Not All Acts of Dishonesty Are Alike

National Post: June 16, 2010. All Rights Reserved.

Building a “cause” case isn’t about throwing mud against a wall and hoping enough will stick.

Too often, employers fail to take action against employees whom they have good reason to believe are dishonest. When they finally decide to fire them, concerned they don’t have definite proof, they instead rely on allegations.

The reality is costs of termination without cause can be considerable. Blanching at the expense, but not wishing to retain an untrustworthy or otherwise undesirable employee, employers often ask me to help make a case for cause.

Novice lawyers will frequently cobble together a “kitchen sink” approach: they foolishly allege a series of minor infractions that they may or may not be able to prove in the hopes of dissuading the employee from suing. This has disastrous consequences.

The courts will quickly see through the charade and punish the employer for devastating the employees reputation and creating an unnecessarily elongated trial, wasting the court’s time too, for purely tactical reasons. They have many ways of responding, an award of substantial legal costs, bad faith or even punitive damages.

A better honed approach entails a detailed analysis of the issues, and a nuanced presentation of your case.

Not every act of dishonesty or theft warrants capital punishment. Employees are not expected to be models of propriety and are provided latitude for errors in judgment.

For example, an employee who uses an employer’s equipment, time or stationery for personal purposes may be technically guilty of theft but it does not give rise to just cause. Dishonesty must strike at the heart of the employment relationship.

A recent example of this principle was Joseph Fewer’s action against Toromont Industries. The 22-year employee with an unblemished work record suddenly found himself under suspension based on anonymous allegations of violating the company’s code of conduct and running personal charges through his business account. Despite Fewer’s written defence to the allegations, Toromont terminated him for just cause.

Although the court found Fewer had violated the code of conduct and had incurred company expenses for personal items, the offences were not considered egregious enough to amount to cause.

The court considered his long service and otherwise stellar performance, in determining that, on balance, there was no legal cause. Fewer was awarded considerable damages.

This lesson should give employers pause in rushing to judgment about employees who may be dishonest. An experienced employment lawyer will undertake an analysis, not only of the evidence but of the broader context of the misconduct, by asking the following questions:

Is the offence isolated or recurring? If it was anomalous and not part of a pattern, it will be a factor in favour of the employee.

What is the position of the employee? If it is an executive or managerial one, a role model or a position whose function is to enforce those policies, a higher standard of conduct is required.

Have there been previous warnings or directives regarding the offences? An employer can more readily rely on company known rules which have been disseminated and signed by employees.

Have the policies been consistently enforced? Nothing undercuts a case more than evidence of a lack of uniformity or laxity in applying the rules.

What is the record and length of service of the employee? The longer the service and the more stellar the record, the harder it is to prove cause. Courts will weigh isolated, recent, unpremeditated anomalous acts against a lifetime of service.

How serious is the offence in relation to the employment relationship? This is often referred to as the test of proportionality. The misconduct must be so serious that the employer/employee bond is irreparably ruptured. For example, lying repeatedly during the course of an investigation into allegations of misconduct may meet this test since it compounds the misconduct and makes it impossible to trust the employee in the future.