Canada: Cumulative Breach Of Ethics Upheld As Proper Dismissal For Cause

Last Updated: March 10 2016
Article by Andrew Cogswell

Asserting and establishing just cause when faced with an action of wrongful dismissal is a difficult and often unsuccessful avenue for employers. Establishing an employee has committed acts or omitted to perform the responsibilities of their position therefore disentitling them to common law reasonable notice is a high burden. The height of the legal burden will differ depending on the type of cause asserted, but it remains an uphill battle for employers regardless of whether the cause is framed as insubordination, theft, fraud or a combination of issues.

A decision from the Court of Queen's Bench of Alberta provides a useful illustration of how cumulative improper acts can amount to just cause. The decision, Molloy v. EPCOR Utilities Inc. involved an employee that was dismissed in 2009 following an investigation into complaints of breaches of the employer's Ethics and Respectful Workplace Policies and improper conduct with another utility company.

The employee, Ms. Molloy, had worked for the City of Edmonton since 1978 and her position evolved considerably over the course of her tenure. In 1992 Ms. Molloy began working for what would later become EPCOR, an electrical utility owned by the City of Edmonton but providing their services throughout North America. In 2006 Ms. Molloy was promoted to Director of Public Consultations and Community Relations. The new position offered greater compensation and increased responsibilities including a new joint venture with another utility company, AltaLink. It was Ms. Molloy's conduct throughout this project that would lead to an investigation and her eventual dismissal for cause in 2009.

The project involved a massive public consultation, involving 2500 stakeholders and the importance of positive relations with AltaLink was paramount. However, over the course of the project Ms. Molloy was alleged to create a hostile working environment between the two companies. The allegations described Ms. Molloy as expressing a negative attitude, bordering on hostile, towards AltaLink employees. These concerns were raised with Ms. Molloy without the use of formal discipline, but Ms. Molloy's role in the project was altered. Around the same time, an informal complaint was lodged by two employees alleging poor leadership and unethical conduct exhibited by Ms. Molloy.

An investigation into the complaint revealed 5 points of misconduct that led to the dismissal of Ms. Molloy:

1. Failing to disclose the conflict of interest arising from her husband being hired as a consultant on the project;

2. Directing subordinates to destroy an email in an attempt to conceal information from AltaLink;

3. Conducting herself with EPCOR and AltaLink staff in a disrespectful manner amounting to workplace harassment;

4. Using EPCOR's time and resources inappropriately for her personal benefit; and

5. Obtaining reimbursement for a personal dinner out with her husband which she improperly characterized as a business expense.

The investigation involved interviewing several employees including Ms. Molloy and it was concluded that each of the five allegations were substantiated. Ms. Molloy was subsequently terminated and she launched a claim of wrongful dismissal seeking 24-months of pay in lieu of notice as well as aggravated and punitive damages.

In a positive decision for employers, JusticeJ.E. Topolniski found that EPCOR had just cause to dismiss Ms. Molloy. While the incidents on an individual basis may not amount to just cause, their cumulative effect was enough to disentitle her to common law reasonable notice. This finding is especially unique considering that Ms. Molloy had worked with the City since 1978 and EPCOR since 1992, had a clean disciplinary history, was 60 years of age at the time of dismissal, and held a very senior management position. On the other hand, someone with her position and responsibility is expected to uphold company policy and the breach of ethics (i.e. destroying documents) was seen as incompatible with the fundamental terms of the employment relationship. At paragraph 210 Justice Topolniski states that "[e]mployers are entitled to hold high expectations regarding the trustworthiness of their senior or managerial employees."

Removing senior employees, or any employees for that matter, for cause is a difficult position for employers to establish especially without a single serious incident of misconduct. However, cases like these show that employers can be successful when a number of incidents have a serious cumulative negative effect on the business. This case also demonstrates that taking the time to conduct a thorough investigation rather than making a snap decision to terminate will place an employee in a better position to defend their actions.

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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Andrew Cogswell
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