Dishonesty not always enough to terminate

Supreme Court says employees’ lies must break down employment relationships.
By Laura Cassiani
|Canadian HR Reporter|Last Updated: 08/10/2001

A lie may not give an employer reason to fire an employee, according to a recent Supreme Court of Canada decision.

A little white lie, like calling in sick to go shopping or sneaking a longer lunch hour to peruse the magazine stand would probably not warrant an immediate termination.

In the high court’s decision, dishonesty in and of itself may not be enough to fire someone.

Rather, the court found that dishonesty has to be put into context and that a lie has to be serious enough — like fraud or embezzlement — that it undermines the employment relationship in order to warrant a termination.

While the issue has been dealt with in lower courts across the country, it’s the first time Canada’s highest court has dealt with lying in the workplace.

In this recent case, Martin McKinley, a chartered accountant with then telephone company BC Tel, was fired because he lied to his superiors about a health problem.

McKinley worked as controller, treasurer and assistant secretary for a number of BC Tel companies before taking a leave of absence because of high-blood pressure caused by hypertension. Upon returning to work, he falsely told his employer that his doctor had advised him to take on a less stressful position because of his high-blood pressure. BC Tel was trying to accommodate McKinley’s request, but when the controller’s lie came to light, he was fired.

The court found that McKinley lied about his doctor’s advice and that his physician told him he could remain in his former position providing he took certain medication. That lie, the court found, was insufficient to justify McKinley’s termination. The context and severity of the dishonesty had to be taken into consideration.

“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,” wrote Supreme Court Justice Frank Iacobucci in his judgement.

“An effective balance must be struck between the severity of an employee’s misconduct and the sanction imposed,” he continued.

The high court’s decision is a radical departure from the British Columbia Court of Appeal’s decision that sided with the employer. That court found that any lie, big or small, was sufficient to warrant a termination.

“Pursuant to its reasoning, an employer would be entitled to dismiss an employee for just cause for a single act of dishonesty, however minor. As a result, the consequences of dishonesty would remain the same, irrespective of whether the impugned behaviour was sufficiently egregious to violate or undermine the obligations and faith inherent to the employment relationship,” wrote Iacobucci, in response to the Court of Appeal’s reasoning.

Before the recent decision, a zero-tolerance approach to lying in the workplace was the prevailing practice in British Columbia. For some time now, other provinces have been moving more in line with the Supreme Court’s recent decision.

With this new decision, employers would have to conduct an investigation to first determine if in fact the employee lied. Then they have to consider the seriousness of the dishonesty and the circumstances surrounding the lie.

“This sets out clearly that not all dishonesty is enough to terminate,” said Lucas Corwin, an associate in the labour, employment and human rights department in the Vancouver office of Fasken Martineau DuMoulin.

A breakdown in the employment relationship might include an action that “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,” wrote Iacobucci.

Basically, lying to your employer isn’t necessarily contrary to the employment contract or the unspoken obligations employees have to their employers.

“What’s disappointing is this idea that dishonesty, in and of itself, isn’t inconsistent with the employment relationship,” said Corwin.

While employers may not have a legal leg to stand on if they terminate someone for a minor untruth, Corwin said there are ways employers can protect themselves against perpetual liars.

Having a progressive discipline policy sets out the organization’s guidelines for what it will and will not tolerate. There should be firm guidelines outlining why and when an employee can be terminated. Having a strict no-tolerance policy is also effective, and while a termination may not be held up in court based solely on this policy, it can set clear parameters in the workplace.

Corwin said giving verbal and written warnings and having them on file could help carry a case for firing an employee who is constantly lying. HR departments should be doing this regardless of this recent decision, he said. “That’s just prudent HR.”

In this decision, the pendulum swung back in favour of the employee in keeping with the recent trend in employment law in the courts.

“This case is really consistent with the trend of the Supreme Court of Canada to expand on the rights of employees in the employment relationship. They are hearing more employment law cases because they want to deal with this idea that employment is a fundamental relationship in our lives. Work is what we do and because of that the law has to put a real premium on it and treat it carefully,” said Corwin.

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