Employee Fired…for Taking out his Wife

By Matt Lalande in Employment Law, Employment Law on May 05, 2023

…and expensing it. Twice. Then denying it. Twice. Which made matters worse. Much worse.

A car dealership in British Columbia was deemed justified in terminating its president after he charged two meals with his spouse to the company, according to a ruling by the B.C. Supreme Court.

The plaintiff, TM, was at a function with the new owner (Amy) of the dealership. After the event, TM stated that he had a discussion with Amy about whether or not they should expense the dinner. TM paid the bill as a business expense and charged it to the employer. Amy disagreed that she had this conversation. After the event, she felt suspicious and investigated the plaintiff’s expense claims generally. She then was of the opinion that a number of them stood out.

For example, there was a dinner receipt in which the plaintiff stated that he had dinner with two other employees. There was a breakfast in which the plaintiff stated he had breakfast with other employees. There was a beach house restaurant receipt that Amy believed was for the plaintiff, his wife and her relatives. There were also several other receipts. The plaintiff conceded at trial that he had not had dinner with the two employees in the breakfast had been with his wife, and not employees of the business.

Even though the expenses were relatively minor, amounting to roughly $250, the president asserted that the dinner and breakfast were shared with employees, and failed to be honest about the situation when confronted. The court ruled that the dishonesty struck at the core of the employment relationship.

The president held the highest management position at the dealership, which demanded a significant degree of authority, responsibility, and trust. By submitting fraudulent expense receipts and subsequently lying about them when given a chance to clarify, he violated that trust, the court stated.

Upon examining the evidence as a whole, it was clear to the Judge presiding over the case that the plaintiff falsely claimed restaurant dinner and breakfast receipts as business-related, despite knowing they were personal expenses. The employee attempted to mislead the defendant by writing the names of other employees on the receipts, suggesting that the meals were shared with them, when he was fully aware this was not the case. Judge Weatherill noted that: “…he was in the most senior management position at the defendant.  His position commanded a high level of authority, responsibility, and trust.  He breached that trust by submitting false expense receipts and thereafter being untruthful about them when given an opportunity to explain them” it said. 

What is Just Cause Termination?

Termination for Cause, also known as just cause dismissal, is a legal concept in Canadian employment law that refers to an employer’s right to terminate an employee’s contract without providing notice or severance pay, due to serious misconduct or other actions by the employee that justify such termination.

In Canada, employment relationships are generally governed by common law principles or specific provincial employment standards legislation, depending on the jurisdiction. Termination for cause can arise from various circumstances, such as:

Dishonesty: This can include theft, fraud, or lying to the employer.

Insubordination: A consistent refusal to follow management’s orders or directives.

Harassment or violence: Engaging in bullying, harassment, or violence in the workplace.

Neglect of duty: Consistently failing to fulfill job responsibilities, or gross incompetence.

Breach of confidentiality: Disclosing confidential or sensitive company information without authorization.

Conflict of interest: Engaging in activities that create a conflict between the employee’s personal interests and their duty to the employer.

Absenteeism or lateness: Excessive or unexcused absences or tardiness, which affect job performance or workplace operations.

Terminating For Cause is a High Threshold to Meet

It is important to note that in Canada, just cause termination is a high threshold to meet, and employers must be able to prove that the employee’s misconduct was so serious that it strikes to the heart of the employment relationship and warrants dismissal without notice or severance pay. Proving just cause for termination in Canada can be quite challenging for employers. The threshold for just cause dismissal is high, and the burden of proof lies with the employer to demonstrate that the employee’s misconduct or actions were so severe that it merited dismissal without notice or severance pay.

To successfully establish just cause, we always examine whether employers:

Keep thorough documentation: Employers must maintain comprehensive records of the employee’s performance, disciplinary actions, and any incidents leading up to the termination. This documentation should include written warnings, performance reviews, and records of meetings addressing the issue.

Are consistent and fair: Employers should ensure that they consistently apply company policies and procedures to all employees. Treating employees fairly and avoiding any appearance of discrimination or favoritism is essential to establish just cause.

Impose Progressive discipline: Employers should generally use a progressive discipline approach, where they give the employee a chance to correct their behavior or performance issues before moving towards termination. This approach typically involves verbal warnings, written warnings, suspension, and finally, termination if the employee fails to improve.

Impose Proportionality: The punishment should be proportionate to the severity of the misconduct. In some cases, the employee’s actions might not warrant immediate termination, and a lesser form of discipline may be more appropriate.

Just Cause and Termination for Dishonesty

The issue that was decided was whether the nature and circumstances of the plaintiff’s dishonesty regarding the restaurant dinner and breakfast receipts rose to the level of just cause for his termination. 

It is important to note several important things about termination for dishonesty:

• The onus is on the defendant to establish that the dishonesty was deserving of termination for cause: Nishina v. Azuma Foods (Canada) Co., Ltd., 2010 BCSC 502 at para. 191;
• Dishonesty is not automatically just cause for dismissal.  The entire circumstances must be taken into account: McKinley v. BC Tel, 2001 SCC 38 at paras. 51, 57.  As was stated by this court in Porta v. Weyerhaeuser Canada Ltd., 2001 BCSC 1480 at para. 14: “In my view, the requirement of a contextual approach and an analysis of the nature and circumstances of the misconduct established by McKinley places an onus on a defendant asserting just cause to take a similar contextual approach in its investigation of misconduct and in its determination of the appropriate sanction.  Where the investigation conducted in the first instance by a defendant asserting just cause is insufficiently broad to establish the full nature and circumstances of the misconduct and thereby the ability of the court to conduct the sort of analysis envisaged in McKinleyis impaired, it follows that the defendant will similarly be impeded in discharging its onus of proof in connection with its claim of just cause.

The Defendant pointed Judge Weatherill to a similar case called Roe v. British Columbia Ferry Service Ltd., 2015 BCCA 1. Roe was a BC Court of Appeal which considered whether a senior manager’s conduct in giving food and beverage vouchers to his daughter’s volleyball team valued at approximately $70, contrary to the company’s policy, was an act of deception justifying his dismissal.  It determined that it did, even though Mr. Roe had confessed what he had done when he was confronted.  In doing so, the Court of Appeal noted that, despite the small monetary value, Mr. Roe had:

• received a personal benefit unrelated to the company’s business;
• failed to obtain prior approval or report what he had done; and
• attempted to conceal his actions.

Judge Weatherill noted that the Court of Appeal in Roe held that the application of the contextual approach in McKinley required an analysis of the following factors (as they existed in that case):

• the high standard of conduct expected of Mr. Roe given the responsibilities and trust attached to his senior management position;
• the essential conditions of integrity and honesty in his employment contract; and
• the deliberate concealment of his actions which he later acknowledged were wrong and unethical.

In applying the law, Judge Weatherill notes that in his view, Amy’s reaction to what she perceived was improper conduct on the part of the plaintiff was justified in the circumstances.  Although she may have misconstrued and made assumptions about some of the underlying facts and could have conducted a more thorough investigation into them, she had sufficient information at her disposal to be confident that her concerns regarding the restaurant dinner and breakfast receipts being personal in nature were well-founded.

He also agreed that with the defendant that the facts in Roe were analogous to those before me in this case.  Although the total amount of the restaurant dinner and breakfast receipts was relatively small, the misconduct went to the very root of the plaintiff’s employment relationship with the defendant.  He was in the most senior management position at the defendant.  His position commanded a high level of authority, responsibility, and trust.  He breached that trust by submitting false expense receipts and thereafter being untruthful about them when given an opportunity to explain them.

Moreover, Judge Weatherill noted that TM failed to “come clean” when he had a second opportunity to do so during a second meeting. 

His conduct was such that the defendant’s loss of faith and trust in him was justified.

Have you been Terminated for Cause? Contact our Hamilton Employment Lawyers today.

Our Hamilton Employment Lawyers understand that being terminated from a job can have a significant impact on an individual’s mental health, as it often represents a sudden and destabilizing change in one’s life. Losing a job can lead to feelings of depression, anxiety, and stress, as it disrupts not only one’s daily routine but also their sense of self-worth and identity. As financial worries mount, and the prospect of finding another job appears daunting, a person’s motivation and ambition may begin to wane. The loss of a job and bring terminated can strip away the confidence and drive that previously fueled their aspirations, leaving them feeling defeated and directionless. This is something that we have seen time and time again.

If you have been terminated, contact our Hamilton Employment Lawyers today. We have been representing terminated employees since 2003 and have recovered millions in wrongful dismissal damages. Call our Hamilton Employment Lawyers today at 905-333-8888 or send us a confidential email and one of our intake specialists will get back to you to schedule your free consultation.

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