August 13, 2019

Issue Estoppel and Employer Participation in the Employment Insurance (“EI”) Process

Decision

In Huron Commodities Inc v Alexander, 2019 CanLII 11915 (CA LA), in the context of an unjust dismissal proceeding under the Canada Labour Code (the “Code”), an adjudicator held that an employer was prohibited from asserting dismissal for misconduct because the issue had already been decided by an EI officer.

The employee, a Procurement and Commodity Originator with six (6) years of service, had his employment terminated in January 2018 and was offered two (2) weeks’ pay in lieu of notice and ten (10) days’ pay as severance. He was also offered an additional two (2) weeks’ wages in exchange for a release. No reason for termination was provided in the termination letter or release. The employer completed a Record of Employment indicating “dismissal.”

The EI officer in the case obtained information from both the employer and employee. When contacted by the EI officer by telephone, the employer indicated the employee was let go for several reasons, including missing fuel and poor performance. The employer indicated that the missing fuel issue was never pursued and that the employee was just not performing to expectations. When pressed further, the employer said the employee just wasn’t a “good fit.”

The EI officer ultimately concluded that the employee had not engaged in any misconduct and, thus, was entitled to employment insurance benefits. The employer was informed, by way of letter, that it could make a request to the Commission for a reconsideration if it disagreed with the decision. The employer did not make a reconsideration request.

At the unjust dismissal hearing under the Code, the employee brought a motion for an order that the employer could not take the position that the employee had been terminated for misconduct. The adjudicator set out the 3-part test for issue estoppel and found that all three (3)  elements had been met: 1) the same question – whether there had been misconduct – had been decided, 2) the decision was a judicial decision and was final, as the officer had authority to decide on employment insurance benefits, determined the facts, and applied the relevant law to those facts, and 3) the parties were the same in both matters.

In exercising his discretion to apply issue estoppel, the adjudicator noted that the employer made no efforts to provide additional information to the Commission or to seek a reconsideration of the decision, that the Employment Insurance Commission has considerable experience and expertise in deciding whether a dismissal was for misconduct, and that the termination letter made no mention of misconduct. Considering all of the relevant circumstances, the adjudicator held that the employer could not rely on allegations of misconduct in the CLC proceeding.

Implications

The decision serves as an important warning to employers to carefully consider their participation in the Employment Insurance process, as any findings made by EI officers may be determinative in certain circumstances despite differing evidentiary standards and the low level of control employers exert in an EI adjudication. When an individual has been terminated for just cause and/or other proceedings may arise from a dismissal where the employer may wish to assert just cause, it is recommended that you seek legal advice prior to engaging in any interaction with an EI officer when contacted.

In some circumstances, it may be best for employers to make clear in writing to the EI officer that, on the advice of legal counsel, they are not a party to the EI process and are not participating in the EI process, and that they are not taking any position with regard to the employee’s entitlement to EI benefits. In this manner, employers should preserve the ability to put forward a full defence to any wrongful dismissal action or other proceeding that is subsequently brought forward.

LEGAL DISCLAIMER: This article is for informational purposes only and is not intended to provide legal advice, which in all circumstances must be tailored to the specific facts of any problem. You should obtain a proper legal consultation in order to determine how this article applies to your specific situation.
Please feel free to contact Israel Foulon LLP to learn more at 416-640-1550.

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