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One Strike and You Could be Out: The Supreme Court Denies Leave to a Decision Upholding Termination for Cause Based on a Single Incident

Can an employer terminate an employee with just cause for a single incident which breaches the trust fundamental to an employment relationship? The British Columbia Court of Appeal (the “BCCA”) suggested that the answer to this question was yes in March 2015, and as of September 17, 2015 the Supreme Court of Canada has tacitly agreed by denying leave to the case of Steel v Coast Savings Credit Union.

In this case the dismissed employee was a Helpdesk Analyst who worked in the IT Department of the Credit Union. The employer had established personal files for each employee. If a Helpdesk Analyst was assisting another employee, there was a specific procedure set out to protect the confidentiality and privacy of these files and the other employee. Ms. Steel, the dismissed employee, had a 21 year history with the company.

This 21 year employment relationship came to an end with one poor decision by Ms. Steel. Unfortunately for Ms. Steel she chose to abuse the access that she had to the system as a Helpdesk Analyst, and in complete violation of the established procedures, she accessed a manager’s file. Why did she access this file – to view her place on a list to obtain a parking space. Wherever Ms. Steel was parking while she waited to obtain a company parking space must surely have been less costly than the price of losing her job. When the Manager attempted to view his files and was unable as the documents were opened by Ms. Steel her decision to violate Company policy was uncovered. She was terminated with cause as a result as the employer cited that the incident caused it “to lose faith in [her] judgment” and “resulted in a serious loss of confidence.”

Terminating an employee for just cause is always a fine line for employers to walk as when an employee is terminated with cause there is no cost to the employer; however, if an employee is terminated without cause or cause is erroneously asserted it is possible for an employer to have to pay common law notice to an employee. A ballpark figure for common law notice is about 1 month for every year of service – it is therefore not surprising that Ms. Steel choose to sue her former employer and claim wrongful dismissal damages.

This wrongful dismissal suit forced the courts to revisit the Supreme Court of Canada decision in McKinley v BC Tel 2001 SCC 38. In this early case the Supreme Court of Canada established the test used to determine if the employee misconduct was sufficient to violate the essential condition of faith and trust required for an employment contract. In McKinley the Court indicated that the approach to be taken in determining if the misconduct was sufficient was contextual and that it required considering all factors such as length and quality of service and the nature and severity of the misconduct. The BCCA in Steel was required to determine whether a single incident of dishonesty is sufficient to cause an irreparable breakdown in the employment relationship such that just cause can properly be asserted by an employer.

In a 2:1 split decision the BCCA upheld the trial judge’s analysis and accepted that Ms. Steel’s decision to breach procedure and read a personal file without permission was sufficient to justify dismissal with cause. The trial judge noted that her position was in an industry, finance, where trust is of central importance; she had access to confidential documents; and there were clear policies and protocols known to Ms. Steel. Furthermore, the employer was not in a position to monitor her access and therefore had to trust Ms. Steel to properly obey its policies and access documents only with permission. This was sufficient to establish that trust was fundamental to the employment relationship. Consequently, she breached the trust principle in two ways as she viewed a document for her own purpose and she violated the policies in place. As a result she was properly dismissed for cause according to the courts.

Employers should take note of this case for the idea that an employee can in limited circumstances be successfully dismissed with cause based on a single incident that establishes a breach of trust. Although the Supreme Court has not directly ruled on this issue, its decision to deny leave can be seen as a tacit endorsement of the position of the BCCA. Although, this case can be viewed as a win for employers, when considering whether to terminate an employee for cause caution should continue to be exercised.

The lawyers at CCPartners have experience in all aspects of wrongful dismissal claims including assisting employers with proactively and appropriately structuring work relationships. Click here for a list of lawyers who can assist you with all your employment-related litigation issues.