A Case of Employee Dishonesty Resulting in Termination

Article No. 15

JUST CAUSE – “DISHONESTY”

“Dishonesty” encompasses not only theft or fraud but any form of untrustworthy conduct. Just cause based on dishonesty may arise whether the conduct in question occurs prior to the commencement of employment, during the course of employment or in relation to matters unconnected with the employment relationship. In determining when just cause for dishonesty exists, the Courts are primarily concerned with whether the conduct of the employee is such that he or she can no longer be trusted or relied upon by the employer.

The leading case on dishonesty is McKinley v. BC Tel, a 2001 decision of the Supreme Court of Canada. In McKinley, the Plaintiff was a chartered accountant who had been employed for almost 17 years when as a result of high blood pressure and his doctor’s advice, he took a leave of absence. He subsequently indicated that he wished to return to work but, given his medical condition, wanted a position of lesser responsibility.  Some three months after the Plaintiff’s leave had begun and without returning him to work, BC Tel terminated the Plaintiff’s employment. The employer maintained that although it had used its best efforts to find another position for the Plaintiff, none was available. At trial, the Defendant advanced the defence that no notice was owing as the Plaintiff had deliberately withheld medical information, which indicated that he could return to his old job.

The lower Court held that dishonesty of any kind and regardless of its degree, justified termination and therefore did not constitute a wrongful dismissal. The Supreme Court took the position that the misconduct in question must be examined in context, and the question to be decided is whether, in the circumstances, the behaviour was such that the employment relationship was no longer viable.

The Supreme Court held that Mr. McKinley’s conduct, although dishonest, did not justify dismissal. In reaching its conclusion, the Court distinguished the facts of this casefrom situations which involve theft, misappropriation or fraud where dismissal may be justified without any further inquiry.

In deciding whether the conduct of an employee is of such a degree as to constitute cause for dismissal, a Court will examine each case on its own facts and circumstances and consider whether the nature and seriousness of the dishonesty is such that the employment relationship can be maintained. In doing so, the Courts will seek to strike a balance between the seriousness of the employee’s misconduct and the penalty imposed by the employer. The Court in McKinley summarized this approach as follows:

“Such an approach mitigates the possibility that an employee will be unduly punished by the strict application of an unequivocal rule that equates all forms of dishonest behaviour with just cause for dismissal.  At the same time, it would properly emphasize that dishonesty going to the core of the employment relationship carries the potential to warrant dismissal for just cause.”

The Court left it open for trial judges to do what is equitable taking into consideration the specific facts of each case.  It is wise to seek the guidance of an employment lawyer in respect of an issue relating to “dishonesty” or any other employment law issues.