A recent appeal court decision reaffirmed that dishonest conduct may be just cause for termination. To determine if it is just cause, the conduct must be assessed looking at the whole context of the employment relationship.

In this case, Roe v. British Columbia Ferry Services Ltd. (PDF), the Court of Appeal found that the trial judge had improperly minimized the employee's dishonest conduct when he found that it did not amount to just cause. 

Background

BC Ferries Services Ltd. fired terminal manager Gregory Roe for cause. An investigation revealed that he had given approximately $200 worth of complimentary food and beverage vouchers to his daughter's sports teams, for use during trips on the ferry. Roe sued for wrongful dismissal. He argued that he did not knowingly breach BC Ferries' policy on granting vouchers. He said it was ambiguous.

As terminal manager, he was authorized under company policy to issue complimentary food and beverage vouchers to passengers who had been inconvenienced in some way.  But this required prior approval, which he had not obtained. 

BC Ferries argued that Mr. Roe's misconduct was dishonest. Roe had violated the "Code of Business Conduct and Ethics" which he had signed when hired. Also, his dishonest actions breached the requirements of good faith and trust that form the basis of any employment relationship..

Trial Decision

In its 2001 decision in McKinley v. BC Tel, the Supreme Court of Canada set out the test for determining whether an employee may be properly terminated for just cause on the grounds of dishonesty. It said that in order to establish just cause, the employer must first prove dishonest conduct; and it must then satisfy the court that the nature and degree of the dishonesty warrant dismissal. The context matters.

Here, the trial judge decided the case by assuming that the allegations were proven. Applying the McKinley test, the trial judge found that the alleged conduct, objectively viewed by a reasonable employer, was "bordering on trifling" or "relatively minor." It therefore did not rise to the level of undermining the obligations of good faith that are essential to the employment relationship. He ruled that the misconduct did not amount to just cause for dismissal. 

Appeal Decision

On appeal, the court observed that the assessment of misconduct under the McKinley approach is a "contextual approach." That involves an examination of the nature and circumstances around the misconduct. This includes a consideration of:

  • The nature and seriousness of the dishonesty
  • The circumstances in which the dishonest conduct occurred
  • The nature of the particular employment contract
  • The position of the employee.

The main consideration is whether the employee's misconduct was such "that the employment relationship could no longer viably subsist."

The Court of Appeal found that the trial judge failed to apply a contextual analysis to the facts. Consequently, he incorrectly minimized the misconduct. He should have looked at the trust attached to Mr. Roe's senior management position; his intentional disregard for the policy and the voucher procedures he was supposed to follow; and the evidence that Roe deliberately attempted to hide his actions.

The appeal court ruled that the trial judge was wrong in finding that BC Ferries did not have just cause to dismiss. But, since the trial judge's findings of fact were assumed and not actually determined on the evidence, the appeal court was unable to substitute its own finding of just cause. As a result, it ordered a new trial.

Takeaway for employers:

This case reaffirms that the assessment of just cause is not "one size fits all." What may be a "trifling" breach of policy for one employee may be conduct that goes to the heart of the employment relationship for another. The reverse is also true. 

Ascertaining whether an employee's conduct amounts to just cause must be done on a case by case basis. One must consider not only the conduct itself, but the particular employee's circumstances, position, responsibilities, and any other relevant matters.