You’re Fired! (But Not for the Reasons You Think)

March 2014

Article by: Danielle Scorda

Can an employer rely on misconduct it discovers after terminating an employee to justify the termination? In the recent case of Campbell v. Harrigan Rentals and Equipment Ltd., 2013 BCSC 1813, the B.C. Supreme Court answered yes.

In Campbell, an employee brought a wrongful dismissal action when he was terminated from his employment without notice. The B.C. Supreme Court upheld the employee’s dismissal and determined that the employer had cause to dismiss him – even though the employer was not aware of those causes at the time of his dismissal.

The employee, Mr. Campbell, was 69 years old at the time of his dismissal and had been employed as a financial controller for 14 years at a salary of $60,000 per year. Campbell was responsible for the employer’s daily financial and accounting duties.

The employer’s new owner discovered that Campbell had been using his company gas card for his wife’s car, and had remitted claims for medical expenses on behalf of his wife who was ineligible to receive benefits under the plan. The employer investigated the allegations and asked Campbell if there was any other information he would like to share regarding his accounting practices. Campbell said “No.” Following the investigation, the employer concluded that Campbell was intentionally dishonest in his use of the gas card and his medical expense claims. In the employer’s view, this dishonesty caused it to lose confidence in his integrity and accordingly justified his termination. The employer issued a termination letter outlining the two reasons for termination and dismissed Campbell without notice.

Following his dismissal, Campbell initiated an action for wrongful dismissal. The employer claimed it had also discovered other reasons to justify Campbell’s dismissal, which were outlined in its Response to Civil Claim. The after-acquired reasons included Campbell taking two unauthorized salary advances and instructing another employee to falsely inflate the inventory recorded in the Company accounts. 

The Court’s Analysis

At the summary trial, the Court concluded that the two reasons outlined in Campbell’s termination letter did not constitute reasonable grounds for dismissal. In particular, the Court rejected the employer’s argument that Campbell was intentionally dishonest in using the gas card, and found that the employer had failed to prove that Campbell made any improper medical claim.

Nevertheless, despite not establishing just cause on the basis of the grounds given to Campbell in his termination letter, the Court accepted the Company’s after-acquired cause. The Court relied on recent authority that said that after-acquired information can form the proper basis upon which to uphold the termination of an employee.

The Court concluded on the evidence that the employer had established, on a balance of probabilities, that Campbell had taken unauthorized salary advances, as well as engaged in a practice of not recording inventory accurately. Campbell admitted to taking the salary advances and intentionally inflating the inventory, but provided explanations for the acts, which the Court dismissed. Assessed in context, the Court found that these dishonest and deceitful actions were incompatible with Campbell’s continued employment as a financial controller.

In the result, the Court concluded at paragraph 53:

…I find that the defendant Company has satisfied the onus upon it of proving that it had reasonable cause to dismiss the plaintiff. The plaintiff admits that he took the salary advances and that he intentionally inflated the inventory. Taking a contextual approach and applying the proportionality principle discussed in McKinley, I conclude that the Company had reasonable cause to dismiss the plaintiff, even though it was not aware of those causes at the time of his dismissal on November 4, 2011.

Lessons for Employers

This decision is helpful for employers as it affirms that if an employer discovers misconduct that it was not aware of at the time of termination, it may rely on this information to justify its termination of an employee.

However, whether misconduct discovered after an employee has been terminated is enough to justify dismissal can be complex and all situations are different. In this case, the after-acquired misconduct was significant enough on its own to establish just cause. This conclusion was due to the gravity of the dishonest acts, especially given the employee’s position of trust within the organization.

It is also prudent for an employer that is considering dismissal for cause to take the time, before dismissal, to fully investigate whether there are any other skeletons in an employee’s closet. This may not only assist the employer in determining whether or not cause for dismissal exists, but may make any allegations that are raised subsequent to an employee’s dismissal more credible.