When employees' pants are on fire

Employee dishonesty can be just cause for dismissal, but context matters

When employees' pants are on fire

Trust no one.

Those who may have watched 90s TV series “The X-Files” – and its brief revival a few years ago -are probably familiar with that phrase. It’s been used there and in other movies and TV shows where there’s usually some sort of conspiracy. In those crazy circumstances, it’s a good philosophy to follow. In much of real life, it’s probably not – especially when it comes to a productive and healthy employment relationship.

Different occupations have different standards of trust, depending on levels of supervision and the nature of the job. But trust is a fundamental element of any employment relationship. If an employer can’t trust an employee, that employee’s employment is likely no longer viable. That’s why dishonesty is generally considered one of the most serious forms of misconduct and can often provide just cause for dismissal.

This was demonstrated in a recent BC Supreme Court decision that upheld the dismissal of an executive who falsified expense claims. The executive held a vice-president position with a high standard of trust, so when the expense claim issue came to light, the employer no longer had faith that he could fulfil his role. The court noted that dishonesty does not always provide just cause for dismissal, but in this case the dishonesty “went to the very root” of the employment relationship,” said the court.

Breakdown in employment relationship

Back in 2001, the Supreme Court of Canada addressed the issue of when dishonesty can rise to level of just cause in McKinley v. BC Tel, 2001 SCC 38. A worker lied to his employer by saying that he could remain in his position with certain medication, but the top court found that the lie wasn’t enough to justify dismissal. The court said that the contest of the misconduct must be assessed on whether it gives rise to a breakdown in the employment relationship.

Falsifying documents such as expense claims in the BC case above is something that is often considered going to the root of the employment relationship. If an employee can’t be trusted to fill out important documents properly, can they be trusted at all? This is particularly true if it costs the employer money. Falsified expense claims cost money, as could something like falsified time sheets. The Saskatchewan Court of Appeal upheld the dismissal of a gas store worker who closed the store early, falsified time sheets, and lied about it during the investigation, noting that it “fractured the trust relationship” beyond repair. The worker compounded her dishonesty by directing a subordinate to falsify his time sheets as well.

Other forms of dishonesty that have been found by courts and arbitrators to warrant termination of employment because they strike at the heart of the employment relationship include an investment consultant who forged a client’s signature and failing to report a safety incident and lying about it.

However, as the Supreme Court of Canada said, the context of the circumstances have to be assessed – dishonesty on its face may not necessarily warrant dismissal. A few years ago, a BC arbitrator reinstated a grocery store worker who was fired for taking sick leave when she wasn’t really sick. Her vacation request had been declined, so she took sick days and worked at a new restaurant she had started. The arbitrator noted that trust was critical in the retail food industry, but considered that the worker had 20 years of service, sympathetic family circumstances, and “excellent rehabilitative potential” – although the arbitrator also cautioned that employees with long service can be held to a higher standards.

Dishonest job applicants

What about when the dishonesty comes during the job application process? Misrepresenting oneself can be serious dishonesty. The Alberta Court of Appeal has held that an applicant who misstated his qualifications and his previous employment could be dismissed for cause.

However, the Supreme Court of Canada established that it must be a material misrepresentation, not “mere puffery,” to constitute dishonesty serious enough for just cause. This was demonstrated in a BC Provincial Court decision where a worker’s resumé said he was working with his own company in the industry, but he had actually wound down the business and had been working in another job for two years. The worker misrepresented the currency of his ties to the industry, but he had extensive experience in it going back decades. It was a relatively minor misrepresentation that didn’t strike at the heart of the employment relationship, said the court.

There are different levels of dishonesty for employees to be guilty of, and the seriousness of it will determine whether termination of employment is appropriate. The question will be whether the employer can legitimately have any faith or trust in an employee going forward. Employers definitely don’t want to be in a situation where they look at their staff and feel that they can trust no one.

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