In the recent Ontario Superior Court of Justice case of Reichard v. Kuntz Electroplating Inc., the Court held that an employer was justified in its decision to terminate an employee for cause after almost 24 years of service due to the non-disclosure of a workplace affair that violated company policy and resulted in a loss of trust in the employee.

Facts

The plaintiff, Bryan Reichard, worked for the defendant, Kuntz Electroplating Inc. (the Company), a family-owned and operated automotive metal finishing plant, for almost 24 years. During this period, Mr. Reichard rose through the ranks, as a seemingly exemplary employee, to become a purchasing coordinator and then a purchasing manager. From the period of 2003 to 2008, Mr. Reichard (who, the judge noted at the outset of the decision, was married at the time) began an affair with Ms. Thompson, an administrative assistant, who was not initially under Mr. Reichard’s direct supervision.

During the affair, the Company brought into force a written “non-fraternization” policy to ensure the workplace was free from, amongst other things, sexual harassment, particularly between managers and subordinates, as well as to guard against any perceived or real favouritism among employees. The policy imposed a duty on employees who occupy a position of power to report romantic relationships to the Company. Failure to report, the policy stated, could result in disciplinary action up to and including dismissal.

Even though Mr. Reichard knew about the non-fraternization policy and his duty to report his relationship with Ms. Thompson in accordance with the policy, Mr. Reichard chose to keep the relationship a secret. He continued to deny having any romantic relationship with Ms. Thompson, even after being asked directly several times by his supervisors about the existence of the affair.

In early 2008, Mr. Reichard confided in a fellow employee about his marital problems, including his relationship with Ms. Thompson. The employee eventually reported the matter to Mr. Reichard’s immediate superior, Robert Kuntz Jr., who then suspended Mr. Reichard pending further disciplinary action. Despite strict orders to stay off Company property until he was given further instruction, Mr. Reichard returned to the workplace on two occasions during his suspension. When the Company discovered that Mr. Reichard had violated the Company’s instructions by returning while suspended, he was terminated for cause.

The Company stated that its decision to terminate Mr. Reichard for cause was based on the Company’s loss of trust in Mr. Reichard resulting from Mr. Reichard’s repeated breach of Company policies. In addition to Mr. Reichard’s failure to disclose his relationship in violation of Company policy, there was other evidence that Mr. Reichard had acted contrary to Company policies on a number of occasions. For example, Mr. Reichard and Ms. Thompson took extended lunch hours and falsified an “emergency day” in order to attend a concert together. Mr. Reichard also provided “glowing” reports regarding Ms. Thompson that eventually lead to her transfer to a position under his direct supervision.

The Decision:

At trial, Mr. Reichard argued that the non-fraternization policy did not apply to him because the affair began two years before the policy came into effect. Sloan J., for the Court, outright rejected this argument and found that Mr. Reichard was aware of the policy and deliberately violated it.

Mr. Reichard also attempted to argue that, given his otherwise exemplary work performance and long-term employment at the Company, the discipline imposed on him should have been something less than dismissal. The Company disagreed, arguing that the dismissal was not based on the existence of the relationship alone; his dismissal was the consequence of Mr. Reichard’s “flagrant and continuous” breach of the Company’s non-fraternization policy by not reporting the relationship and lying about its existence on several occasions. Moreover, Mr. Kuntz and others took particular issue with the fact that Mr. Reichard deliberately violated orders by returning to the workplace during his suspension – in fact, Mr. Kuntz testified that until the Company learned that Mr. Reichard violated his orders not to return to the workplace, the Company was considering discipline short of dismissal.

The Court agreed with the Company that Mr. Reichard’s misconduct was “serious and prolonged” and that the Company “had every right to no longer trust” Mr. Reichard, especially given his managerial position, which called for “the utmost in trust and integrity.” Factors leading to this loss of trust cited by the Court, included Mr. Reichard’s failure to report the affair despite his duty to do so, his repeated denials of its existence to senior executives, his breach of lunch hour time limits, his favouritism towards Ms. Thompson and his breach of orders to stay away from the workplace. This loss of trust, the Court found, constituted just cause for termination and Mr. Reichard’s claim was dismissed with costs.

Our Views:

This decision provides a rare example of circumstances in which an employer was justified in terminating an employee for cause, particularly a long-service employee who had an otherwise exemplary track record. It is important to emphasize that the employee in this case was not terminated as a result of his workplace affair, but rather as result of his repeated and flagrant breaches of the Company’s policies and lying to his superiors (among a myriad of other bad behaviour described above). As the Court noted, romantic relationships between employees are not forbidden. In this case, it was the failure to disclose the relationship in violation of the non-fraternization policy and the prolonged breach of trust between the employer and the employee that gave the employer sufficient basis to terminate the employee for cause.