THE EMPLOYERS' EDGE
Implementing and Revisiting Code of Conduct enables Canadian Bank to Dismiss 26 year Employee with Cause
Lodovico Cavan v. Royal Bank of Canada demonstrates the benefit of using appropriately drafted employment policies and consistently applied practices to enforce critical company values.
Facts
Mr. Cavan was a financial planner with 26-years of service with his employer, the Royal Bank of Canada (“RBC”). From the start of Mr. Cavan’s employment in March of 1985 until June of 2011 he had a spotless record with no complaints about his performance. In June of 2011 RBC received an order from the Ontario Superior Court to freeze Mr. Cavan’s personal bank accounts due to allegations filed with the court that he engaged in fraud against an Ontario hospital with his friend, an employee of the hospital, through three entities owned by Mr. Cavan in 2000. RBC complied with the court order and conducted its own investigation of Mr. Cavan’s conduct.
RBC ultimately terminated Mr. Cavan’s employment but did not do so based on any of the allegations that he participated in fraud against the hospital. Instead, the bank terminated Mr. Cavan’s employment because he breached RBC’s own code of conduct by not disclosing his relationship with three businesses owned by him and that he carried out a series of transactions for a close personal friend without accord for standard operating procedures.
Mr. Cavan was provided with the company policies and signed and declared through a company form on a periodic basis that he understood the code of conduct and had no outside interests from those he had reported. Mr. Cavan reported renting out a portion of his basement but did not report any of the three entities registered to his name.
Mr. Cavan filed a complaint for unjust dismissal seeking damages under the Canada Labour Code. RBC took the position that Mr. Cavan was terminated with cause. Specifically, that Mr. Cavan’s dishonesty was a breach of the code of conduct and severed the trust relationship.
Decision
Adjudicator J. McNamee found that Mr. Cavan knew, or ought to have known, that he had an obligation to disclose his outside business activities for which he received a monetary benefit. Further, in coming to the conclusion that Mr. Cavan breached the RBC’s code of conduct the adjudicator relied heavily on Mr. Cavan’s regular declaration that he did not have any outside business relationships that could interfere with his role at the Bank.
In determining that the breach of the code of conduct was serious enough to justify the termination of employment Adjudicator McNamee took into account the following facts:
a) Mr. Cavan’s breach “was not a momentary aberration or single mistake of judgment, but the course of conduct which he deliberately embarked”;
b) Mr. Cavan exhibited poor judgment and good judgment was an essential element of his position;
c) Mr. Cavan did not suffer any greater degree financial hardship than any other employee that loses a job; and,
d) Mr. Cavan failed to accept any personal responsibility for the events that led to his termination.
Lessons for Employers
Well drafted policies make it far easier for employers to justify the dismissal of an employee with cause and do well to protect company values. It is particularly useful to set out employee codes of conduct that outline potential conflicts as well as employee obligations. Further, regularly revisiting these policies and having employees acknowledge in writing that they continue to meet their obligations under the policy will only further serve to protect the employer.
Had RBC failed to implement and revisit their policies with Mr. Cavan they would have faced a far more difficult case when terminating this 26 year employee with an otherwise unblemished record of performance.
The CCP team has considerable experience drafting and reviewing employment policies, determining whether there is “just cause” and advising on appropriate discipline in all given circumstances. Consider consulting a CCP lawyer prior to dismissing an employee and/or implementing your employment policies.
Please Note: This blog has been prepared as an informational service for our clients and other interested parties. It is not intended to constitute legal advice, a complete statement of the law or opinion on any subject. Although we endeavour to ensure the accuracy of the content, no one should act upon the information provided without a thorough examination of the law after the facts of a specific situation are fully considered.