Canada: Employee Discount Policies: Zero Tolerance

Last Updated: March 27 2014
Article by Lisa Gallivan and Alison Strachan

A recent Nova Scotia Labour Board decision considered whether an employee with 11 years' service was dismissed for cause when he used an employee discount policy for a "friend", contrary to company policy. The Board found a violation and that dismissal for cause was the correct course of action. If your company provides employee discount policies to employees, this is a decision you may want to learn more about.

In the hotel and retail industries, employers often provide employee discount policies discounting products and services the employer offers to the public. In Newell v. Marriott Hotels of Canada Ltd. (2014 NSLB 47) the employer, the Halifax location of one of its international hotels, provided an Associate Pleasure Discount Rate for employees that had the following conditions attached to it:

As a condition of receiving a Discount Card or Room Rate Discount Authorization Form, you must agree to all terms and conditions of the Room Rate Discount Program, and acknowledge your understanding of the following:

I understand that falsification of discount documentation or misrepresentation of information will constitute grounds for immediate termination of employment.

I understand that my conduct, as well as that of my family members and friends who receive a discounted room rate through the Room Rate Discount Program, is a reflection on Marriott International Inc. and its employees. If I, or if any of my family members or friends who receive a discounted rate through me, engage in any inappropriate conduct or behaviour, I will be subject to disciplinary action, loss or suspension of discount privileges, and/or termination of employment.

The employer offered room rate discounts to certain immediate family members and a lower room rate discount rate for friends and family. To make a long story short (and we always recommend your review of the entire decision (in this case 175+ paragraphs!)) the Board made the following findings:

  • The complainant was not credible on a number of material facts and was not forthright when he initially said he said he did not remember reading the policy terms and conditions;
  • The complainant "knew or ought to have known" his friend and his friend's niece and nephew were not immediate family members and, therefore, not entitled to the lower discount rate;
  • The complainant knowingly misrepresented that his friend and his friend's niece were family members and he "knew or ought to have known" that this misrepresentation that lead to a better discount could lead to termination under the employer's policy;
  • The Complainant's friend checked into the rooms even though they were not a class of people to whom the better rate applied; and that
  • The Complainant had the opportunity to get clarification from the employer for the lower rates and witnesses testified that "all employees knew of the conditions attached to the use of those cards, and that any misrepresentation could lead to termination".

The Board also noted that the employer provided oral instructions on the policy:

The Board accepts the evidence of the witnesses for the Respondent over that of the Complainant where it differs on all material facts for the reasons stated. The Board further finds from the testimony of the witnesses on behalf of the Respondent, including Mr. Ransome the general manager, that the employees are told, even though it may not be a written term and condition, if they are using the associate card, they have to be in the room with their family members, otherwise, they must use the Friends and Family member discount where they do not have to stay in the room, and the Friends and Family rate has a much lower discount.

In its conclusion, the Board noted that the retail sector is especially vulnerable to losses through policy breaches by employees quoting from Stubbs v. T. Eaton Company, [1996] O.E.S.A.D., 217:

However, the importance of strict adherence to such a policy for a large retailer such as the Respondent cannot be denied. The failure to strictly apply the policy could result in significant losses. Nor would it be realistic to require the Respondent to tolerate such breaches if it could not prove a direct and personal gain to employees or their acquaintances, or a loss to the Respondent. Indeed, if it had not been for the somewhat unique circumstances involving this purchase, in that the VCR was returned at the discounted price and resold, the Respondent would have suffered a $90.00 loss.

What was the outcome?

The Board found the employer was justified in dismissing the Complainant for cause and this was not a case where progressive discipline would have been appropriate:

... for breaching the trust, by misusing and misrepresenting the discount policy when he knew or ought to have known the consequences for misusing and misrepresenting this card would lead to termination. The Board also finds that progressive discipline is not appropriate in this case as the Complainant knew or ought to have known that a violation of the use of this special discount would lead to his termination. Further, the Board finds the Complainant's breach of trust and misrepresentation goes to the root of the employment contract.

What does this mean to you?

If you're an employee, the message is clear. Policy terms and conditions should never be ignored. If you are an employer in retail or an employer offering company discount policies, this is welcome news because employers can impose and enforce terms and conditions that, if violated, can support discipline as set out in the policy. This decision confirms that when providing discount opportunities for employees, employers can adopt a zero tolerance policy leading to termination for deterrence to protect its business interests.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Lisa Gallivan
Alison Strachan
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