Employee misconduct: The threshold for dismissal

Answer: Since the 2001 decision of the Supreme Court of Canada in McKinley v. BC Tel, it has been clear that an employer must show that dismissal was a proportional response to the act of misconduct relied on if it is to succeed in defending a wrongful dismissal action.

The assessment requires a contextual approach. While certain categories of misconduct are clearly more serious than others (such as dishonesty, theft, and criminal acts) and thus more likely to be found sufficient to justify a harsh employer response, the context in which the misconduct occurred will always be important in determining whether the threshold for summary dismissal has been met.

In McKinley, the employee was a chartered accountant who was terminated for concealing information about his medical condition. The trial judge stated that the employer was required to prove not only that the employee had committed the dishonest act but also that the act was incompatible with his continued employment. The B.C. Court of Appeal held that the trial judge had erred in imposing the second requirement.

The Supreme Court of Canada agreed with the trial judge. It held that BC Tel was also obliged to prove that the nature and severity of the employee’s dishonesty justified dismissal in the context of the facts and the employment relationship in which it occurred. This approach guarded against excessive punishment of an employee by the strict application of an unequivocal rule that treated all forms of dishonesty alike.

Because this contextual approach focuses on specific facts in the context in which they occurred, it is not always easy to discern when an employee’s act of misconduct has met the threshold for summary dismissal. The Supreme Court provided some guidance, suggesting that dismissal would be appropriate where a single act of misconduct gave rise to a breakdown in the employment relationship; violated an essential condition of the employment contract; breached the faith inherent to the work relationship; or was fundamentally or directly inconsistent with the employee’s obligations to her employer.

However, the difficulty of predicting when the threshold is met on a specific set of facts remains. It is well-illustrated in the B.C. Court of Appeal decision in Steel v. Coast Capital Savings Credit Union.

The employee was an IT helpdesk analyst who improperly used her comprehensive computer access to view a confidential document without permission. The document designated a list of priorities for limited employee parking spaces; it also included pay grades and seniority dates. The employee accessed the document to determine her chances of getting a parking spot.

The trial judge held that summary dismissal was warranted, relying on the fact that the employee worked autonomously in a position of trust in the financial industry where trust was of central importance. She found that the employer had justifiably lost trust in the emloyee when she violated confidentiality policies of which she was aware for purposes of her own.

The trial decision was upheld by the B.C. Court of Appeal, with one dissenting judge who would have allowed the appeal, believing that the trial judge had applied the McKinley test incorrectly. In his view, she had placed too much emphasis on the nature of the employer’s business and too little on the employee’s 21 years of discipline-free employment in upholding the summary dismissal.

In the opinion of the dissenting judge, the trial judge had adopted an elevated standard of trust in a context in which it was not properly invoked. The higher standard was properly applied where the employee’s misconduct related to the financial industry — money or the affairs of a client. It was not properly applied to an internal administrative issue that did not compromise the integrity of the employer as a credit union. In the dissenting judge’s view, McKinley required employers to assess whether a single act of misconduct was sufficiently egregious to violate or undermine the obligations and faith inherent to the employment relationship and to keep in mind the integral nature of work to the lives and identities of individuals while doing so. The majority of the Court of Appeal rejected the notion that it was necessary to balance the importance of employment to the individual against the nature and severity of the misconduct. The former factor was properly considered only in determining whether, as a matter of fact, the employment relationship had irrevocably broken down.

The factors to be considered as part of the inquiry into the surrounding circumstances were described in Dowling v. Ontario (Workplace Safety & Insurance Board). The court noted that relevant factors relating to the employee included age, employment history, seniority, role, and responsibilities. Factor relating to the employer included its business or activity, relevant policies or practices, the employee’s position within the organization, and the degree of trust reposed in the employee.

McKinley does not preclude an employer from relying a single act of misconduct to justify a summary dismissal. However, it does require the employer to assess whether that act is sufficiently serious in the context of the particular employment relationship to cause its irreparable breakdown. It is no longer possible for an employer to point to a category of misconduct such as theft, fraud or dishonesty, as sufficient in and of itself to justify the dismissal.

The contextual approach may also justify dismissal for what might be generally considered to be less serious misconduct.

In Aboagye v. Atomic Energy of Canada, an employee was found to have been properly terminated for omitting reference to his current employment from a questionnaire he was filling out to obtain security clearance his new position. The omission occurred in an employment context where employees had access to nuclear facilities and information vital to the security of Canada. The employee admitted that he deliberately omitted reference to his current employment and lied when asked about his employment status in an email. In the circumstances, the court had no difficulty determining that the employee’s dishonesty was cause for summary dismissal in that case. It was dishonesty that was properly regarded as going to the core of the employment relationship.

For more information see:

• McKinley v. BC Tel, 2001 CarswellBC 1335 (S.C.C.).

• Steel v. Coast Capital Savings Credit Union, CarswellBC 1979 (S.C.C.).

• Dowling v. Ontario (Workplace Safety & Insurance Board), 2004 CarswellOnt 4923 (Ont. C.A.).

• Aboagye v. Atomic Energy of Canada, 2016 CarswellOnt 20710 (Ont. S.C.J.).