Sharing confidential information can be cause for dismissal
By Stuart Rudner and Nadia Zaman
In Manak v Workers' Compensation Board of British Columbia, 2018 BCSC 182, the British Columbia Supreme Court held that where a managerial employee breaches her confidentiality obligations, the employer may have just cause for dismissal. This decision not only shows that breach of confidentiality obligations can constitute just cause for dismissal, but also emphasizes the importance of a properly executed release.
In Manak, the employee (Manak) was employed at WorkSafeBC for 36 years, culminating in the position of client services manager, responsible for claims made by other employees, and was an ethics advisor. Accordingly, her position was highly sensitive.
Manak’s co-worker complained that she was sharing confidential information with other employees by using the phrase “I shouldn’t be telling you this, but…” and then:
•disclosing details surrounding the termination of two employees prior to or after their termination
•discussing information regarding the claims of two employees
•disclosing that a staff claimant had threatened to report the handling of his unresolved claim to Global TV when his claim was disallowed.
Manak initially denied each allegation but after a co-worker corroborated the allegations, she partially admitted the third one.
Shortly thereafter, the employer terminated Manak’s employment for just cause, but offered her the option of receiving a lump sum payment amounting to about four months of salary, in exchange for executing a release. The employer gave her 24 hours to decide, and Manak executed the release.
A few months later, however, Manak sued her employer for wrongful dismissal. She argued that the high standard for just cause for dismissal was not met in light of the nature of the conduct, her lengthy and clean tenure, and the lack of proof of actual harm resulting from the alleged misconduct.
The BC Supreme Court found otherwise. The court emphasized the importance of confidentiality at WorkSafeBC and the fact that Manak was aware she could be dismissed if she breached her confidentiality obligations. Given the nature of her role, such breach of confidentiality was serious, and her employer could no longer trust her. Summary dismissal was warranted despite other factors suggesting that Manak be given another chance.
Just cause for dismissal in Ontario
In Ontario, there are two types of dismissal: with cause or without cause. Where an employer dismisses an employee with just cause, the employee is not entitled to notice, termination pay, or any compensation.
Just cause for dismissal may be found if the employee is guilty of serious misconduct or poor performance. The employer has to meet a high standard of proof: The employer must prove not only that the alleged misconduct took place, but also that the misconduct was sufficiently serious to damage the employment relationship to the point where it can no longer continue. In so doing, a contextual approach must be used which takes into account all relevant factors, including
•length of service
•prior disciplinary history
•position and degree of trust required
•employee’s response when confronted
•any mitigating circumstances
•any other relevant factors.
The complex issue of just cause for dismissal is discussed in detail, with extensive case summaries, in Stuart Rudner’s You’re Fired! Just Cause for Dismissal in Canada.
Enforceability of release
In addition, Manak argued that the release was unconscionable and should be set aside. Again, the court disagreed with Manak, finding that
•the settlement agreement was not a “grossly unfair and improvident transaction”
•Manak had the opportunity to seek legal advice and chose not to
•the unequal bargaining power between employer and employee was mitigated by the fact that she was a manager, knew about the dismissal process, and had time to consider the circumstances
•she was given 24 hours to consider signing the release, which does not indicate that her employer took advantage of her.
While the threshold for just cause for dismissal is fairly high and in most cases, a single incident will not justify termination with cause, the court in the Manak decision made it clear that even a long-service, managerial employee may be dismissed for cause if she breaches confidentiality obligations which are important given the nature of her role. Employers should ensure that they have appropriate policies in place, and that they promptly investigate any suspected breach.
The Manak decision also cautions employers with respect to how they handle settlement agreements at the time of termination or post-dismissal. Employers should provide ample time to employees to consider an offer of settlement and the opportunity to seek independent legal advice.
Although the court in this case found 24 hours to be sufficient, we strongly recommend that employers provide well over 24 hours, as this will likely not be sufficient in most cases. Employers should never pressure employees to sign on the day of dismissal or within a short period of time, and in fact should not allow them to do so. Providing three to five business days to consider a settlement offer is advisable.
Nadia Zaman is an associate at Rudner Law in Toronto.