Alleging cause against an employee is the most severe punishment an employer can impose. It means no severance, no reference and no Employment Insurance Benefits for the employee. Being accused of wrongdoing can have far reaching consequences for an employee. As a result, employers bear the burden of proving cause, which can be difficult and costly. The reality is that employers often choose to make a severance payment rather than alleging cause in order to avoid the hassle and costs of a lawsuit.  However, on occasion, an employer will take a chance and allege cause and win its case in court.

This was the case in a recent decision, Grossi Consulting Services Limited v. Premier Salons Ltd. (2014) ONSC 5028 where the Ontario Superior Court  found that an employer had cause to terminate an employee. Grossi, the principal and owner of a technology consulting company, entered into an agreement with Premier Salons to implement a new technology platform. From the start, the relationship between the parties was tense. Premier became concerned that Grossi could not meet the deliverables he was hired to complete. Despite these concerns, Premier worked with Grossi for another 18 months, and then terminated his employment.

Premier made a series of cause allegations against Grossi, including negligent misrepresentation, and accused him of not being able to meet his obligations under the agreement. Although Premier was unable to prove negligent misrepresentation at trial, it was able to show that Grossi had:

  1. Disclosed confidential information;
  2. Communicated that confidential information in a derogatory tone which was further evidence of disloyalty on the part of Grossi; and
  3. Taken unauthorized liberties with company property, including “borrowing” company computers and iPods for personal use rather than legitimate business needs.

The Court found that Grossi’s misconduct went beyond one isolated act, and concluded that the breaches of confidentiality, and the appropriation of Premier’s hardware, were grave offences which justified dismissal:

“The conduct can only be characterized as deliberate, with at least in the case of the hardware some pre-planning. Mr. Grossi was in a position of great responsibility, including the supervision of others, and such a demonstration of untrustworthiness renders him unsuitable for keeping such a position.  I conclude that there was a breach of trust that created an irreconcilable rift in the employment relationship”. 

Trust and loyalty were the key concepts which the Court seized upon in making its findings. The Court held that once it became known that Grossi had made negative comments about Premier and had disclosed company information, the appropriate remedy was termination for cause. Grossi was a senior employee with whom Premier had placed a great deal of responsibility. Once that trust was broken there was no going back. Of note is that even though Grossi had been hired as a consultant, the Court recognized him as an employee.

Careful employers must still exercise caution before making allegations of cause. Faced with a tough situation, employers are still required to consider a range of disciplinary actions before alleging cause.

What allowed Premier to succeed? In this case, Premier had hard evidence of Grossi’s wrongdoing, including emails which Grossi had sent. Premier was able to specify which equipment went missing and for how long. Premier did not engage in spiteful behavior or bring a flurry of specious allegations. The Court’s decision makes it clear how damaging it was to Premier for Grossi to have sent disloyal and negative emails. Though this was an unfortunate result for Grossi and his family, the case is a good example of the importance of trust and loyalty to the employment relationship. Trust and loyalty may not be fashionable these days, but in the Court’s eyes, Grossi had crossed the line and made it untenable for Premier to continue to trust him and maintain their employment relationship.