Wrongful Dismissals

The November 20th , 1998, issue of Lawyers Weekly headlines read "42 months salary for wrongful firing."

An insurance company fired its office manager in early 1995, making allegations of forgery, insurance fraud, incompetence and drug abuse. This case had taken three years to be resolved.

The office manager sued for wrongful dismissal and the case went to court. The judge found in her favour and stated that the false allegations put the "sign of the leper" on the employee and made it impossible for her to find a new job in the insurance business "where fidelity and honesty are paramount". With the false allegations hanging over her head, she was able only to find work driving a catering truck to construction sites.

The mediator in me groans! I wonder why this happened? The litigation result may be fair, but the outcome is far from perfect. The reputation of the insurer as a reputable employer has been severely damaged. The reputation of the ex-office manager has been tarnished. The cost of litigation to both sides was, no doubt, substantial. The stress and anxiety experienced by the people involved, in part due to the negative publicity and public "interrogation" process through the courts, cannot be measured. This problem has been hanging over the heads of those involved for over 3 years and it may not be over yet! The lawyer for the insurance company has indicated that the case likely will be appealed.

Lawyers themselves did not come away from this incident unscathed. The judge chastised "the carelessness with which the defendant and their counsel were prepared to besmirch the otherwise good reputation" of the former employee.

How could this have been managed more effectively? The best solution to most disputes is one that the parties reach themselves in the privacy of their own offices. The reality is that this is not always possible. However there is help for those who want to resolve their disputes privately and fairly, yet cannot do it without outside assistance.

Most of us are familiar with the term "mediation". We see it more and more frequently in our newspapers, particularly with regard to labour disputes and strikes. Mediation is also an option for employee dismissal cases in non-unionized workplaces and many business people are beginning to recognize its effectiveness.

A mediator is selected who has the skills and experience to assist the parties to negotiate a settlement acceptable to both. The mediator may meet with the parties together or separately. Discussions are confidential and are "without prejudice", meaning they cannot be used later in court if a settlement doesn't result. This helps people to be honest and candid with less worry about legal strategizing or retaliation.

If the sides have reached a point where they are completely unwilling to negotiate a settlement, there is still the option of having matters decided in private by an impartial and knowledgeable individual. This is arbitration. Both sides agree that an arbitrator will hear both sides of the story, and review the evidence presented, and make a final and binding decision. When mediation or arbitration is used effectively, how might a different outcome result? Let us take a look at the case in question, recognizing, of course, that we don't know all the facts. If a mediator had been brought in when the employer had misgivings about the manager, misunderstandings and concerns could possibly have been identified and resolved, and the firing might never have taken place. The employer might have recognized reasons to give the manager another chance or she may have decided to seek another position where certain conditions or expectations were not present. Secondly, the whole matter could have been dealt with in private. The publicity and spectacle of a court case could have been avoided. The final agreement or decision might have included a confidentiality clause to protect both sides from being "bad mouthed", ensuring that professional reputations would be protected. Thirdly, the dispute could have been resolved long ago. Because the parties could have hired a mediator or arbitrator within a short period of time, the whole matter could have been resolved within weeks or months rather than years. Lastly, the parties could have saved both money and respect. The employer could have saved money if a smaller settlement had been reached with the ex-employee left in a position to find comparable employment. The employee could have received a satisfactory settlement and continued in the career path of her choice. Legal costs to both sides are far less when disputes are resolved quickly and are not drawn out through time-consuming procedural battles. The circumstances of a case may support decisions by both sides that litigation is the best route. Perhaps it is a priority for a dismissed employee to make her former employer publicly accountable. Perhaps an employer believes very strongly in their case against an employee and may want to set a precedent. However, it is important to recognize that both sides' hopes and objectives cannot be met in a win-lose adversarial system. Usually, even the winner in litigation loses something. Time, money, reputation, confidence, control. The benefits of choosing to resolve disputes through mediation or arbitration can be significant, and can be won by both sides.