$15,000 in aggravated damages for false allegations of cause

'It looked like they were on a witch hunt'

$15,000 in aggravated damages for false allegations of cause

A British Columbia employer must pay a worker more than $15,000 in aggravated damages for firing a worker before her resignation date and then making unfounded allegations of theft and fraud.

It’s a cautionary tale for employers who might be unhappy with a quitting employee, says Melanie Samuels, partner with Singleton Reynolds in Vancouver and co-chairperson of the firm’s Employment and Labour Group.

“The issue is that it looked like they were on a witch hunt,” says Samuels. “Once they got sued, they thought, ‘Now we're going to drum up everything we possibly can.’”

Principal sends letter of resignation

The Kitsumkalum First Nation is an Indigenous band government located near Terrace, B.C.  In 2005, the band hired the worker as a teacher in an adult learning centre, which later transitioned to a school for kindergarten to grade 12. In 2017, the band promoted her to principal of the school.

On Dec. 20, 2018, the worker sent a letter to the band government indicating that she planned to end her employment on Nov. 30, 2019. She said that she wished to continue as school principal for the rest of the 2018-19 school year and then stay on for the first three months of the following school year to help the transition to a new principal.

The band did not immediately respond to or acknowledge the worker’s letter and the worker continued in her role as principal. However, on April 26, 2019, the band sent the worker a letter stating that her services would no longer be required as of the end of the school year.

The band said that if it kept her on for the first three months of the next school year, it would mean additional costs from having two principals. The band wasn’t willing to pay these costs, so it was terminating her employment effective June 30.

Read more: Courts are willing to award large punitive damage amounts for bad-faith conduct in the course of dismissal, writes an employment lawyer.

The worker filed a claim for damages compensating her for loss of pay and benefits from June 30 to Nov. 30, 2019.

The band responded to the claim by citing four allegations of misconduct that constituted just cause for dismissal:

  • The worker received a First Nations youth employment strategy grant in 2017 that authorized capital costs “other than small repairs or renovations to support the participation of persons with disabilities.” The worker used about $4,600 from the grant for repairs in her home to create a studio for art instruction as part of a youth initiative program.
  • The worker kept a hard drive, a paddle, a salmon panel, and a laptop that belonged to the band. The worker denied taking the hard drive and paddle, and said that she believed that the band hadn’t reimbursed her for the salmon panel so she took it. When the band provided proof that they had paid for the panel, she returned it. As for the laptop, the worker explained that shortly after it had been given to her for work, several school employees were given laptops as Christmas gifts. When the band pointed out that this was a different laptop than the Christmas gift, the worker returned it.
  • As principal, the worker regularly used her personal credit card for general expenditures and applied for reimbursement. The band alleged that several expenses for which she was reimbursed such as staff gifts and lunches were inappropriate, although it hadn’t raised these with the worker previously and there were no official guidelines for expenditures.
  • The band claimed that the worker had demonstrated instances of “disruptive and combative conduct towards others in her role as principal.” The worker had not been disciplined or warned about her conduct during her employment.

No warnings or discipline

The court noted that the worker had been employed with the band for more than 13 years and had followed certain procedures, such as filing for reimbursement of expenses, a certain way. The band had never warned or disciplined her, or indicated that there were any issues with her performance or conduct – which made it difficult for the band to assert just cause, said the court.

This emphasizes the importance of prior warnings and discipline to an argument of just cause if the employer was aware of behaviour that it didn’t approve of, says Samuels.

“If you have had issues, then yes, there could always be after-acquired cause, but it has to be pretty egregious,” says Samuels. “If they'd had issues with her about any of the allegations, it would have rung truer if they had actually brought them up at the time.

“If you have an issue with somebody and you never raise it, you've acquiesced to the conduct.”

The court also found that for the laptop and salmon panel, the worker was mistaken in thinking that she was entitled to the items and returned them when she was corrected. There was no indication of any intention to steal them and no evidence that she stole the hard drive or paddle in light of the worker’s denial, said the court.

The band’s cavalier approach to its allegations of misconduct, along with the nature of the allegations, amounted to bad faith on its part, says Samuels.

“I think [the band] went on a fishing expedition and tried to dig up everything they possibly could to formulate a defense of cause,” she says. “[The evidence] was just so flimsy, and then to dress it up as fraud and theft made it worse – it's one thing to say ‘You didn't properly follow our expense policy,’ but to say you actually defrauded and stole from the employer is what elevated it.

“They painted [the worker] with the worst possible brush they could have used for the allegations.”

Read more: An Ontario brewery’s false allegations of fraud and theft lead to $35,000 in aggravated damages as part of wrongful dismissal award.

The court determined that the worker was wrongfully dismissed and ordered the band to pay her the damages she claimed for loss of compensation and benefits, which equalled more than $18,000.

The court also found that the band’s raising of unfounded allegations that suggested “potential criminal behaviour” such as theft and fraud were in bad faith when there was no truth to them. These allegations were potentially harmful because they not only caused the worker mental distress, but they hurt her reputation as a teacher in a small community where everyone knew she had been dismissed.

The band was also ordered to pay the worker $15,000 in aggravated damages.

Lessons for employers

When an employee gives a notice of resignation, Samuels says that in most cases, it’s wiser to accept and deal with it rather than try to concoct a reason to get rid of them sooner.

“Once an employee gives notice, the employee is entitled to continue working and the only thing that employers can do is say, ‘We don't want you in the office, because it creates morale issues’ or whatever, and then the employer has to pay them out,” says Samuels.

“This is not an employee who was trying to take advantage of the employer. This is an employee who was, I think, trying to do the employer a favour by giving them such advance notice.

 “it's very rare because, of course, the employment relationship starts to get a little funky when someone's given that much notice – it probably wasn't the best move for the employee, either, but I appreciate the employee was doing it with an abundance of fairness to the employer.”

See Austin v. Kitsumkalum First Nation, 2020 BCSC 2298.

Latest stories