Dishonesty terminations - An analysis of non-union and union considerations in Canada - FINAL 6

Dishonesty terminations: An analysis of non-union and union considerations in Canada

Labour Law – Business 9329

Memorial University

St. John’s NL, Canada A1B 3X5

Student Number:

009902685

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Table of Contents Abstract / introduction .................................................................................................................................1 Overview of Canadian legislation................................................................................................................1 “Dishonesty” and “Just Cause” in the legislation ............................................................................................ 2 Newfoundland.............................................................................................................................................. 2

“Dishonesty” and “Termination” in the legislation ......................................................................................... 2 Quebec ......................................................................................................................................................... 2 Alberta.......................................................................................................................................................... 3

“Discharge” and “Cause” and “Labour Act” in the legislation ....................................................................... 3 Newfoundland.............................................................................................................................................. 3

Overview of Canadian jurisprudence and literature ....................................................................................4 What is dishonesty ........................................................................................................................................... 5 Test requirements for dishonesty terminations ................................................................................................ 6 Non-union considerations ............................................................................................................................ 6 Union considerations ................................................................................................................................... 9

Further consideration and discussion............................................................................................................. 12 Considering post-discharge evidence ........................................................................................................ 12 Warning employees about requirements surrounding honesty.................................................................. 13 Breach of policy or procedure.................................................................................................................... 14 Employer ‘Best Practices’ in dishonesty terminations .............................................................................. 15

Conclusion .................................................................................................................................................16 Citations .....................................................................................................................................................17

Dishonesty terminations: An analysis of non-union and union considerations in Canada 1

Abstract / introduction This paper examines Canadian jurisprudence and select legislation relating to dishonesty terminations,

with particular focus on cases and decisions involving employees who allegedly acted deceitfully, or

committed a breach of trust or fraud against their employer. Traditionally in Canada, disputes arising from

non-unionized employee terminations have been settled using litigation through a court of justice, while

disputes arising from unionized employee terminations have been settled using alternate dispute resolution

processes, such as arbitration through a sole arbitrator, board, or tribunal. It is on this premise that an analysis

of union and non-union considerations is undertaken. This paper is primarily concerned with the comparable

tests, procedures and processes judges and arbitrators consider in determining whether a dishonesty

termination is appropriate; rather than the actual remedies available should a dishonesty termination be found

inappropriate.

Overview of Canadian legislation The electronic database used to explore current Canadian legislation was CanLII. The database was

searched using syntax and precise key phrases associated with the title of the paper, to assist in capturing

relevant legislation from Canadian jurisdictions. Specifically, statutes pertaining to labour and industrial

relations were reviewed. Legislation pertaining to human rights and discrimination were intentionally

excluded to maintain an appropriate scope in consideration of resources and limitations. Results should not be

viewed as an all-inclusive list, but as a brief overview of what was available. Given the breadth and depth of

statutes and regulations in Canada, combined with the copious cases of law, any broader focus was not

plausible.

Each key phrase, with applicable syntax used, can be found listed in a heading below, with sub-

headings used to outlay results found by locale or jurisdiction. If a locale is not listed, it is because the

applicable key phrase did not yield relevant results, or similar legislation from another locale may have

already been analyzed.


“Dishonesty” and “Just Cause” in the legislation

Newfoundland

Based on section 6 of the Newfoundland Public Employees Act, the Lieutenant Governor in Council, has

without prejudice power to terminate a public employee from duty for dishonesty or other just cause.

Additionally, under section 3, the Lieutenant Governor may, if in his or her opinion it is in the public interest to

do, can order any person employed by a board, commission or body, which is an agency or arm of the Crown, to

be considered a public employee. This language, given the appropriate cases, could be quite significant in

determining any number of decisions, whereas courts must act within the confines and bounds of written law.

Hypothetically, a publically funded health or school board, whose employees may not normally fall within the

definition of public employees (as set out in section 2 of the Newfoundland Public Employees Act), could be

ordered to be recognized as such at any time giving the Lieutenant Governor the without prejudice power to

terminate them as per the language.

“Dishonesty” and “Termination” in the legislation

Quebec

Section 329 of the Civil Code of Quebec finds that the court, on appropriate grounds may “prohibit a

person from holding office as a director of a legal person if the person has been found guilty of an indictable

offence involving fraud or dishonesty in a matter related to legal persons, or who has repeatedly violated the

Acts relating to legal persons or failed to fulfil his obligations as a director”. Although most terminations for

dishonesty may not be to the level of an indictable offence, some may. Therefore, in the appropriate context

such legislation may be found relevant. Beyond the province of Quebec, many jurisdictions have similar

language in various acts pertaining to positions of public trust (e.g. public officers, chiefs, councillors, elected

officials, etc.). Within the appropriate context, such legislation may be found relevant surrounding events of

dishonesty termination, or relating to those who were previously terminated for such (see Corporation of the

Township of Howick (Re), 1996 for such an example).


Alberta

Section 480 of the Alberta Insurance Act, gives the minister the power “to revoke, suspend or refuse to

reinstate or renew one or more of the certificates of authority held by the holder, impose terms and conditions

provided for in the regulations on one or more of the certificates of authority held by the holder and impose a

penalty on the holder or former holder” where it is found that they have been guilty of misrepresentation,

fraud, deceit, untrustworthiness or dishonesty. What is unclear is whether one terminated for dishonesty

would reach the threshold of guilt required within this act. If so, then in the appropriate context, such

legislation may be found relevant. Beyond the province of Alberta, many jurisdictions have similar language

in various acts pertaining to positions of trust or to particular industries and services (e.g. barristers and

solicitors, collection agencies, direct sellers, financial services, funeral services, life insurance agents, public

nurses, security services, etc.). Within the appropriate context, such legislation may be found relevant

surrounding events of dishonesty termination, or relating to those who were previously terminated for such

(see P.D. Ltd v. Ford, 1996 and D.P. v. P.B., 2011 for such examples).

“Discharge” and “Cause” and “Labour Act” in the legislation

Newfoundland

Section 27 of the Newfoundland Labour Relations Act states “Except as otherwise expressly provided,

nothing in this Act affects the right of an employer to suspend, transfer, lay off or discharge an employee for

proper and sufficient cause.” Therefore, where a unionized employer is found to have cause, they are within

their right to suspend or terminate an employee for dishonesty - assuming they have not breached any other

article of the act (e.g. section 25) and have complied with all other applicable legislation. This paper

examines when it is appropriate to go beyond suspension - to termination - and seeks to provide a comparative

analysis of non-union and union considerations in this regard. Of further consideration in the Newfoundland

Labour Relations Act is section 88 (2), which finds should a unionized employer terminate an employee for

just cause, surrounding an act of dishonesty, unless the penalty is explicitly found in the collective agreement,

an arbitration board may decide to substitute the termination for another penalty it finds to be just and


reasonable. As discussed later in this paper, such language can have implications on employers and

employees within a unionized environment.

Also relevant are sections 52 through 55 of the Newfoundland Labour Standards Act, which applies to

any employer – unionized, or not. Section 52 states, “An employer or employee shall not terminate a contract

of service unless written notice of termination is given by or on behalf of the employer or employee within the

period required by section 55.” However, exclusions to the above are noted in sections 53 and 54. Of

particular relevance is section 53 (a), which finds where:

the employee has wilfully refused to obey a lawful instruction of the employer, or has committed misconduct or been so neglectful of duty that the interest of the employer is adversely affected, or has otherwise been in breach of a material condition of the contract of service that in the opinion of the director or the Labour Relations Board considering and deciding a complaint made under this Act warrants summary dismissal.

Similar to the language found in the Newfoundland Labour Relations Act and the Newfoundland Labour

Standards Act, other jurisdictions throughout Canada have similar language within their own legislated acts.

Such legislation, within the appropriate context, will typically be found relevant surrounding events of

dishonesty termination in a non-unionized or unionized environment (see R.W. Tomlinson Ltd. v. Blair, 2003

for such an example).

Overview of Canadian jurisprudence and literature The electronic databases used to explore Canadian jurisprudence were CanLII and Labour Spectrum.

The databases were searched by key words, phrases and catchline term(s) associated with the title of this

paper. Based on the results, cases, and some of the cases referenced within them, were manually reviewed by

the researcher to determine if they pertained. Where they did, and they offered what was perceived to be

beneficial insights and / or considerations, they were discussed and cited within this paper. Historical cases,

especially those found to be frequently cited by relevant cases, were discussed to identify traditional

principles, tests and procedures, while recent cases were discussed to demonstrate how Canadian

jurisprudence may have evolved, and to identify modern day considerations within a non-unionized and / or

unionized context. Cases pertaining to human rights and / or discrimination were intentionally excluded from


this paper to maintain an appropriate scope in consideration of resources and limitations. Where research

literature was limited, or where alternative context was desired, online databases, search engines and tools

may have been used to locate literature and / or documentation from professionals and practitioners.

What is dishonesty

In R. v. Rodney (2007), the Ontario Superior Court of Justice found, “Theroux established that what is

a lie, deceitful act or other fraudulent means is determined objectively, by reference to what a reasonable

person would consider to be a dishonest act” (para 44). The case states that one’s belief of what is right or

wrong, or one’s interpretation of whether one will be hurt in the end, affords no defence to such acts despite

individual beliefs, moral judgements or internal justifications (R. v. Rodney, 2007 and R. v. Théroux, 1993).

While this may be so, some appellate courts have also found that one must at least show an accused had intent

to “deceive, lie or commit some other fraudulent act knowing that such conduct could cause deprivation” (R.

v. Rodney, 2007, para 47); as was previously affirmed by the Supreme Court of Canada in R. v. Parise (1996).

Although on the surface the sentences above may appear somewhat at odds, they need not be.

Clarification is offered by the Supreme Court of Canada in R. v. Zlatic (1993):

[It] is important to distinguish between a belief in the honesty of one's actions and an honest belief in facts which would make the actus reus non-culpable. Where a person uses his own funds in a way which jeopardizes his ability to repay his creditors, the conduct can only be stigmatized as dishonest if he does so knowingly (R. v. Zlatic, 1993, p. 4).

In consideration of the arguments above, it could be said that an individual may be found to have lied,

deceived, or committed some other fraudulent act, so long as a reasonable person could determine objectively

whether a dishonest act has occurred (e.g. an employee who blatantly lies to their reporting supervisor about

being sick, and is later discovered to be vacationing outside of the province). Where a reasonable person

could not determine whether a dishonest act had occurred, it may then be valuable to examine whether an

individual had intent to act dishonestly or fraudulently, knowing such conduct could cause deprivation (e.g. as

per the example offered in the case R. v. Zlatic). In Telecommunications Workers Union v Telus

Communications Inc (2007) the union offered a definition for consideration from the Dictionary of Canadian


English finding, “fraud as 1. deceit; cheating; dishonesty; any attempt to deceive is considered as fraud. 2. A

dishonest act, statement etc; something done to deceive or cheat; trick” (p. 9). Similar, language surrounding

‘bad faith’ has been examined and offered by arbitrators as being, “conduct motivated by hostility, malice, ill-

will, dishonesty, or improper motivation” and / or “dishonesty of belief or purpose” which may include a

“wilful rendering of imperfect performance” acknowledging that a complete catalogue of actions surrounding

bad faith is impossible (Bruce v. Ontario Secondary School Teachers Federation, District 9, 2006, para 11 and

Dhaliwal v. Canada (Treasury Board), 2004, para 82).

Test requirements for dishonesty terminations

Non-union considerations

In McPhillips v. British Columbia Ferry Service (1994) it was found that dishonesty was always cause for

termination because it was “a breach of the condition of faithful service” (para 43). However, in 1995 the

Supreme Court of British Columbia disagreed with this line of thought, finding that a fundamental breach to the

employment contract was first required to justify termination (Petit v. Insurance Corp. of British Columbia).

I find the applicable law does not require me to consider the plaintiff's conduct in isolation at a given point in time, but rather to consider whether the plaintiff's actions, taken in their entirety and in context, constitute a fundamental breach of the contract of employment (para 54).

Further consideration was given in Lau v. Geo-X Systems Ltd. (1998), when the trial judge found a plaintiff’s

conduct was “closer akin to a serious mistake of judgement than to a classic act of dishonest. It was

considered significant the plaintiff attempted to retract his dishonesty and that the employer had not relied on

that dishonesty to its detriment” (para 55). It could be surmised that single lapses of judgement, or errs, may

not be sufficient to justify just cause termination for dishonesty or a breach of trust. Instead, one’s actions

would need to be looked at in their entirety, within an appropriate context, to determine if a fundamental

breach of the employment contract has occurred. Similar arguments have recently been referred to by

defendants before various arbitrators, boards and tribunals, suggesting there is still broad belief such

principles deserve consideration (R.W. Tomlinson Ltd. v. Blair, 2003, para 12; Sabin's Hair Fashions Ltd. v.


Baker, 2006, para 11; FBG Enterprises Inc. (Herbal Magic Systems of Hamilton) v. Devlin, 2008, para 11 and

Gosse v. Atlantic Wholesalers Limited, 2011, para 125).

Additionally, it appears important to consider that when an employee admits to dishonesty or a breach

of trust, the courts often look upon this in a favourable light and consider it as a mitigating factor within their

decision, as was found in Petit v. Insurance Corp. of British Columbia (1995, para 59). Similarly, arbitrators,

boards and tribunals have been shown to consider such factors (Alberta v. A.U.P.E., Local 12 (Young), 2011,

p. 307; Emond Harnden LLP., 2007; Ontario Power Generation Inc. v. Power Workers' Union (Heard), 2011,

para 71 and Zehrs Markets v. United Food and Commercial Workers Union, Local 1977, 2010). In

Overwaitea Food Group v. United Food and Commercial Workers, Local 1518 (2011, para 63), the arbitrator

quoted arbitrator Hope in Canada Safeway Ltd. and United Food & Commercial Workers, Local 2000 stating,

“arbitrators will consider the presence of such mitigating factors as whether the grievor has apologized, shown

response, or admitted wrongdoing, and whether the grievor has a clean disciplinary record” (2011, para 79-

82). More recently, further support to this argument was given in Kidd v. Hudson’s Bay Company (2003,

para 26), where an employee openly admitted to a wrongdoing to his employer in an alleged theft valued at

$29. In this case, due in part to such admittance, the judge ruled the employer’s termination of the employee

was excessive. Thus, in some cases, it may be advisable for an employee to admit to such err; failure to do so

may result in just cause termination (Board of Education of School District No. 79 v. Canadian Union of

Public Employees, Local 606, 2011, para 92). Similarly, it may be advisable for an employer to give an

employee several occasions to admit to such wrongdoing. It may be argued that where an employee chooses

to retract their dishonesty - where given the opportunity - this may help to limit the deterioration of the

employment relationship. Alternatively, should an employee choose not to retract their dishonesty, especially

where given the opportunity, it may be used by the employer as further evidence that a fundamental,

irreconcilable breach of the employment contract has occurred - which may better support a just cause

termination (Di Vito v. MacDonald Dettwiler & Associates Ltd., 1996 and Lancaster House, 2008, p. 40).


If any confusion was to exist surrounding the two alternate lines of thought introduced above (e.g. is

dishonesty always cause for termination, or not), they were clarified in McKinley v. B.C. Tel et. al. (2001)

when the Supreme Court of Canada ruled that just cause termination, associated with dishonesty, was only

justified where the degree of dishonesty was incompatible with the employment relationship (Kidd v.

Hudson’s Bay Company, 2003, para 22). Anything less than this was found to be insufficient cause for

termination without reasonable notice. Hence, the test for just cause termination associated with dishonesty

within a non-unionized environment - based on consideration of the aforementioned cases - could be stated as

any breach of the employment contract, where the degree of dishonesty was incompatible with the

continuation of the employment relationship. In McKinley v. B.C. Tel et. al. (2001), Justice Iacobucchi stated

“the test is whether the employee’s dishonesty gave rise to a breakdown in the employment relationship […]

just cause for dismissal exists where the dishonesty violates an essential condition of the employment

contract, breaches the faith inherent to the work relationship, or is fundamentally or directly inconsistent with

the employee’s obligations to his or her employer” (para 48) [emphasis added]. This test, and more

specifically the process surrounding it, were further elaborated upon in Christensen v. McDougall (2001, p. 3)

and Dowling v. Ontario (Workplace Safety and Insurance Board) (2004). Additionally, in Kidd v. Hudson’s

Bay Company (2003) Justice Brennan offered a two-part process for consideration:

Dishonesty is not necessarily grounds for dismissal. In a case such as this one I take that authority to require that I engage in a two-part process. First the fact of wrongdoing […] must be established, on particularly cogent evidence, to the balance of probabilities. That done, the act must be found to render impossible the continuation of the employment relationship (para 23).

In McKinley v. B.C. Tel et. al. the Supreme Court of Canada called for an analytical, case-by-case

approach that proportionally matched the level of dishonesty to an appropriate level of discipline, which may

or may not be termination. The aforementioned alternate lines of thought were also directly addressed by the

Supreme Court of Canada. They suggested that those cases stating dishonest conduct was always cause for

termination, upon closer inspection, could still fit within the analytical, case-by-case approach referenced

above. It was noted that judgements in such cases frequently involved dishonesty that could be described as


symptomatic and serious in nature; with most cases involving allegations that an employee had intentionally

planned to profit, or gain benefit to which they were not entitled. If such cases were weighed within an

analytical, case-by-case framework, which proportionally matched the level of dishonesty to discipline, it is

likely the outcomes still would have resulted in termination. Whereas the “conduct was frequently

tantamount to a serious form of fraud, and explicitly characterized by the courts as such… Where theft,

misappropriation or serious fraud is found, the decisions considered here establish that cause for termination

exists” (McKinley v. B.C. Tel et. al., 2001, para 50-51). Of especial note is that in cases involving termination

for dishonesty, the onus lies with the employer to show just cause (Brien v. Niagara Motors Limited, 2008;

Tong v. Home Depot of Canada Inc., 2004; and Lambe v. Irving Oil Ltd., 2002).

The burden of proving just cause lies on the employer, and where dishonesty or fraud is alleged the standard, although not nearly as high as the criminal standard of beyond a reasonable doubt, is somewhat higher than the usual civil standard, in the sense that the evidence offered to sustain a charge of dishonesty or fraud must be considered having regard to the gravity of the consequences of proof of such an allegation (Nagy v. Metropolitan Toronto Convention Centre Corp., 1998).

The case McKinley v. B.C. Tel et. al represents an important, select decision that is relevant not only

to Canadian courts, but also to boards and tribunals (Christensen v. McDougall, 2001, para 42 and Emond

Harnden LLP., 2007, p. 10). A search of the CanLII electronic database showed it was subsequently cited in

over 299 decisions, with a respective 210 citations coming from the courts, and 89 from arbitrators, boards

and tribunals. The case of McKinley v B.C. Tel et. al. was also unique, in the sense that it represented one of

the few examples cited where the Supreme Court of Canada may have borrowed from arbitral decisions

(Doorey’s Workplace Law Blog, 2010; Morgan Cooper, personal communication, February 21, 2012).

Union considerations

In Telecommunications Workers Union (T.W.U.) v Telus Communications Inc (2007) the T.W.U.

argued arbitrators must heed the Supreme Court of Canada decision in McKinley v. BC Tel (2001).

Additionally, Overwaitea Food Group v. United Food and Commercial Workers, Local 1518 (2011, para 63)

added that in cases relating to theft or dishonesty:


…the actual value of the goods stolen [or damage done] is not especially relevant. Third, dismissal is no longer to be considered as the automatic response to a detection of theft [or dishonesty]. The question is in each case whether the employment relationship can be restored. Fourth, where the grievor is confronted and is untruthful in denying the offence that is an exacerbating factor to be

considered. Beyond that, each case must be decided on its own facts [emphasis added].

Whether a person is in a “position of trust” or held to a “high standard of conduct” is often an additional

consideration of arbitrators, boards and tribunals (Bilfinger Berger (Canada) Inc. v. Construction and

Specialized Workers' Union, 2005 and Alberta v. A.U.P.E., Local 12 (Young), 2011). Such employees are

generally held to a higher standard in terms of expectations surrounding trust and honesty. Thus, the

threshold for a breakdown in the employment relationship can be argued to be much lower for such

individuals (Board of Education of School District No. 79 v. Canadian Union of Public Employees, Local

606, 2011, para 92). In T.W.U. v Telus Communications Inc. (2007), the union suggested, “We must look at

the context of the misconduct within the employment relationship to determine whether there was a

breakdown such that the only alternative was dismissal” (p. 9) (emphasis added). Counsel for the union

argued that dismissal in their case went too far and that an appropriate, available response would have been

progressive discipline. On the point of progressive discipline, T.W.U. v Telus Communications Inc. (pp. 9-

10) provides a valuable quote from Arbitrator Hope in Canada Safeway v. UFCW:

“...acts of gross misconduct where it is fair to presume that the grievor would know that the conduct was unacceptable. In such cases the usual rationale of progressive discipline is absent. That is it, cannot be assumed that a pattern of progressive discipline is needed to bring home to an employee that gross acts of misconduct, such as theft, assault, sabotage, could lead to dismissal. All employees will be presumed to know such conduct is unacceptable and will invite dismissal.”

In Ineos Nova Ltd. v C.E.P., Local 914 (Vandescheur), (2010) offences associated with dishonesty, including

sick leave fraud, were found to “strike at the heart of the trust in the employment relationship and have

traditionally been viewed by arbitrators as constituting very serious misconduct” (p. 251). In cases of serious

misconduct – including dishonesty – it has been found appropriate for an employer to terminate an employee,

even where progressive discipline may have been an available response. Just because a response is available

does not mean it is the only response available, or the most appropriate (Kingston (City) v. C.U.P.E., Local

109 (McLaughlin), 2010, p. 441). Traditionally, the term progressive discipline primarily concerned


employers operating within a unionized environment; however, in cases such as Brien v. Niagara Motors

Limited (2008) it appears there may be convergence in considerations taken by courts, and arbitrators, boards

and tribunals. In this case, the judge found the employer to be “playing hardball” and “engaged in bad faith

conduct” in part for its refusal to recognize progressive discipline as an option in maintaining the employment

relationship of one of its non-unionized employees (para 439 – 440).

In T.W.U. v Telus Communications (2007), Arbitrator McFetridge found that an act of dishonesty that

is a deliberate breach of trust undermines the foundation of the employment relationship. Arbitrator

McFetridge went on to quote from a decision in Greater Toronto Airport Authority and P.S.A.C. (n.d.) which

concluded there was “ample support in the arbitral jurisprudence for treating dishonesty or untrustworthiness

in an employee as constituting, in and of itself, grounds for discharge” (pp. 15-16). However, in cases with

mitigating circumstance, it appears some arbitrators have been found to substitute a lesser penalty for cases

involving dishonesty. Based on recent arbitration decisions, principles for consideration include the following

(Canada Safeway Ltd. v. U.F.C.W., Local 1518 (Arthur) 2011; T.W.U. v Telus Communications, 2007, p. 16

and Gosse v. Atlantic Wholesalers Limited, 2011, para 129-130):

1. bona fide confusion or mistake by the grievor as to whether he was entitled to do the act complained of;

2. the grievor’s inability, due to drunkenness or emotional problems, to appreciate the wrongfulness of his act;

3. the impulsive or non-premeditated nature of the act; 4. the relative trivial nature of the harm done; 5. the frank acknowledgment of his misconduct by the grievor; 6. the existence of a sympathetic, personal motive for dishonesty, such as family need

rather than hardened criminality; 7. the past record of the grievor; 8. the grievor’s future prospects for likely good behavior, and 9. the economic impact of discharge in view of the grievor’s age, personal

circumstances, etc.

According to Emond Harnden LLP., (2007), “The more serious the dishonest conduct, the more substantial

the mitigating factors have to be to warrant the substitution of a lesser penalty than dismissal.”


In relation, I would recommend careful consideration be given to language found within applicable

collective agreements, where some arbitrators may overextend their reach in substituting a lesser penalty in some

cases or jurisdictions (Ineos Nova Ltd. v C.E.P., Local 914 (Vandescheur), 2010, p. 251; Kingston (City) v.

C.U.P.E., Local 109 (McLaughlin), 2010 and Region of Peel v. Canadian Union Of Public Employees, Local

966, 2011, pp. 5-6). For example, in section 88 (2) of the Newfoundland Labour Relations Act it states where

a unionized employer terminates an employee for just cause - such as dishonesty - unless the penalty is

explicitly found in the collective agreement, an arbitration board may substitute the termination for another

penalty it finds patently just and reasonable. Thus, it may be advisable for unionized employers to attempt to

negotiate explicit language surrounding such penalties within their collective agreements. This would assist

in limiting, or even completely preventing arbitrators, boards and tribunals from substituting terminations with

lesser penalties, regardless of mitigating factors. Further related considerations and discussions are elaborated

upon in the next section of this paper.

Further consideration and discussion

Considering post-discharge evidence

In Cie minière Québec Cartier v. Quebec (1995), the Supreme Court of Canada ruling arguably limited

the use of post-discharge evidence for just cause terminations. The Supreme Court stated an arbitrator should

be able to decide if, and when an employer had sufficient cause to terminate an employee; and that events

subsequent to such should only be considered if they are relevant in determining whether there was initial,

sufficient cause for termination. It was found in this particular case the grievance arbitrator exceeded his

jurisdiction by permitting the use of post-discharge evidence. I would argue that this does not mean the use of

all post-discharge evidence is prohibited; however, when it may be used is restricted. Since the Supreme

Court ruling above, there have been many cases where arbitrators have pondered the usage of post-discharge

evidence. One such case, Fraser Lake Sawmills Ltd. v. Industrial Wood and Allied Workers of Canada (2000,

para 6), offered further clarification when it found “events which transpire after the dismissal has occurred”


are prohibited, while “evidence developed subsequent to the dismissal but which addresses relevant facts or

circumstances existing prior to or concurrent with the dismissal” are permitted (Clarke, 2011, p. 10).

In the court case Lambe v. Irving Oil Ltd. (2002), it was decided that post-discharge evidence would

not be permitted in regard to an alleged just cause termination associated with dishonesty. The judge stated,

“had [this matter] come to light earlier and was investigated, it could well have given Irving grounds for

dismissal for just cause. However, in this case there never was an investigation and because there was no

element of dishonesty and there was a manner of openness with the operation, it would be unreasonable to

allow Irving to now use this ground as justification for dismissal, even though Irving never became aware of

this until after termination” (para 121).

The consideration of post-discharge evidence remains a contentious issue and according to Health

Sciences Association of Alberta v Alberta Health Services (2010), “there has been a lively debate in the

labour arbitration community and in the courts about whether post-discharge events can or should be

considered in assessing the reasonableness of a discharge” (para 86). Canadian jurisprudence in this area

continues to evolve; thus, it is recommended that stakeholders and researchers continue to monitor

considerations surrounding post-discharge evidence in relation to just cause terminations – such as dishonesty

termination (Clarke, 2011, p. 11).

Warning employees about requirements surrounding honesty

In Riehl v. Westfair Foods Ltd., it was found “where the conduct of the employee is grossly deficient

and the likelihood of discharge should be obvious to the employee, warnings and reasonable notice likewise

are not required: Goldberg v. Natural Footwear Ltd. (1986), 2 A.C.W.S. (3d) 130 (Ont. D.C.); Fonceca v.

McDonnell Douglas Canada Ltd. (1983), 1 C.C.E.L. 51 (H.C.J.)” (1995, p. 6). As discussed previously, in

McKinley v. B.C. Tel et. al., the Supreme Court of Canada called for an analytical, case-by-case approach that

proportionally matched the level of dishonesty to an appropriate level of discipline, which may or may not be

termination. However, in cases where discipline in the form of termination was immediately warranted, and


the likelihood of discharge ought to have been obvious to the employee, warnings and reasonable notice are

not required. Alternatively, in cases where a lesser discipline was warranted and / or the likelihood of

discharge was unclear, warning and reasonable notice must be given consideration (Brien v. Niagara Motors

Limited, 2008, para 439). Although in the latter example, immediate termination for dishonesty or breach of

trust may not be forthcoming, the employer may be able to build a case for cumulative cause for dismissal

based on misconduct (Henson v. Champion Feed Services Ltd., 2005, para 51). According to Lowery v.

Calgary (City of) (2002, para 3) where an employer wishes to allege cumulative cause for dismissal it must

prove:

1. The employee was given express and clear warnings about his performance. 2. The employee was given a reasonable opportunity to improve his performance

after the warning was issued. 3. Notwithstanding the foregoing, the employee failed to improve his performance. 4. The cumulative failings “would prejudice the proper conduct of the employer’s

business”. Similarly, where it can be shown an employee has breached an employer policy or procedure, and they have

previously been warned, discipline up to and including termination may be acceptable.

Breach of policy or procedure

As previously stated, when the degree of dishonesty is incompatible with the continuation of an

employment relationship, just cause for dismissal will be found. Likewise, case law from courts, and

arbitrators, boards and tribunals supports just cause termination for breaches of employer policy and

procedure where it is found a particular checklist has been met (Transcontinental, St. John’s, NL v. C.E.P.,

Local 441-G, 2009; Lambe v. Irving Oil Ltd., 2002 and Alberta v. A.U.P.E., Local 12 (Young), 2011). Such

breaches may include those relating to requirements of truth and honesty - amoungst others. Lambe v. Irving

Oil Ltd., (2002, para 94) identifies when it is appropriate to consider termination in such cases. In particular,

it references the textbook, The Law of Dismissal in Canada by Harold A. Levitt 1985 Canada Law Book.

The case states case law is quite clear in establishing when a breach of company policy or procedure (e.g. a

breach of a rule) constitutes cause for discharge. The requirements are: the rule must be distributed; the rule


must be known by the employees; the rule must be consistently enforced by the company; the employee must

be warned that they will be terminated if a rule is breached; the rule must be reasonable; the implications of

breaking the rule in question are sufficiently serious to justify termination; and whether a reasonable excuse

exists. Where such a checklist has been met by an employer, there would appear to be great support for just

cause termination. Completing such a checklist, prior to terminating an employee, would be considered by

many to be an obvious best practice. However, some employers forego such practices – presumably due to a

lack of resources, experience or knowledge. In the next section, I wish to acknowledge alternative best

practices employers may wish to consider.

Employer ‘Best Practices’ in dishonesty terminations

From an employer perspective, it is always advisable to ensure your business is following ‘best

practices’. Additionally, best practices are especially important when an employer is considering terminating

an employee for just cause. Much is at stake surrounding a just cause termination. There is considerable

liability, not only in terms of direct financial costs, but also in terms of reputation, business control and

precedent setting (especially in a unionized environment).

Based on literature from practitioners, and decisions from courts, and arbitrators, boards and tribunals

- as discussed throughout this paper - it is less likely that an employer’s just cause termination argument will

be rejected where the employer has: warned employees that their jobs are in jeopardy, and / or given them

reasonable opportunity to correct deficiencies prior to termination; prior to termination, interviewed all

relevant witnesses, regardless of whether such evidence would be found favourable to allegations of cause;

permitted the employee to respond to all allegations of misconduct, and in the case of dishonesty or breach of

trust, provided them with several opportunities to admit to any wrongdoing; ensured proper practices, policies

and procedures were followed; conducted prompt and thorough investigations; ensured employees had

reviewed all pertinent policies and procedures (advisable to ensure all new or revised policies are signed with

pertinent sections initialled); relied upon conclusive, non-circumstantial evidence in determining if


termination was warranted (Lancaster, Brooks & Welch L.L.P., n.d.; Canada Safeway Ltd. v. U.F.C.W., Local

1518 (Arthur) 2011; Tong v. Home Depot of Canada Inc., 2004 and Zehrs Markets v. United Food and

Commercial Workers Union, Local 1977, 2010). An employer who uses these best practices will be much

more likely to succeed in making a just cause termination, while at the same time minimizing their risk and

liability.

Conclusion From time-to-time, many employers, employees and other stakeholders struggle to balance and

interpret what is appropriate within the employment relationship. This is especially true surrounding just

cause terminations - such as termination for dishonesty. Although, scholarly research literature may be

limited on this subject, an analysis of Canadian jurisprudence and legislation, and associated literature from

professionals and practitioners has shown to reveal many insights.

This paper examines dishonesty terminations, with particular focus on cases involving employees who

allegedly acted deceitfully, or committed a breach of trust against their employer. This paper considers

specific non-union and union considerations, and identifies and analyzes whether such considerations are

shared or uniquely held. Many ideas, lists, principles, rules and tests used by judges and arbitrators, related to

dishonesty terminations, were uncovered in this process. The hope is that through this paper and its analysis,

an understanding of what is reasonable and appropriate when dealing with dishonesty terminations is made

clearer, or at a minimum the foundation for future research and growth put in place. Due to limitations, a

complete comprehensive review of all pertinent Canadian jurisprudence and legislation was not possible. In

the future, it may be advisable for researchers to build upon findings within this paper to construct a more

comprehensive document that stakeholders can utilize on this topic.

Of particular importance in relation to dishonesty terminations, in a non-union and / or union

environment, was analysis surrounding the McKinley case. This case identified a two-part process required to

determine whether the employment relationship was irreconcilable and advocated for an analytical, case-by-


case framework that proportionally matched the level of dishonesty to discipline. Similarly, there was found

to be much overlap in discussion surrounding mitigating factors and other considerations. Although many

commonalities were found, the two systems (involving the courts, and arbitrators, boards and tribunals) are still

separately fluidic with varying rules and tests (Gosse v. Atlantic Wholesalers Limited, 2011, para 125-126).

Metaphorically speaking, in many ways courts, and arbitrators, boards and tribunals are like two separate,

parallelly flowing rivers. From time to time, the streams and brooks running between the two may cross and even

converge - permitting the mixing of ideas, principles, rules and tests - but as quickly as this may occur, the rivers

may just as hastily retreat and diverge. Canadian jurisprudence is continually evolving with many decisions

waiting to be written to further guide employers, employees and stakeholders.

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Dishonesty terminations - An analysis of non-union and union considerations in Canada - FINAL 6

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