Dismissal for work affair overturned but no reinstatement

Bank manager has sexual relationship with subordinate while being investigated for other misconduct

A BMO branch manager who had a sexual relationship with a subordinate and acted inappropriately towards other employees was unjustly dismissed but shouldn’t be reinstated, the Federal Court of Appeal has ruled.

Mark Payne, 62, was the manager of a Bank of Montreal (BMO) branch in Woodstock, Ont., and had been with BMO since August 2003. In September 2008 five female employees made complaints against him, claiming he had demeaned them in front of co-workers and customers, as well as other inappropriate conduct. BMO suspended Payne with pay while it investigated.

The investigation found the complaints had merit and on Oct. 16, 2008, Payne was given an action plan to change his behaviour and understand the difference between what was appropriate and what was inappropriate behaviour. This stage of discipline was the most serious, short of dismissal.

Payne was transferred to a smaller branch, where he was coached by the existing manager until her retirement. However, in November 2008 BMO received a complaint from the assistant branch manager of the Woodstock branch that Payne was stalking her. The two had been in a sexual relationship over the summer and into October, including during the investigation and after Payne had received the corrective action plan. It turned out Payne had revealed to her information about the investigation that was confidential.

BMO decided Payne demonstrated “a lack of awareness with respect to his actions and behaviours as a manager and BMO employee” during both instances of misconduct and he lacked integrity and honesty. In addition, he breached BMO’s code of conduct and ethics and its trust. BMO terminated Payne’s employment on Nov. 20, 2008.

The adjudicator found Payne’s sexual relationship with the assistant branch manager raised a potential risk for BMO’s reputation and to the morale of other employees. However, the evidence showed only one employee knew about it and no real harm was done. In addition, the relationship was consensual so there was no abuse of power or violation of BMO’s anti-harassment policy.

The adjudicator also noted progressive discipline required an opportunity for the employee to correct his behaviour, but Payne didn’t get “an opportunity to reflect on his misconduct.” Though Payne’s misconduct was “dangerous, foolish and reckless,” the adjudicator felt dismissal was too harsh. BMO was ordered to reinstate Payne with a four-month suspension.

BMO appealed and the Federal Court set aside the arbitrator’s decision, finding Payne’s managerial position required a higher standard of conduct, trustworthiness and judgment. The court also found the risk of harm to BMO’s reputation and employee morale was sufficient to justify dismissal, regardless of whether there was any actual harm.

Payne appealed to the Federal Court of Appeal, which noted it was necessary to determine whether the employee’s dishonesty led to a breakdown in the employment relationship and the difference in each incidence of misconduct — one involved unwelcome treatment of employees and the other involved consensual behaviour. The appeal court also found Payne didn’t receive his corrective action plan until well into his relationship and didn’t have a chance to demonstrate that he would change behaviour.

Ultimately, the appeal court said it was the adjudicator’s jurisdiction to consider the facts and the law and only an unreasonable decision should be overturned. It found a lengthy suspension instead of dismissal was “within the range of outcomes reasonably open” to the adjudicator.

However, given the dishonesty Payne demonstrated and the fact he had only been employed by BMO for five years, the appeal court found it was unlikely BMO’s confidence in Payne as a manager could be restored. It agreed Payne had been unjustly dismissed, but disagreed that reinstatement was a viable remedy. The appeal court remitted the matter to a different adjudicator to determine an appropriate remedy. See Payne v. Bank of Montreal, 2013 CarswellNat 192 (Fed. C.A.).

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