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Employee fired for using employer’s resources to pay personal debt

Court rules employer had just cause to terminate public works manager in Alberta
Employment law
n the case of Potts and Samson Cree Nation, the Neal Potts was employed by Samson Cree Nation in their public works department for over 40 years. Google Street View

By Stuart Rudner and Anique Dublin

An Alberta Court recently ruled that an employer had just cause to terminate the employment of its public works manager for unauthorized use of its employees and resources to repay a personal debt.

In the case of Potts and Samson Cree Nation, the Neal Potts was employed by Samson Cree Nation in their public works department for over 40 years.

At the time of his termination, Potts was employed as a foreman. His role required that he take directions from his manager and set the work schedules of the crews accordingly.  

Potts was responsible for a crew of 10 people, comprised of heavy equipment operators and truck drivers. Their job was to haul materials such as sand and gravel. As part of his job he was required to conduct a safety meeting each morning and assign the workers their duty for the day. He also attended in the field to ensure the work was being done. His authority, however, was limited to supervising the crew based on the direction he received from his manager. He was also required to notify his manager of the crew’s daily and weekly activities, so that his manager could complete the monthly reports for the Nation.

On Aug. 12, 2015, Potts was disciplined for his failure to follow direction and report his activities on a weekly basis. This resulted in a 10-day suspension. The discipline letter stated that “any further misconduct after the suspension will be termination without any reasonable severance notice.” Potts had received previous verbal warnings but records of these were not kept.

A few months later, in November, Potts’ manager received a text message from a band member asking why the nation’s public works trucks were being used to deliver material to a local grocery store. The manager asked Potts about this and he replied, “I told you it was before your time and I will leave it at that.” As a result, the manager contacted a council member, who asked the ombudsman to conduct an investigation.

Potts admitted during the investigation that he gave Samson Cree Nation material to the local grocery store to pay back $2,000 he had personally borrowed from the owner. Potts said he borrowed the money so each crew member could be given $200 in order to attend a retreat.   

At the conclusion of the investigation, it was determined that Potts breached the Nipisihkopahk employment policy by:

  • taking and/or giving an unauthorized raise or advance on salary or bonus
  • trading in Nation property for his own benefit
  • refusing to answer his employer’s questions regarding a suspicious incident.   

On Feb. 3, 2016, his employment was terminated for cause.

Potts appealed his dismissal to an appeal panel comprising of three members independent of the Nation. However, the panel unanimously upheld the decision to terminate his employment. It found that Potts admitted to the wrongdoing, he was fully aware that what he was doing was wrong, and when questioned about it by his manager, he refused to cooperate or share information.

Consequently, Potts filed a complaint for unjust dismissal under the Canadian Labour Code.

Decision

The complaint was dismissed. The adjudicator concluded that it was clear that the misconduct occurred, as Potts had admitted to it during the investigation, at the internal appeal hearing and during his testimony at the adjudication. The issue was whether discipline was warranted in the circumstances and, if so, whether termination was appropriate.

The adjudicator found that because of the seriousness of Potts’ conduct, discipline was warranted. She then turned her attention to whether dismissal was appropriate.

Previous verbal warnings: The adjudicator accepted that Potts had been verbally warned on a number of occasions about his performance, in particular his failure to follow directions. However, she held that the evidence did not establish that Potts understood these discussions to be discipline and “it did not satisfy the requirement for discipline to be clear in order to be relied upon for the purposes of establishing progressive discipline.”

Refusal to cooperate with manager: The adjudicator accepted that Potts had previously been disciplined for insubordination and failing to respect his manager (the two-week suspension he received on Aug. 12, 2015). The suspension letter referred to prior discipline and advised Potts that further misconduct would put his employment in jeopardy.

Unauthorized borrowing: The adjudicator held that the loans were obtained in 2013 and unrelated to any discipline Potts previously received. She concluded that Potts knew his conduct in obtaining the loans was inappropriate. She agreed that he exceeded his authority and that his actions were worthy of discipline. However, on these facts alone, she felt that she would not necessarily find that summary dismissal was appropriate.   

Repayment of indebtedness: The adjudicator held that Potts knew his arrangement was inappropriate and she concluded that the seriousness of his misconduct was such that it was “knowingly dishonest.” Despite his argument as to his motivation, he made no attempts to arrange for the monies to be repaid through the public works department.

The adjudicator found that these facts alone established a “significant breach of Mr. Potts’ fiduciary responsibility to the Nation as the acting manager in public works” and “created a potential liability for the Nation and are egregious in the extreme”.

She further held, that even without the reliance on progressive discipline, Potts’ dishonesty was such a breach of the trust relationship in this regard it is worthy of termination. She found that based on his “discipline history and more critically, the events surrounding the misappropriation of goods in November 2015, the employment relationship is so irreparably damaged that termination is the appropriate remedy.”

Not every instance of misconduct will justify summary dismissal. In every case, a contextual approach must be adopted which consider the specific facts of the case in question. In this case, the egregious acts of dishonesty, the unapologetic response of the employee, and the prior discipline and warning all served to just dismissal.

Anique Dublin is law clerk specializing in employment law at Rudner Law in Toronto.

© Copyright Canadian HR Reporter, Thomson Reuters Canada Limited. All rights reserved.

Stuart Rudner

Stuart Rudner, Employment Lawyer and MediatorStuart Rudner is the founder of Rudner Law (RudnerLaw.ca), a firm specializing in Employment Law and Mediation. He can be reached at stuart@rudnerlaw.ca, (416) 864-8500 or (905) 209-6999, and you can follow on Twitter @RudnerLaw.
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