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12 December 2018
How should an employer respond when they discover an employee's misconduct? When is misconduct just cause for termination? Many employers wrestle with these questions. The British Columbia Supreme Court's decision in Kerr v Arpac Storage Systems Corporation (2018 BCSC 704) is a cautionary tale for employers that terminate employment first and ask questions later.
In March 2017 Arpac Storage Systems Corporation (Arpac) gave its 70-year-old occupational health and safety (OHS) manager one year's working notice that his employment would be terminated. The OHS manager had almost 23 years of service and no disciplinary record. However, his relationship with Arpac had deteriorated because his supervisor no longer saw him as an asset.
The OHS manager was diagnosed with reactive depression after receiving notice of termination. He gave Arpac a doctor's note stating that he was not fit to attend work. While he was off work, the OHS manager altered a spreadsheet to make it inaccurate and deleted hundreds of business and personal emails from his work e-mail account.
After being confronted by Arpac the OHS manager apologised through his lawyer, who tried justify the OHS manager's actions by saying that he had just cleared his computer of personal data. His lawyer offered for the OHS manager to repair the damage himself or to explain to another employee how to repair it.
Arpac did not conduct an investigation or determine the extent of the damage; it simply concluded that it was a breach of trust and just cause for termination. It fired the OHS manager.
The court found that there was cause for discipline but not just cause for termination. Just cause termination is the most serious form of discipline and each case of misconduct must be considered individually to determine the appropriate discipline. The court found that Arpac was predisposed to terminate his employment. Arpac failed to consider mitigating factors or to consider less serious discipline. The main mitigating factors were:
The court awarded the OHS manager more than C$112,000 in damages for wrongful dismissal.
This decision is from British Columbia but its principles apply to employers across Canada. Just cause termination is the highest penalty in employment law. Even serious misconduct like breach of trust does not automatically provide just cause. As the court wrote in Arpac "[b]reach of trust cannot be used as a magic incantation which employers can say to negate their legal responsibilities".
Employers have an obligation to investigate possible misconduct before acting. An investigation requires interviews with those involved in the alleged incident and those who may have information that is relevant to the incident. The investigation must provide the employee who is suspected of misconduct with an opportunity to respond to the allegations.
If the investigation determines that there is cause for discipline, employers have a duty to consider the suitability of lesser discipline. When considering the appropriate level of discipline, employers should consider all mitigating and aggravating factors before deciding on the appropriate discipline. This includes, but it not limited to:
The failure to conduct a proper investigation can undermine an employer's case for termination for cause. Just cause is an all or nothing proposition; there is no such thing as 'near cause'. Courts will not reduce damages for an employee who engaged in conduct that falls short of just cause. In addition, in certain circumstances courts may also award aggravated and punitive damages for improper investigations.
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