Six-month termination delay does not equal condonation, BC court rules
A recent decision by the British Columbia Supreme Court dismissed a wrongful dismissal claim and ordered a former manager to pay $814,681 to his employer.
The employer said the termination was lawful and with just cause because the individual breached his duty to be a faithful and honest fiduciary.
While the employee admitted to the misconduct, he also argued that the company condoned his misconduct and therefore could not terminate him for cause.
‘Excessive’ wages for family
John Vassilakaki was a director, president and store manager of Vassilaki & Sons Investments, operating as Last Call Liquor Mart in Penticton, B.C. He had the company pay “excessive” wages to himself, his wife, son and daughter-in-law without notifying or obtaining approval from the company's other director.
Vassilaki also used company funds for personal expenses including home insurance, vacation costs, postage stamps for a personal collection, income taxes, and a $5,000 legal retainer for a shareholder dispute he and his son had jointly initiated.
An independent expert found excess compensation paid to the four family members totalled $631,269 over the period.
One salesclerk, testified that "John didn't do a lot of work when he was at the Liquor Store." Payroll records logged his son at 104 hours per semi-monthly pay period, but Jones said, “That simply did not happen."
Investigating misconduct
On the second day of trial, Vassilaki conceded that just cause existed. His remaining argument was that the six months between the company first suspecting misconduct in April 2023 and his termination in October 2023 meant the employer condoned his conduct. The company had also warned him in writing in August 2020 about excessive wages and fund misuse, but his misconduct continued.
The company retained an external investigator in May 2023. The report was delivered on July 7, 2023. Termination followed on Oct. 3, 2023, after a replacement manager was secured.
The court confirmed that "misconduct that the employer has condoned no longer constitutes just cause unless new facts, such as further misconduct, come to light," and that the employee bears the onus of proving condonation.
No condonation of misconduct
But Justice Kenneth Ball rejected the condonation argument, finding the investigation was "clearly a necessary and reasonable action," not a delay tactic. The court also noted that Vassilaki had concealed his misconduct, limiting the company's ability to assess the full scope before the investigator's report was received.
Vassilaki "advanced no evidence in support of this claim but only asked this court to draw an inference based on the facts." The inference did not hold.
Justice Ball dismissed the wrongful dismissal claim, awarding $814,681 in damages payable forthwith, and found that Vassilaki’s behaviour “was seriously incompatible with his duties as the manager of the liquor store, and that the employment relationship could not viably persist after the workplace investigation concluded and its results were made known to VSI and its board."
VSI's claims for punitive damages and costs were adjourned pending further submissions.
