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 BC 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 discipline. 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 notes stating he was not fit to attend work. While he was off from work, the OHS manager altered a spreadsheet to make it inaccurate. He also deleted hundreds of business and personal emails from his work e-mail account.
After being confronted by the company, the OHS manager apologized through his lawyer. His lawyer tried to justify the OHS manager's actions by saying he was just clearing his computer of personal data. His lawyer offered for the OHS manager to repair the damage himself or explain to another employee how it could be done.
Arpac did not conduct an investigation or determine the extent of damage done. It simply concluded it was a breach of trust and just cause for termination. It fired the OHS manager.
What did the court decide?
The BC Supreme Court found 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 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 lack of harm caused;
- the failure to properly consider the OHS manager's medical condition;
- the failure to properly consider his long record of good service; and
- the failure to conduct a proper investigation.
The court awarded the OHS manager more than $112,000 in damages for wrongful dismissal
Lessons for employers
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 relevant to the incident. The investigation must provide the employee suspected of misconduct with an opportunity to respond to the allegations.
If the investigation determines 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, prior disciplinary history, expressions of remorse by the employee, the nature and impact of the misconduct, and whether there was any external contributing factor like a medical condition.
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, courts may, in certain circumstances, also award aggravated and punitive damages for improper investigations.