie, is gratefully acknowledged.


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