In certain situations, an employer has the legal right to summarily dismiss an employee. This right exists where there is “just cause” for dismissal.  Just cause is established when an employee’s conduct has led to an irreconcilable breakdown in the employment relationship. By committing acts of misconduct, such as theft, dishonesty or repeated absenteeism, an employer, who can prove it actually has just cause, has the right to immediately end the  employment relationship without providing the employee with reasonable notice or pay in lieu of reasonable notice at common law.

Just cause dismissal has often been referred to as the “capital punishment” of employment law. Given the consequences of a just cause dismissal, courts carefully analyze any allegations of misconduct using a contextual approach. Courts determine whether an appropriate balance has been struck between the severity of the misconduct, and the form of discipline chosen – here, summary dismissal. If the dismissal was a proportionate response to the employee’s misconduct, the termination for cause will be upheld.

Although just cause for dismissal is a defence against a wrongful dismissal action, the defence has its limits. One such limit is the doctrine of condonation.

The doctrine of condonation stipulates that where an employer becomes aware of an employee’s misconduct, but chooses not to discipline the employee, or allows an unreasonable amount of time to pass before acting, the employer is considered to have waived the wrongdoing in question. By waiving the wrongdoing, an employer will be disentitled from including that wrongdoing in any assertion that it has just cause to end the employment relationship.

In theory, the doctrine functions to prevent “surprise”, whereby an employee is lulled into believing that their conduct is acceptable, only to discover later that it is not. Practically, however, the doctrine functions more as a pitfall for employers who do not actively manage misconduct.

The onus of proving condonation is on the employee. In order for an employee to successfully argue the doctrine of condonation, certain elements must be established.

First, the employer must be aware of the misconduct. If misconduct is to be excused, an individual within the organization possessing the ability to discipline or terminate the employee must either have knowledge of the conduct, or choose to ignore it. Once knowledge is established, an employer is entitled to “reasonable time” to decide whether or not to discipline or dismiss the employee. What’s considered reasonable is analyzed on a case-by-case basis. Ultimately, reasonableness is about whether an employer acted in such a manner to suggest that he or she overlooked the misconduct in question. Simple deliberation is not unreasonable – avoiding confrontation is.

In a recent decision from the Ontario Superior Court of Justice, Armstrong v. Lendon, 2015 ONSC 3004, the defendant employer only alleged just cause when the plaintiff asserted her right to additional notice. The defendant claimed the plaintiff was incompetent and insolent during the course of her employment. The court found the plaintiff was wrongfully dismissed. In reaching this decision, the court accepted that the defendant was aware of the plaintiff’s misconduct at the time it occurred and chose not to discipline the plaintiff. Thus, the behaviour was condoned and could not be used as a defence to the wrongful dismissal action.

Moreover, as discussed in a previous blog post, The Significance of Progressive Discipline and the Duty to Act Honestly in the Manner of Dismissal, employers alleging just cause simply to avoid severance obligations may also attract punitive damage awards, in addition to damages for reasonable notice.

As in Armstrong, employers frequently take the “path of least resistance” and let misconduct “slide” over time. This course of action is unfortunate, but human:  management is often hesitant to give an employee truly critical feedback in performance reviews, or discipline an employee in a formal way. Then, when patience runs out and the employer tries to end the relationship, it finds itself unable to rely on the misconduct.

If, as an employer, you are unsure whether or how to discipline your employee for an act of misconduct, it may be wise to start by providing a warning. A warning should consist of a statement that the employee’s behaviour is unacceptable and may result in further discipline up to and including termination. Warnings need to be clear, unequivocal and acted upon. It sounds simple, but developing and deploying a clear, consistent and predicable system of progressive discipline is one of the most challenging aspects of employee relations.

It is also prudent to avoid behaviour that courts could interpret as evidence of condonation. An employee should not be rewarded for bad behaviour. This includes providing the employee with a raise or promotion, filling out positive performance reviews, or giving mixed signals. For example, telling an employee they are excelling at their position, when they are in fact struggling, is one obvious but common example. Also, if termination is being considered, providing the employee with some amount of reasonable notice, as in Armstrong, is also a sign of condonation and evidence that the employer did not really view the employee’s misconduct as constituting just cause for summary dismissal at the time of termination.

There is no absolute standard as to what constitutes condonation. However, what is important for employers to understand is the way they respond to an employee’s misconduct at the time it happens will go a long way in determining whether summary dismissal is justified down the line. - See more at: http://www.somlaw.ca/just_cause_past_misconduct