'The court is always going to look at the conduct in the context of the employment relationship'
“Post-termination conduct can never be cause [for dismissal] retroactively, but if it's something that they've done during the employment relationship that the employer later discovers post-termination, then it can potentially amount to after-acquired cause.”
So says Nicole Toye, an employment lawyer and partner at Harris and Company in Vancouver, after the BC Court of Appeal upheld the firing of a worker that was initially without cause but the employer later found out about more than 100 secret recordings the worker had made of workplace conversations.
“’After-acquired’ is kind of a misnomer, because we're talking about conduct that predates the termination,” says Toye. “We say ‘after-acquired’ because the employer’s learned about it after the termination has already happened.”
Code of business conduct and ethics
The 41-year-old worker joined Mercer Celgar Limited Partnership, an operator of a large pulp and paper mill in Castlegar, BC, as a financial analyst in 2010. Six years later, he was promoted to senior financial analyst.
Mercer had a code of business conduct and ethics as well as a confidentiality policy. The former required him to conduct himself “with honesty and integrity and to adhere to the highest ethical standards in carrying out his duties,” while the latter required him to not to use confidential information “for any purpose other than those of the company.”
The worker was also a member of the Chartered Professional Accountants of British Columbia, which had a professional code of conduct that also required members to conduct themselves ethically and with integrity in their professional services, as well as not to disclose confidential information related to their employer’s affairs.
Recorded training, toolbox talks with cellphone
Early in his tenure with Mercer, the worker began recording training sessions and toolbox talks with his cellphone, without anyone’s knowledge. The worker later acknowledged that it was ethically wrong, but he claimed that it was to help him improve his English as he was originally from Russia.
According to the worker, he didn’t have a good relationship with his supervisor. On a couple of occasions, the worker used Russian expressions and the supervisor told the worker not to use “any kind of Russian in conversations with people.”
The worker felt that the supervisor was giving him a hard time because of his background, so he began secretly recording his conversations with management because he felt it would help if he decided to file a complaint.
In late 2018, the worker was concerned about Mercer’s financial statements and recorded a couple of conversations with the accounting manager.
In early 2019, the worker discovered that everyone in his department had received a raise except him, so he spoke to an HR manager in a conversation that he recorded.
Continued to record meetings
The worker’s supervisor was fired in 2019, but the worker continued to record meetings because it had become his “practice” to record any conversation with HR or management.
In March 2020, the worker recorded meetings with management and HR about upcoming incentive bonuses. He refused to accept that an important factor in the amount of the bonus was the mill’s overall performance and argued that his own performance warranted an amount near the upper limit.
The worker continued to send emails that challenged Mercer’s bonus formula, including a comment that said he was “open to resolve this disagreement in a timely manner and internally, without litigation.”
Mercer management was troubled by the worker’s mention of litigation and decided that they couldn’t work with him any longer. On March 25, 2020, the worker’s employment was terminated without cause.
The worker filed an employment standards complaint, a wrongful dismissal lawsuit, and a human rights complaint alleging discrimination based on ethnicity, national origin, and other grounds.
Worker revealed recordings
During the human rights hearing, the worker disclosed that he had surreptitiously recorded several one-on-one training sessions, more than 100 toolbox meetings, and at least 30 meetings with supervisors and HR. Some of these recordings also picked up other conversations with co-workers when he forgot to turn off the recording function on his phone.
Mercer then amended its response to the worker’s wrongful dismissal suit to state that the worker’s secret recordings demonstrated “a character of untrustworthiness, incompatible with continued employment” and constituted just cause for dismissal.
Once Mercer learned about the misconduct and the worker filed a wrongful dismissal action, it was good strategy to amend their defense to include the misconduct as after-acquired cause, says Toye.
The trial judge for the wrongful dismissal suit found that there was no evidence that the worker shared any of the recordings with anyone other than the BC Human Rights Tribunal and Mercer, and he didn’t seem to have intended any financial benefit other than in relation to his legal proceedings.
However, the trial judge also found that the worker did not ask any of his co-workers or managers for permission to record them and he knew that it would make them uncomfortable, as well as that the recordings were unethical.
Recordings breached trust, ethics code
Ultimately, the trial judge found that the surreptitious recordings constituted just cause for dismissal, as he breached the code of conduct and ethics and the recordings included confidential information and personal details about his co-workers. In addition, the worker provided no evidence that supported his concerns of discrimination that could justify the recordings.
The trial judge noted that Mercer did not know of the recordings at the time of dismissal, but the company had no real ability to discover them until after the worker was fired. Once discovered, the recordings were evidence of misconduct that irreparably damaged the trust in the employment relationship, said the judge.
The worker appealed, arguing that the trial judge misapplied the just-cause test and failed to consider relevant context.
The Court of Appeal found that the worker’s recording activity was “underhanded and would be regarded by most employers as misconduct undermining the trust relationship between employer and employee.” In addition, it violated the privacy of everyone who was recorded and anyone discussed in those conversations, said the appeal court.
The Court of Appeal agreed that the recordings constituted dishonest behaviour. The question was whether the context and degree of dishonesty warranted dismissal, the court said.
No justification
The appeal court noted that it was the worker’s practice to record meetings, even after the supervisor with whom he didn’t get along left the company. None of the recorded conversations had anything to do with his place of origin or other alleged discrimination, but rather they were related to his displeasure with other things. This was not justification for making the recordings, said the court.
The Court of Appeal determined that the trial judge did not misapply the law of wrongful dismissal, as the context of the circumstances was assessed, including the worker’s own admissions of why he made the recordings. The dishonesty and breach of ethics were sufficient cause for termination, said the court in dismissing the worker’s appeal.
Although the worker’s secret recordings amounted to just cause in the context of this case, there are no hard rules on what constitutes cause for dismissal, according to Toye.
“Even though in this case the employer was successful in establishing that this kind of recording was cause for termination, that doesn't mean that every time an employee records anything that's going to be cause,” she says. “The court is always going to look at the conduct in the context of the employment relationship.”
After-acquired cause
However, Toye says that this is a good case that nails down what after-acquired cause really is.
“It involves conduct which happened before the termination which is discovered or learned about post-termination, so it's facts that existed at the time of termination but the employer didn't know about at the time,” she says. “In this case, the employer terminated [the worker’s] employment without cause, but subsequently learned about these recordings… in the course of other proceedings.”
However, it’s important to distinguish between after-acquired cause and an allegation of cause for conduct about which an employer was already aware, says Toye.
“The principle of after-acquired cause exists as something that an employer can rely on if it's something they've learned about after the termination has already occurred, but what employers can't do, and should certainly not be doing, is trying to rely on conduct that they knew about or ought to have known about later,” she says. “We sometimes see in some cases employers are getting themselves into trouble by trying to allege cause for something that didn't seem to be much of a concern during the employment relationship.”
“It has to be something that you're learning about for the first time after the employment relationship has already ended.”
