Sexual harassment: Grounds for dismissal, but not for denying severance

Slapping a woman on the buttocks in the workplace may be grounds for dismissal, but the threshold for terminating severance as a result of sexual harassment requires ‘wilful misconduct,’ the Ontario Court of Appeal has ruled.

In essence, if the harassment was done “in the heat of the moment,” and not as part of a plan, the employer will not be able to terminate severance under the Employment Standards Act.

“A requirement for demonstrable pre-planned bad behaviour may operate as a de facto licence to shield those individuals that, in the heat of the moment (or in response to a perceived slight), steal, lie or commit violent acts in the workplace,” Ottawa employment lawyer Paul Willetts of Vey Willetts LLP writes in an article for Canlii.ca. “Such acts, no matter how serious, may fall short of the statutory standard [for not paying severance]. The message this sends appears at odds with prevailing societal views and minimizes the severity of such conduct.”

The decision in Render v. ThyssenKrupp Elevator (Canada) Limited may be of interest to D&O insurers defending employers sued in sexual harassment lawsuits, since the court’s threshold for defendant insureds to deny paying severance is confirmed to be much higher than the threshold to terminate for just cause.

Some in the P&C industry have questioned whether D&O insurance for sexual harassment should be available at all, since some would argue harassment is always done with intent, and is not an ‘accidental’ act.

In Render, Mark Render began working at his father’s elevator company in 1984, and was president of the company when it was sold to ThyssenKrupp Elevator in 2002. Under the new ownership, Render was made operations manager of the Mississauga office in 2005, and continued in that role until his employment was terminated in 2014.

Linda Vieira, Render’s co-worker, was an accounts manager in the Mississauga office. She did not report to Render.

According to court documents, there “was a very social atmosphere in the Mississauga office, including lunches and other events and regular joking and bantering….

“This atmosphere included inappropriate jokes. One of the men, Leo Daniel, made sexist and offensive comments to or about Ms. Vieira. The male workers would occasionally tap each other on the buttocks and say ‘good game,’ as if they were football players on the field or in the locker room.”

On Feb. 28, 2014, six people were in one of the employee offices around 2:00 p.m. The trial judge found Vieira made a remark about Render’s height, at which point Render got on his knees in front of her to crack a joke about being short.

“As he was getting up from his knees,” the Appeal Court wrote, “he made a sweeping gesture with his right hand, intending to tap Ms. Vieira on the hip and said, ‘get outta here.’ [Render told the court he intended to dismiss her so he could talk privately with another employee in the room.] However, he testified that he either lost his balance or she turned, with the result that his hand touched her buttocks. When that happened, he said, ‘good game.’”

Vieira objected to his gesture immediately, identifying it as sexual harassment. She reported it to a supervisor, and lodged a formal complaint with HR. The company had a ‘zero tolerance’ policy regarding sexual harassment, and Render was ultimately terminated with no severance.

A trial judge upheld his grounds for dismissal and the withholding of severance pay. But the Appeal Court ruled that, while termination on the basis of sexual harassment was correct, the trial judge erred in not requiring the employer to pay severance.

“In my view, [Render’s] conduct does not rise to the level of wilful misconduct required under the [Employment Standards Act to terminate severance],” Ontario Court for Appeal Justice Karyn Feldman wrote for a unanimous three-judge panel. “While the trial judge found that the touching was not accidental, he made no finding that the conduct was preplanned. Indeed, his findings with respect to the circumstances of the touching are consistent with the fact that [Render’s] conduct was done in the heat of the moment in reaction to a slight.

“Although his conduct warranted dismissal for cause, it was not the type of conduct in the circumstances in which it occurred that was intended by the legislature to deprive an employee of his statutory benefits.”

The court’s decision appears to emphasize pre-planned behaviour to qualify as wilful misconduct, as Willetts observes.

“This requirement creates a significant additional burden for employers in establishing that a dismissed employee committed wilful misconduct,” he writes. “In effect, it requires an employer to prove an individual’s mindset and their subjective prior intention to commit a wrongful act (thus being almost akin to special intent in criminal law).”

Feature photo courtesy of iStock.com/Pyrosky