While employee theft is frequently
grounds for termination, shades of grey do appear in the case law.
In a recent case, the Ontario Superior Court enforced a settlement
agreement in a wrongful dismissal action even though an employee
had not told her employer of a loan she had taken from a social
committee without permission.
After the release had been executed,
the employer discovered irregularities with respect to the
plaintiff's administration of a social committee. The
social committee received tickets from a local amusement park, sold
them to employees at a discount from face value, and then sent the
remaining tickets and cash receipts back to the amusement park.
At the time of termination, the
employee did not tell the employer about the shortfall, and
admitted at trial to having omitted the details on purpose.
The shortfall resulted from the employee "borrowing"
$1,200 from the social committee fund, to help offset approximately
$12,000 of the employee's money that she had lost to an
unrelated online scam.
Although charges were laid against
the employee in connection to the shortfall, those charges were
quickly withdrawn. The employee never admitted that she had
committed theft. The employee maintained that she intended to
pay back the money, and in fact had repaid the money by cheque
shortly after her termination.
The employer refused to release the
settlement funds. The employer argued that the settlement
should be null and void and relied on the missing funds to argue
that the employee was terminated for just cause.
The Court rejected the employer's
argument and ordered the employer to pay the settlement in
The Court found that the
employer's investigation was fundamentally flawed. The
investigation concluded that the employee had confessed on several
occasions to what was described as "theft." The
Court found that this was unsupported by any evidence. Further,
because the charges against the employee had been withdrawn, there
was no way to rely on the charges against the employee as
demonstrating any sort of criminal wrongdoing.
The Court did not elaborate further
on what in the investigation it found inadequate other than the
determination that there was a theft and the employee admitted to
The Court pointed to the
employee's intent to repay the shortfall, the fact that her
social committee work was not part of her employment duties, and
the poor quality of the internal investigation as mitigating
factors. As a result, the Court found that it was
"totally disproportionate" for the employer to view the
employee's conduct as support for termination with cause.
The Court's decision is perhaps a
little surprising, in light of the fact that the employee admitted
she had not brought the shortfall to her employer's attention
upon her termination for fear that it would jeopardize her
severance package. Nonetheless, the Court found that the
settlement agreement was valid and enforced it.
What employers should know
In order to protect themselves,
employers must ensure that they diligently and fairly investigate
any suspicions of wrongdoing by a departing employee.
It is important not to rely on
criminal charges alone (conviction, of course, is another
story). Employers should always consider a parallel
investigation. First, because the criminal process in often
long and authorities will not likely release the fruits of their
investigations. Second, because the criminal standard of
proof is much higher (beyond a reasonable doubt), and so
prosecutors often withdraw charges in criminal proceedings
when they believe they cannot meet that high burden. On
the same facts and evidence an employer may be able to meet
the civil standard of proof (balance of probabilities with clear
and cogent evidence) to support a case for cause.
The new Sexual Violence and Harassment Action Plan Act (Bill 132) imposes a range of new duties in regard to workplace harassment. These include requiring employers to amend their programs to implement workplace harassment policies and establish new rules for the investigation of workplace harassment incidents or complaints.
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