Canada: Believe Me, Ontario Court Upholds Termination For Dishonesty

Last Updated: August 30 2017
Article by Michael MacLellan

Employers are sometimes surprised to learn that they do not necessarily have just cause to terminate a dishonest employee.  It is true that employees have an implied duty of faithfulness and honesty in their relationships with employers, but as the Supreme Court of Canada ruled in its 2001 decision: McKinley v. BC Tel (2001 SCC 38), not all acts of dishonesty justify termination of employment.  Employers need to take a contextual view of the misconduct and analyze whether the nature and degree of dishonesty has irreparably damaged the employment relationship to the point that it cannot continue.  This is a high threshold to meet before an employee can be terminated for dishonesty, but a recent Ontario case has shed some more light on when an employer will be justified in firing a dishonest employee.

Francis Aboagye sued his former employer Atomic Energy of Canada Limited ("AECL") for wrongful dismissal and sought damages totalling $4 Million.  In response, AECL applied to have Aboagye's claim dismissed on a summary basis for failing to establish any legitimate issue for trial.  The Ontario Superior Court of Justice ultimately agreed with AECL, and in 2017 the Court of Appeal affirmed that decision.

AECL is Canada's leading nuclear agency, with research facilities in operating in various locations including Chalk River, Ontario, and the Port Hope Area Initiative.  Employees have access to nuclear facilities and information vital to the security of Canada due to the sensitive nature of material and equipment being used by AECL.  Accordingly, all employees are required to obtain security clearances corresponding to their positions and AECL is required to comply with the federal government's mandated rules under the Nuclear Safety and Control Act, General Nuclear Safety Control Regulations, the Nuclear Security Regulations, and security clearance requirements established by the Canadian Nuclear Safety Commission.

On April 3, 2012 Mr. Aboagye was offered employment with AECL as an Industrial Safety Specialist subject to successfully obtaining security clearance.  As part of the security clearance process Mr. Aboagye was required to disclose all employment information for the last five years and warned that refusal to provide information would result in a review of the applicant's eligibility to work for AECL.  Mr. Aboagye completed the requisite form on April 29, 2012, but left a gap in his employment record for the current period of time.   He was contacted by an AECL Personnel Security Officer on May 10, 2012 and specifically asked whether he was presently in school, working, or unemployed.  He advised that he was unemployed and upon receiving clearance Mr. Aboagye began working for AECL on May 15, 2012. 

AECL began receiving harassment complaints against Mr. Aboagye almost immediately upon starting his employment.  In the course of investigating these complaints, AECL learned that Mr. Aboagye in fact was working for another company at the time that he was obtaining security clearance to work for AECL.  He had simply and patently lied about his employment status during the hiring stage.  Mr. Aboagye provided a number of wacky explanations for failure to disclose that employment, including that he did not think it was relevant, and that he was the victim of a racially-motivated conspiracy involving his former employer and the Ontario Provincial Police.  AECL terminated Mr. Aboagye after determining that the harassment complaints were all legitimate.  His dishonesty in the hiring process was also a factor considered by AECL in deciding to terminate.

The Court granted AECL's motion for summary judgment by ruling that Mr. Aboagye's dishonesty in the hiring process gave the company just cause to terminate his employment.  In part, the Court decided:

While dishonesty will not necessarily give rise to cause for dismissal, dishonesty that goes to the "core of the employment relationship" carries the potential for dismissal. For instance, if the dishonesty "violates an essential condition of the employment contract, breaches the faith inherent to the work relationship, or is fundamentally or directly inconsistent with the employee's obligations to his or her employer", it may well constitute conduct going to the core of the employment relationship: McKinley,  at para. 48; Steel v. Coast Capital Savings Credit Union,  2015 BCCA 127 (CanLII), at para. 30.

The Court noted that the context in which Mr. Aboagye misled AECL was significant due to the national security aspects of this matter.  AECL is required to operate in a highly regulated environment where it must comply with federal government security processes and procedures.  AECL is not a typical employer in this respect, and its background checks extend far beyond the typical purposes of assessing suitability based on past performance with former employers. 

The bottom line in this matter was that Mr. Aboagye was dishonest, and actively lied, during his security check, and he did so in the context of a highly regulated and rule oriented process designed to protect the nation.  He engaged in a serious form of dishonesty which was irreconcilable with sustaining employment with AECL because it went to the core of the employment relationship.  AECL therefore had just cause to terminate Mr. Aboagye and his complaint was dismissed.

It should be clear from the foregoing that not all cases of dishonesty will give an employer the right to terminate an employee.  Dishonesty from an employee is never appropriate, but this case illustrates the exception rather than the rule.  But dishonesty in the hiring process might be enough to destroy the employment relationship if the dishonesty concealed significant information about the employee's ability to perform the job safely, or legally.  For example, and employee should not expect to keep their employment if they lied about obtaining required training or certification, or if they lied about their eligibility to work in Canada or in a certain industry.

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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Michael MacLellan
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