Not blowing the whistle on theft constitutes just cause for dismissal

Houlihan v. McEvoy, [2002] B.C.J. No. 8 (B.C.S.C.)

Houlihan was employed by McEvoy for 20 years when her employment was terminated for cause. She started an action for damages for breach of her employment contract and wrongful dismissal. Houlihan had discovered the theft of money from the employer by other employees, but because she was unable to determine exactly who had committed the acts of theft she decided not to inform her employer, choosing instead to implement various procedures to prevent future losses.

The court held Houlihan’s decision to not inform her employer of the thefts constituted just cause for dismissal. Her failure to report the loss of money was a form of dishonesty which amounted to a breach of the implied duty of faithfulness and honesty she owed her employer. The court found that by remaining silent she had subordinated her obligation to McEvoy in favour of protecting other employees.

In doing so she misled the company and this misconduct was compounded by the fact Houlihan had been warned of the importance of reporting missing money and she was aware she could lose her job if she did not do so. Therefore her conduct constituted just cause for dismissal.

Houlihan had a written employment contract which provided she could be dismissed for cause only with agreement from the rep committee, college dean of student services and personnel director. She argued McEvoy had not complied with this term which was a mandatory part of the termination provision.

The court rejected this argument, holding her actions were so serious that they went to the root of the employment contract. Therefore by her actions she had repudiated the employment contract and could not rely on its terms.

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