Manager at inn invested in bar with different clientele; employer’s worries about conflict of interest ended employment relationship
An Ontario employer must pay $65,000 to a long-term worker who was terminated after he invested in a similar business in a nearby town, the Ontario Superior Court of Justice has ruled.
Graham Carter was hired in 1992 to be a waiter and bartender at the Olde Angel Inn, a hotel, restaurant and bar in Niagara-on-the-Lake, Ont. In 2005 the inn was purchased by Barry Williams and Nancy Penman and in 2008 they promoted Carter to the position of senior shift manager. The responsibilities of the position included running the bar, inventory control, supervision of staff and marketing.
In August 2011, Carter bought a half-stake in a bar in nearby Niagara Falls, Ont., partnering with a former co-worker at the Olde Angel Inn. The bar served bar food, but was not a full restaurant and catered to a working-class crowd of locals in Niagara Falls, different from the clientele of the Olde Angel Inn, which catered more to tourists and residents in Niagara-on-the-Lake.
Carter remained a silent partner in the new bar and wasn’t involved in the day-to-day operations. His plan was to continue working at the Olde Angel while the new bar would be an investment.
Employer reacted negatively to worker’s investment in other business
On Sept. 2, 2011, Carter called Williams, one of the Olde Angel’s owners, to tell him about his investment in the other bar but that he wanted to keep working for Williams. Williams congratulated him on the transaction. Later that day Carter told Penman about it, but she reacted negatively. Both owners had concerns about Carter being in charge of inventory for two bars, as they felt there could be a conflict of interest from the temptation to steal or to use his relationships with sales representatives to get discounts for his new bar.
Carter worked his shifts that day and the next, and heard about negative comments by Penman through other employees. The next day, which he had off, he went to his new bar and, upset by what he had heard, drank too much. He called Williams – who was in England where it was the middle of the night – a few times and told him he was upset about the reaction to his purchase and he could handle both commitments. Williams agreed to discuss it with him later.
The next day was a Monday, which is when Carter usually did his ordering for the Olde Angel. However, it was Labour Day and the suppliers other than Brewers Retail were closed, so Carter – who was hungover – called in sick unless they “really needed him.” The Brewers Retail order could be done by anyone, so he didn’t see a problem. He made the call from his new bar, as he had gone over to retrieve his car which he had left the previous night because he had been drinking.
Penman saw Carter was calling from his new bar and assumed he wasn’t sick but instead was working there.
The Olde Angel owners told Carter to take a few days off to “consider things.” Carter didn’t work from Monday through Friday that week, then spoke to Williams on Friday, Sept. 9, and they agreed to meet on Sept. 11.
Carter expected the meeting to be cordial, so he brought his wife and children. However, Williams had spoken to his lawyer and drafted a letter to give to Carter. At the meeting, Carter reiterated that he could handle both commitments and if a problem arose, they could address it. However, Williams gave Carter the letter, which stated Carter had called in sick when he was actually working at the other bar, had called the owner in the middle of the night and had been absent from work without explanation – referring to his absences the previous week. It also said Carter had damaged the Olde Angel’s business by failing to supervise employees and “disregarding (the inn’s) business interests.” Finally, it stated Carter had breached his employment duties and he had “already severed your employment relationship.” The letter was accompanied by a letter of resignation and release for him to sign.
The court found Carter’s absence from work the previous week was approved by the Olde Angel and Carter was not culpable for it. He was told to take a few days off and when the meeting was scheduled for Sept. 11, that was permission to remain off until that time. When Carter didn’t come to work in the days after the meeting, it was not an abandonment of employment because he had been told to stay away and that he would be fired if he didn’t resign, said the court. Though Williams testified the letter was intended to negotiate a change in the terms of Carter’s employment, the court found this could not be so.
“A new contract position would have amounted to constructive dismissal anyway,” said the court. “I find that on Sept. 11, 2011, (Carter) was actually, not constructively dismissed.”
The court also found Carter was not working at the other bar when he called in sick. He wasn’t feeling well and he was upset because of Penman’s reaction to his transaction. He had a good reason to be at the other bar and there was no reason for him to be accused of lying, particularly since he was a 19-year employee with no previous issues. In any event, Carter’s absence did not stop the beer from being ordered from Brewer’s Retail because anyone could do it, said the court.
Finally, the court found Carter was not involved in the day-to-day running of the other bar, so there was no reason for the Olde Angel owners to be concerned about conflict of interest. The bar was not in direct competition with the Olde Angel and it wasn’t clear how any discounts Carter received from suppliers would hurt the Olde Angel’s business, said the court.
The court found Carter was dismissed without cause. The Olde Angel Inn was ordered to pay him 20 months’ pay in lieu of notice minus income he earned working part-time at a bar for 11 months. Carter didn’t make any money on his investment in the Niagara Falls bar. The total award was $64,990.
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