Canada: Dishonesty Is Not The Best Policy: Employees Have The Obligation To Always Be Honest With Their Employer

Dishonesty on the part of an employee casts a dark shadow on the employment relationship and may throw the ongoing viability of that relationship into serious question, especially if the dishonesty involves theft or is premeditated, intentional, or sustained over a period of time. In some industries and for specific jobs, honesty is of paramount importance and an employee's dishonest conduct can result in summary termination of employment for just cause.

Indeed, as confirmed by a respected labour arbitrator in a recent arbitration award, in an industry like the retail food industry there is a "presumptive rule" that an employee who is dishonest invites termination of his or her employment, regardless of whether the dishonesty involves theft.


The grievor in Sobeys West Inc. v. United Food and Commercial Workers, Local 1518 (Sidhu Grievance ) worked as a cashier at a grocery store in Vernon, British Columbia. She requested a two-week vacation to open a small Indian restaurant.  Her request came at a very busy time for the store and, when her employer declined the request, the grievor called in sick and missed four shifts.  She went on to provide a medical note stating she was unfit to report to work.

Meanwhile, the grievor worked at her new restaurant. The employer found out and took the position that the grievor's absence from work was improper and orchestrated to give her time to work at the restaurant.  The employer said that the grievor occupied a position of trust in its store and breached clear, well-known company policy requiring honesty and integrity.  The employer relied on what it said was a presumption in the retail food industry that employee dishonesty warrants summary discharge from employment.  In the employer's view, the employment relationship was irreparably damaged and there was just cause for termination.

At the time of her dismissal, the grievor had 20 years of service and a clean disciplinary record.

Arguments made at arbitration

At arbitration, a key argument the union made was that the presumptive rule on which the employer relied only applied with respect to theft of cash or food product or other inventory. According to the union, the presumption therefore did not apply in the grievor's case.

The union also argued that an employee who is able to fulfil some but not all of his or her regular duties is entitled to take sick leave. In the grievor's case, she would have had to interact with customers at the grocery store despite the fact she had asthma and trouble speaking.  While she was legitimately sick, the grievor still wished to be present during the opening of her restaurant and only performed limited tasks and rarely interacted with its customers.  There was no evidence that the small amount of work she performed at the restaurant was inconsistent with her medical condition.  The union also argued that there was no proof of intent to commit fraud.

Decision of the arbitrator

Reflecting on the totality of the medical evidence available at the hearing – evidence which had not previously been available to the employer because of how the grievor chose to conduct herself during the company investigation – Arbitrator Arne Peltz determined that the grievor did not dishonestly take sick leave for the purpose of working at her newly opened restaurant.

The arbitrator found that the grievor was unable to work for her employer at the grocery store during the time period in question. As a cashier, she would have been expected to communicate verbally with customers and would have been unable to take rest breaks as required.  In contrast, at the restaurant she only provided minimal assistance and took frequent breaks.

Nonetheless, Arbitrator Peltz held that the grievor had engaged in culpable misconduct and provided the employer with just cause for discipline. During the period of time that mattered most, she had refused to provide her employer with relevant medical evidence.  The employer was entitled to receive a fulsome, cogent explanation for the grievor's absence from work.  Regardless of whether she had the right to take sick leave in the first place, her failure to be honest and forthcoming with her employer, and to generally cooperate with the company's investigation, amounted to misconduct which gave her employer cause for serious discipline.

This was particularly so against the special backdrop of the Sobeys case.  The arbitrator confirmed that trust between an employee and his or her employer is absolutely critical in the retail food industry and the presumptive response to incidents of dishonesty is summary discharge for cause, regardless of whether the employee has actually engaged in theft.

Despite this presumption, given the many compelling factors in the grievor's case, Arbitrator Peltz decided to substitute a four month unpaid suspension for the termination of the grievor's employment. He highlighted the grievor's many years of good service and her sympathetic personal and family circumstances.  He also took the view that she had excellent rehabilitative potential, had learned her lesson, and was unlikely to repeat her misconduct in the future.

Takeaways for HR professionals

  1. Special presumptive rule. Honesty is the touchstone of the employment relationship. Although such "rules" are always dependent on the circumstances, in the retail food industry in particular, dishonesty, including theft, invites termination of employment for just cause.
  2. Employee's long service. Although the employee's long discipline-free service worked to her benefit, as Arbitrator Peltz explained, the grievor's long service "cut both ways ... since a senior employee should know her obligation to be honest at all times". Especially with respect to honesty, employers can hold employees with long service to a higher standard than those with short service.
  3. Duty of fidelity and good faith. Employees have a duty of fidelity and good faith during an investigation. Discipline may be imposed for obstructing an investigation or providing untrue information regardless of whether the employee is cleared of the initial charges of misconduct. An employee has a positive duty to be honest and forthright and not to mislead the employer, or be evasive or generally frustrate the investigation.

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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James Kondopulos
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