Level of employee dishonesty

Question: If an employee is caught lying to the employer, should the employer factor in what the lie was about when determining discipline, or can all employee dishonesty be treated similarly?

Answer: All employees owe a duty of faithfulness and honesty to their employer. As with other misconduct, the level of discipline will vary and must be measured in the context of the particular employment relationship. However, the case law generally recognizes that dishonesty goes to the heart of the employment relationship, which makes dishonesty particularly serious.

The magnitude of the lie is a factor to take into account in determining discipline. Dishonest conduct which is prejudicial to the interests of the employer or is incompatible with the employee’s duties, may be just cause for dismissal. In some workplaces, employee dishonesty is an extremely serious offence. Employees in the retail industry, for example, work independently, handling cash and merchandise on a regular basis. In this type of workplace, termination is often viewed as the appropriate penalty unless the decision maker can be confident that the trust relationship can be repaired.

The importance of honesty also increases with the degree of responsibility and discretion attached to the employee’s position. For example, integrity and honesty are critical to an employment relationship between the employer and a supervisor or manager. In cases involving theft by a supervisor, even if the item stolen is of little value, this will not necessarily save someone with a higher standard of conduct and integrity.

It is also less likely that the trust relationship can be repaired where the employee refuses to accept responsibility for the misconduct. Lack of candor and forthrightness can  also lead to an inference that the act was premeditated, as in UFCW, Local 401 and Sobey’s West Inc.

All of the above factors were recently before the Saskatchewan Court of Appeal in Wholesale Department Store Union v. Yorkton Cooperative Association. A supervisor closed a retail gas store early and falsified her time sheets on several occasions. She also directed a subordinate to falsify his time sheets. When the employer investigated, the supervisor lied and denied any wrongdoing. An arbitrator set aside her termination, but both the Court of Queen’s Bench and Court of Appeal upheld the termination.

According to the Court of Appeal, the supervisor worked in a position of trust, frequently worked without supervision, and was responsible for operating the store independently and ensuring other employees followed the employer’s policies. The Court of Appeal was particularly influenced by the fact that the supervisor refused to take responsibility for her misconduct throughout the employer’s investigation and continued to deny the misconduct. The Court of Appeal found her ongoing dishonesty fractured the trust relationship and made it impossible for the employer to have any confidence that it could ever be repaired. In those circumstances, termination was the only reasonable conclusion.

It is clear that the level of discipline imposed should reflect the context within which the dishonesty occurred. In this way, “what the lie was about” does indeed matter, and will often indicate how much damage was inflicted on the trust and confidence between employer and employee.

For more information see:

• UFCW, Local 401 and Sobey’s West Inc., Re, 2017 CarswellAlta 1612 (Alta. Arb.).

• Retail, Wholesale Department Store Union v. Yorkton Cooperative Association, 2017 SKCA 107 (Sask. C.A.).