Employee Dishonesty? Not Always Grounds For Firing

Most of us know that employers have the right to terminate an employee ‘for cause’ at any time during the employment relationship.  If an employer has ‘cause’ to terminate an employee, the employer can do so immediately, without notice to the employee and without paying any severance.  However, many lawsuits arise over the question of whether the employer, in fact, had ‘cause’ to terminate the employee.

It is important to understand that having ‘cause’ to terminate an employee may not be as straightforward as one might think.  In fact, it can be quite difficult for an employer to establish sufficient grounds to entitle it to terminate an employee ‘for cause’.  Many people might be surprised to learn that even an employee who commits an act of outright dishonesty in the course of his or her employment is not automatically subject to termination ‘for cause’.   Whether an employer is justified in dismissing an employee for dishonesty is a question of fact, requiring an analysis of the entire context in which the dishonesty arose.  The purpose of a contextual analysis is to ensure, among other things, that there is proportionality between the dishonest conduct and the sanction imposed on the employee.  More serious acts of dishonesty entitle an employer to terminate an employee ‘for cause’ while the less serious acts of dishonesty will not justify termination.

The next question, of course, is what acts of dishonesty are serious enough to justify dismissal?  Unfortunately, the answer is not black-and-white and instead involves an analysis of the entire circumstances surrounding the dishonest conduct.  The Supreme Court of Canada has tried to provide some guidance by suggesting that to justify termination, the dishonesty must violate an essential term or condition of the employment relationship and is such that the dishonesty gives rise to a breakdown in the employment relationship.  While this is helpful, the fact remains that it can be quite difficult for an employer to determine if it has cause to terminate an employee for dishonest conduct.  An employer is well advised to seek legal advice prior to terminating an employee for an alleged act of dishonesty. This is especially important when dealing with a long term employee because the financial consequences for making an incorrect decision could be significant if it was ultimately determined the employee was wrongfully dismissed.  Likewise, an employee who has been terminated for dishonesty should consider seeking legal advice as they may in fact be entitled to severance.

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