Egregious Conduct is Grounds for Summary Dismissal

I frequently advise employers that a single instance of misconduct is normally not a sufficient basis for dismissing an employee summarily. This news is usually not received very happily by the employer. When the employee’s conduct is particularly egregious, however, even a single instance may suffice.

The current rules relating to summary dismissal (termination without notice or pay in lieu thereof) of non-union employees flow from a 2001 decision by the Supreme Court of Canada. The McKinley v. B.C.Tel decision indicated that non-union employers should be following essentially the same sort of progressive discipline procedures as union employers.

The extension of the progressive discipline concept to the non-union sector forces the employer to take into account the context of the wrongdoing and to apply escalating measures before resorting to dismissal. This makes employers work harder, and longer, before being able to conclude that just cause for summary dismissal exists.

The current approach means the likelihood of just cause for summary dismissal existing after only a single incident of misconduct is very low. As I’ve written previously, employers might be forgiven for believing there is no longer any such thing as just cause for summary dismissal.

Now and then, however, an employee engages in such deplorable behaviour that the employer is justified in dismissing after just one occurrence. Just such a case was decided recently by the Alberta Court of Queen’s Bench.

It involved RBC Dominion Securities and a vice president and investment advisor, Whitehouse. He was a highly ranked, and highly paid ($424,500 per year in commissions) employee with RBC’s Calgary office.

After having been out drinking one evening Whitehouse brought a prostitute into RBC’s offices. He used his security pass to enter the building and to utilize the elevator to RBC’s premises. The prostitute consumed cocaine in RBC’s washroom and the two then headed for Whitehouse’s office.

At some point, an argument broke out between them over payment. With no resolution to the dispute, Whitehouse departed, leaving the prostitute alone in RBC’s lobby area.

Having been left alone in RBC’s premises, the woman would have had easy access to files and papers. Whitehouse subsequently returned to the building, but the prostitute had since also departed.

In the Court’s words, Whitehouse’s late night indiscretion rapidly became a public spectacle the next day. The prostitute reappeared at RBC’s offices, revealed the events of the previous evening, and demanded payment. Needless to say, the story spread quickly and soon became common knowledge.

The whole, bizarre, scene quickly turned into an investigation. RBC’s security system, both videotape and the data from the security pass reader, produced proof supporting the prostitute’s story. Whitehouse (twice!) denied any involvement but, as people tend to do, made an admission after being confronted with incontrovertible security system evidence.

It also came out in the investigation that Whitehouse had engaged in similar indiscretions in RBC’s offices on other occasions. RBC dismissed Whitehouse, summarily, for just cause reasons. Whitehouse (inexplicably, in my view) sued RBC for wrongful dismissal.

The Court considered Whitehouse’s conduct, calling it “arrogance or disdain for his employer’s expectations” of him as an employee. It stated he “exhibited a contempt for his employer, his co-workers, and their respective reputations in the business community” and concluded he showed a “serious lack of judgment”.

The Court focused to some degree on the fact that Whitehouse had left the prostitute, unaccompanied, in RBC’s offices with access to whatever client or corporate information was in the vicinity. This showed a “reckless disregard for his clients’ interests”.

It was also significant that Whitehouse compounded the seriousness of his misconduct when he lied about it to his employer. All of this led the Court to determine that what his conduct portrayed was “a lack of integrity, a deficient judgment, dishonesty, untrustworthiness and a careless disregard for client and corporate confidentiality”. The employer had made out its defence of just cause for summary dismissal.

It was also important that RBC had implemented policies in an attempt to guide its employees on appropriate (and inappropriate) conduct. RBC’s Code of Conduct emphasized the importance of honest and ethical behaviour and provided eight guiding principles. The Court highlighted portions of the Code relating to lawful behaviour, confidentiality of client matters, and integrity.

It may well have been that just cause would have been found by the Court even in the absence of such a Code of Conduct. However, having the Code in place definitely made RBC’s task of meeting the just cause standard easier.

This case is, of course, an example of how even senior, highly paid employees can destroy their employment relationship with a single course of ill-conceived conduct. It also serves as a reminder that, however unreachable the just cause standard may seem, sometimes a judge will agree that egregious conduct (even just a single occurrence) warrants summary dismissal.

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