Written by Michael J Weiler

Once again, "close but no cigar"

Maureen Stock, a single mother, worked for Oak Bay Marina for 20 years as a sales agent. She was dismissed on August 5, 2015 with cause. The employer alleged she had engaged in improper conduct by “marking” guest reservations as her own when, in fact, she had not made contact with the guests. The matter was set for a 5-day trial. The defendant brought a summary trial application based on affidavit and discovery evidence to have the action dismissed. The plaintiff in turn brought an application for judgment for wrongful dismissal. The Court held that it could decide the matter on a summary trial despite conflicting affidavits or conflicting evidence because in this case the Court was able to make the necessary findings of fact.Ms. Stock was an excellent employee with a proven track record as a sales agent. The employer had a policy against “marking” reservations. It noted in 2006 that “marking of guest files is not acceptable”. In 2012 it sent an email to employees noting instances where past guests of departed sales agents were “marked” as contacted even though no contact was made. The email stated “This is unacceptable behaviour in that it erodes the trust that is in place around how your guests are dealt with and serviced. Being negligent in honouring this policy can unfortunately result in disciplinary action.” (emphasis added).Ms. Stock was found to have accessed guest bookings and noted them as her own. Her explanation was that she often intended to contact the guest to see if she could upsell them on services. However, there were many occasions where she did not, in fact, contact them.The Court found that, although Ms. Stock had engaged in inappropriate conduct, the misconduct was not sufficient to justify termination for cause.The Court provided a very thorough updated summary of the law on just cause which we reproduce in its entirety (paras. 58-64):[58] The basic principles for determining whether an employer is justified in dismissing an employee on the grounds of dishonesty are well-established, and not in dispute. They are set out in McKinley v. BC Tel 2001 SCC 38, the leading case, and conveniently summarized in Roe v British Columbia Ferry Services Ltd., 2015 BCCA 1 (at paras. 26 and following) and also in Lau v Royal Bank of Canada 2015 BCSC 1639 (at paras. 141 and following), among other cases.[59] In McKinley, at para. 49, the Court set out a two-part test. The court must determine: (i) whether the evidence establishes the employee’s deceitful (dishonest) conduct on a balance of probabilities; and (ii) if so, whether the nature and degree of the dishonesty warrant the employee’s dismissal. Both parts of the test involve factual inquiries.[60] In particular, the test requires an assessment of whether the employee’s misconduct gave rise to a breakdown in the employment relationship justifying dismissal, or whether the misconduct could be reconciled with sustaining the employment relationship by imposing a more “proportionate” disciplinary response (McKinley, at paras. 48, 53 and 57). A “contextual approach” governs the assessment of the alleged misconduct at this stage of the test (McKinley, at para. 51). That assessment includes a consideration of the nature and seriousness of the dishonesty, the surrounding circumstances in which the dishonest conduct occurred, the nature of the particular employment contract, and the position of the employee (McKinley, at paras. 48-57). The ultimate question to be decided is whether the employee’s misconduct “was such that the employment relationship could no longer viably subsist” (McKinley, at para. 29).[61] Mr. Justice Iacobucci, writing for the Court in McKinley, summarized the contextual approach to the assessment of whether the employee’s dishonesty gives rise to a breakdown of the employment relationship as follows:[48] . . . I am of the view that whether an employer is justified in dismissing an employee on the grounds of dishonesty is a question that requires an assessment of the context of the alleged misconduct. More specifically, the test is whether the employee’s dishonesty gave rise to a breakdown in the employment relationship. This test can be expressed in different ways. One could say, for example, that 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.[49] In accordance with this test, a trial judge must instruct the jury to determine: (1) whether the evidence established the employee’s deceitful conduct on a balance of probabilities; and (2) if so, whether the nature and degree of the dishonesty warranted dismissal. . . .. . .[51] . . . I conclude that a contextual approach to assessing whether an employee’s dishonesty provides just cause for dismissal emerges from the case law on point. In certain contexts, applying this approach might lead to a strict outcome. Where theft, misappropriation or serious fraud is found, the decisions considered here establish that cause for termination exists. . . . This principle necessarily rests on an examination of the nature and circumstances of the misconduct. Absent such an analysis, it would be impossible for a court to conclude that the dishonesty was severely fraudulent in nature and thus, that it sufficed to justify dismissal without notice.[62] Mr. Justice Iacobucci continued (beginning at para. 53):[53] Underlying the approach I propose is the principle of proportionality. An effective balance must be struck between the severity of an employee’s misconduct and the sanction imposed. The importance of this balance is better understood by considering the sense of identity and self-worth individuals frequently derive from their employment . . . . . .[56] . . . Absent an analysis of the surrounding circumstances of the alleged misconduct, its level of seriousness, and the extent to which it impacted upon the employment relationship, dismissal on a ground as morally disreputable as “dishonesty” might well have an overly harsh and far-reaching impact for employees. In addition, allowing termination for cause wherever an employee’s conduct can be labelled “dishonest” would further unjustly augment the power employers wield within the employment relationship.[57] Based on the foregoing considerations, I favour an analytical framework that examines each case on its own particular facts and circumstances, and considers the nature and seriousness of the dishonesty in order to assess whether it is reconcilable with sustaining the employment relationship. 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.[63] The trial judge is not obligated to formally balance the length and quality of service with the nature and severity of the misconduct in determining whether there was just cause to dismiss, although it may be appropriate on the facts of a particular case to engage in just such an analysis. The framework adopted by the Court in McKinley focuses on the nature and severity of the misconduct in relation to its impact on the employment relationship; it is not a balancing exercise between the value of the employment to the individual and the severity of the misconduct. See Lau, at para. 145 (citing Steel v Coast Capital Savings Credit Union 2015 BCCA 127, at paras. 28-29).[64] The standard of proof is on a balance of probabilities. The court must scrutinize all of the evidence with care, and the evidence must be sufficiently clear, convincing and cogent to satisfy the burden of proof. See Lau, at para. 146 (citing F.H. v McDougall, 2008 SCC 53, at paras. 46 and 49).*************************The Court held the first part of the test had been met (at para. 71):However, I find that Ms. Stock’s ultimate intention was to claim credit for the guest bookings she accessed, and I find that her conduct amounted to “marking,” as described in Oak Bay’s policy and in Mr. Watling’s evidence. Her conduct was wrongful, and I find that Oak Bay has established the first part of the two-part test described in McKinley.But, (at paras. 74 and 75), the Court held that Oak Bay had not satisfied the second part of the test; it had not established that immediate termination was justified:Ms. Stock’s position within Oak Bay is distinguishable from that of the plaintiff in Roe v British Columbia Ferry Services Ltd., 2015 BCCA 1, relied on by Oak Bay. Instead, Ms. Stock’s situation warranted a more proportionate disciplinary response, taking into account Ms. Stock’s age, her long employment history with Oak Bay, her unblemished record, the fact that she received no benefit from marking the guest records and the lack of any clear warning about the consequences of marking. In my view, her misconduct does not rise to the level of “serious fraud” or “severely fraudulent,” as those terms are used in McKinley. While Oak Bay argues that it should not be required to monitor an employee for potential dishonesty, in my opinion, having regard to the principles stated in McKinley referred to above and Mr. Watling’s evidence that monitoring was available, the appropriate sanction in the circumstances was to give Ms. Stock a strong and final warning, that any further misconduct would result in her immediate dismissal.I find, therefore, that Oak Bay has failed to demonstrate that it had just cause for dismissal. It follows that Ms. Stock is entitled to damages for wrongful dismissal.“Mike what’s an employer to do?”There are two options.First, an employer may apply “progressive discipline” suggested in this case that would include, at a minimum, a strong written warning where further misconduct will result in termination for cause. That delays the inevitable termination for cause. It also is no guarantee that subsequent misconduct will constitute cause. And, of course, failure to act might send the wrong signal to other employees.A second alternative is to have a proper, legally enforceable, written employment agreement that minimizes the damages from a dismissal. The Supreme Court of Canada has said that employers can contract to limit an employee’s rights on termination to the minimum standards under the Employment Standards Act — basically one week of notice or pay in lieu for each year of service up to a maximum of 8 weeks. This advice is not new — I have suggested this many times over the years in our publications and at our seminars. Here, there was no written contract in place and Ms. Stock claimed she was entitled to 20 months’ notice; the employer could have limited its exposure to 8 weeks' wages. The legal fees incurred in defending a wrongful dismissal action would eat up that severance payment in short order.Stock v Oak Bay Marina Ltd., 2017 BCSC 359