A male manager sends G-strings to female staff through the inter-office mail as a Valentine's Day prank.

An employee keeps a television set sent by a supplier as a promotional gift after ordering a shipment of goods on behalf of his company.

And a respected staff member threatens to sabotage his computer and delete his key files when he receives a memo criticizing his work.

If you were the boss, could you fire these people for "just cause" and send them packing without a severance package?

Malcolm MacKillop

All three scenarios are examples of wrongful dismissal cases documented in Damage Control: An Employer's Guide to Just Cause Termination (Second Edition, Canada Law Book Inc.)

In all three cases, the employees were fired for just cause. But in subsequent legal challenges, the courts ruled in favour of the employee in each case.

"Employers have to know that the pendulum has swung way over in favour of the employee," says employment lawyer Malcolm MacKillop, a partner in Fraser Milner Casgrain's Toronto employment and labour group. "Even though they think they may have cause, a court may not. There is no sense (any more) that an employer can be 100-per-cent confident that they will have cause in any case."

MacKillop wrote the first edition of Damage Control seven years ago. Since then, the law of wrongful dismissal has changed significantly.

The book (in collaboration with James Knight and Kerry Williams) focuses on the Canadian employer's common- law right to terminate an employment contract or relationship for just cause. Just cause refers to the fact that if certain grounds exist, an employer has legal justification for dismissing the employee summarily.

The dozens of cases MacKillop cites help illustrate what an employer might do in trying to establish just cause in a particular case.

While it's intended as a guide and resource for fellow lawyers, human resources professionals and employers, I found it a fascinating read. The case studies are great fodder for water-cooler conversations.

MacKillop says one excellent example that highlights today's ambiguity surrounding just cause was an Ontario case, where a female accountant gave herself and a friend three consecutive unapproved raises. When the employer found out, the accountant was fired.

But when she took legal action, the judge concluded the employee had made an error in judgment.

"Nobody would have thought that was an unreasonable action for the employer to take," MacKillop says. "That to me is the best and clearest example of how difficult it is to assess a case."

The difficulty is the result of a seminal ruling - McKinley vs. BC Tel (2001) - where the courts adopted a new perspective on honesty, a critical workplace issue. It was revealed in court that the BC Tel employee had withheld important information from his employer involving his return to work following a health-related leave. The court still ruled in his favour.

"Prior to McKinley, the generally accepted view was that any type of dishonesty would be sufficient to substantiate dismissal for cause," MacKillop says. "There was an implied duty to be honest, period."

The McKinley decision means that an employer today can't say with any certainty what degree of honesty will constitute cause, he says.

Importantly, although McKinley was a dishonesty case, it now applies to every case of misconduct.

As a result, the courts now take a "contextual approach" where they examine the nature and seriousness of the misconduct, and examine each case in light of its own particular facts and circumstances.

MacKillop believes that while judicial thinking recognizes the right for an employer to terminate a worker, the courts are also asking if the employee should be penalized financially as well.

Unlike a unionized environment where the employer has to show cause or the person is entitled to have his or her job back, wrongful dismissals are all about compensation.

"I think the judiciary comes to the conclusion that the employer has already got what it wants," MacKillop says. "It got rid of the person. So the only question is money. I think a judge looks at fairness, that the person has a family and bills to pay, and so on."

MacKillop's book is filled with real-life workplace situations that raise important questions. How does an employer deal with employees who are careless, negligent in their duty, disobedient or who (after the fact) have been found to have lied during the interview process?

In each case, MacKillop cautions employers who too often assume that as long as they fairly conclude that there is cause, then it's OK to terminate the worker.

But if they get it wrong, employers can expect a time- consuming and costly process. Additionally, wrongful dismissal cases can undermine staff morale, create bad publicity and disrupt productivity.

"Sometimes there is good reason to terminate, but not cause," he says. "If you want to avoid the embarrassment of having to prove your case ... if you package the person you avoid all that, plus the legal costs."

MacKillop says defence costs alone - from the time an employee is terminated to the conclusion of a week-long trial - can easily amount to $150,000 to $200,000. Plus, the employer must pay the other side's costs if it loses.

MacKillop notes that a high-profile case in Toronto in 2004 involving the Rosedale Golf Club Association cost the club close to $1 million after it terminated its general manager six years earlier.

The employee had 12 years of service and made $130,000 a year, MacKillop says. The club could have offered him a year's salary to leave, which would have avoided litigation and significant media attention.

Instead, the employee sued for wrongful dismissal and won. The judgment, combined with legal costs for both sides, were much higher than a standard package would have cost.

MacKillop recommends that employers in every case should seek advice from their employment counsel and also seek advice from an outplacement firm, because how you terminate a person is also important.

In the Rosedale case, for example, the general manager was fired on a Friday afternoon. Meanwhile, across the hall from his office, a retirement party was being held for another employee with all the other employees in attendance.

"The judge mentioned that," MacKillop recalls.

He says that in a complicated and evolving world of employment law, it's prudent to look at each case from all angles.

Those who don't get advice before they "pull the trigger" can get into all kinds of problems they'd never imagined - even though their case seemed bullet-proof.

(Mike Dempster can be reached at miked@businessedge.ca)