Canadian Consulting Engineer


January 1, 2001
By Shelley Boyes

Many engineering firms, like other employers, often leave employee discipline up to the discretion of individual managers and supervisors. In smaller firms, especially, discipline decisions are made o...

Many engineering firms, like other employers, often leave employee discipline up to the discretion of individual managers and supervisors. In smaller firms, especially, discipline decisions are made on the spot, often with little thought as to how appropriate, effective — or legal — those decisions might be.

But, according to Allan Wells, a labour and employment lawyer with the Toronto office of Osler, Hoskin & Harcourt, a recent Ontario court decision shows how important it is for every organization to have a clear discipline policy in place.

The facts of the case were these: Ms. Haldane had worked as the controller for Shelbar Enterprises for about five years. She was suspended for three days after she swore at her boss in front of other employees. Haldane thought the discipline was excessive and suggested instead that she lose three days’ vacation pay. The employer rejected her suggestion, and fired her because she wouldn’t accept the suspension. As a result, Haldane sued for constructive dismissal.

(Generally, a “constructive dismissal” occurs when an employer unilaterally makes a significant change to the terms of employment, to the employee’s detriment.)

The trial judge found that while insolence may be grounds for dismissal in some situations, in Haldane’s case, it wasn’t. In fact, the judge said that even a three-day suspension without pay was excessive. He ruled that an appropriate disciplinary response would have been to require Haldane to apologize and take the afternoon off. In addition, a memo noting the disciplinary action could have been added to her personnel file. The judge agreed that by imposing unreasonable discipline, the employer had constructively dismissed Haldane.

The case went through two appeals. Eventually, the Ontario Court of Appeal found that an employer could not discipline an employee by suspending him or her unless it had a specific right to do so under the terms of the employment contract. Haldane was awarded seven months’ pay.

According to Wells, the case holds two important lessons for employers:

It’s important to ensure that employee discipline is reasonable and appropriate to the circumstances;

It’s essential to formulate, communicate and follow an employee discipline policy.

What’s reasonable discipline?

“Employee misconduct often arouses emotional responses in everyone involved … including the person who will make the discipline decision. So, it can be difficult to respond objectively,” Wells explains. The Haldane case shows employers should take a deep breath and consider the following factors before reaching a decision.

The circumstances of the misconduct. For example, the trial judge noted that the incident between Ms. Haldane and her employer occurred with a new boss, who had a less “relaxed” management style than his predecessor. Moreover, the new boss, without discussing the matter with Haldane, had just announced a change in the scheduled non-smoking day, thereby undermining her authority.

The employee’s past record. An isolated incident of misconduct by an otherwise good employee doesn’t merit the same disciplinary response that would be imposed on an employee with a poor record. The trial judge noted Haldane’s excellent work record and her willingness to work beyond regular hours as relevant factors in assessing whether the employer’s disciplinary response was reasonable.

Alternative discipline. The employer should always consider whether there are other options that might achieve the disciplinary objectives. For example, when they got to court, Shelbar executives couldn’t offer a satisfactory explanation why Ms. Haldane’s suggestion of losing three vacation days hadn’t been an acceptable compromise.


Even if a particular discipline is reasonable in the circumstances, it could still lead to the employee making a constructive dismissal claim if the terms of employment don’t imply or expressly permit that the discipline is to be imposed.

“This doesn’t mean that you need to advise employees of every possible consequence for every kind of misconduct,” Wells points out. In the Haldane case, the court said a term of employment can be implied in a contract based on “custom and usage or based upon the presumed intentions of the parties.” This means an employer with an established and well-known practice of imposing particular forms of discipline will be in a better position. They could show that accepting these kinds of discipline was an implied term of employment agreed to by the employee.

However, for those employers without established disciplinary practices, a written disciplinary policy may be the best option.

To be effective, Wells says, a disciplinary policy must be reasonable and effectively communicated to all employees. Besides identifying specific disciplinary offences and procedures for investigating them, the policy should define a range of responses and penalties. “You want to avoid the employee being able to claim … in court, if it comes to that … that he or she didn’t know the potential consequences of the misconduct,” he explains.

Penalties include:

Written or verbal warnings. These should include a warning that additional discipline — up to and including termination of employment — could be meted out in the event of future misconduct.

Temporary suspension without pay. Suspensions are issued typically to employees who, given the nature of their work, are temporarily replaceable. A suspension with pay is usually imposed pending the results of an investigation into allegations of serious wrongdoing.

Loss or reduction in bonus. Wells warns, if, as an employer, you want the option of using bonus reductions as a disciplinary response, your bonus policy must clearly state that pay-outs are at the employer’s discretion, and are based on overall performance as well as meeting financial targets.

Loss of overtime work. This is an option for disciplining hourly employees, who often rely on evening or weekend overtime work to supplement their incomes.

A demand for an apology. The court in the Haldane case recognized that in some circumstances it is reasonable to ask an employee to apologize for inappropriate conduct. If the employee refuses to apologize in response to a reasonable request, the employer may have cause to dismiss him or her for refusing to accept that reasonable discipline, or possibly even for insubordination.

Denial of an annual wage increase. Denying a discretionary wage increase can be an effective disciplinary response in some circumstances. However, Wells points out, for employees who are entitled to scheduled wage increases based solely on service, denying an incremental increase could again evoke a constructive dismissal claim.

Temporary demotion. For example, a delivery driver involved in a series of accidents could be assigned to a “desk job” for three months. However, a demotion that is unreasonable, or given for an unreasonable period, could also be construed as constructive dismissal.

Finally, Wells advises, “You need to ensure employees … are given a clear warning of the consequences of future misconduct. It may seem obvious, but you’d be surprised how many times it doesn’t happen this way.”


Stories continue below

Print this page

Related Stories