In Shalagin v. Mercer Celgar Limited Partnership, 2023 BCCA 373 ("Shalagin"), the British Columbia Court of Appeal affirmed that surreptitiously recording fellow employees may constitute just cause.

Employers are often reminded that the threshold for establishing just cause in Canada is high, as discussed in our previous postwhich also provides an overview of the general principles of just cause termination. However, in the recent decision of Shalagin v. Mercer Celgar Limited Partnership, 2023 BCCA 373 ("Shalagin"), the British Columbia Court of Appeal ("BCCA") affirmed the trial judge's decision that secretly recording colleagues in the workplace constituted just cause. Additionally, in Mechalchuk v. Galaxy Motors (1990) Ltd., 2023 BCSC 635 ("Mechalchuk"), a decision from earlier this year, the Supreme Court of British Columbia ("BCSC") also upheld a just cause termination in a case where the employee attempted to expense approximately $250 in personal meals as business meals, submitting receipts by writing the names of coworkers on the receipts; when confronted with the issue, the employee perpetuated his dishonesty. Both Shalagin and Mechalchuk involved dishonest misconduct committed by employees in a position of trust. These recent British Columbia decisions serve as a good reminder that while care must be taken when determining whether an employee can be terminated for just cause, the threshold for what constitutes serious and egregious conduct may be lower when the behaviour strikes at the trust relationship between the employer and employee.


Mr. Shalagin was a Certified Professional Accountant ("CPA") who worked as a Senior Financial Analyst at the employer's pulp mill for approximately ten years. Mr. Shalagin was originally terminated without cause and provided payment in lieu of notice pursuant to the Employment Standards Act.

The employment relationship was not governed by a written employment agreement; however, Mr. Shalagin was subject to the employer's workplace policies including a Code of Business Conduct and Ethics and a Confidentiality Policy. As a CPA, Mr. Shalagin was also required to abide by the Chartered Professional Accountants of British Columbia Code of Conduct which expressly prohibited Mr. Shalagin from using a client's or employer's confidential information for his own advantage.

Following his termination, Mr. Shalagin filed an employment standardscomplaint, a human rights complaint, and a wrongful dismissal claim. Among other things, Mr. Shalagin alleged that he had been discriminated against during his employment and that the employer was dishonest about its bonus plan. During the hearing at the Human Rights Tribunal, Mr. Shalagin disclosed that he had secretly recorded several training sessions, over one hundred meetings, and numerous conversations with colleagues at his workplace. After learning about such secret recordings during the human rights hearing, the employer amended its BCSC pleadings to assert after-acquired just cause.

There was no evidence that the secret recordings had been shared with anyone other than the Human Rights Tribunal and the employer. The recordings were mainly used to advance Mr. Shalagin's position in the various complaints and claims he had commenced against his employer. While the secret recordings were not illegal under Canada's Criminal Code, Mr. Shalagin did acknowledge that some of his recordings were unethical and that he had not asked his colleagues for permission to records because he was aware that it would make them uncomfortable. Some of the recordings included personal details about his colleagues that had nothing to do with the workplace.

BCSC Decision

The main issue in the BCSC decision was whether Mr.Shalagin'ssecret recordings constituted just cause for his dismissal. The BCSC held that Mr.Shalagin's recordings constituted just cause "given the effect [on] the relationship of trust" between the employer and employee.

The BCSC concluded that there was no legitimate basis for Mr.Shalagin's claim that he made the recordings based on a fear of discrimination. While the BCSC noted that Mr. Shalagin was not acting with malice in making the records, he was aware that it was morally wrong to do so. Furthermore, while Mr. Shalagin was not a fiduciary, the BCSC did note that professionals in positions of high accountability are expected to respect the standards established by their profession and Mr. Shalagin's professional obligations provided additional support for a finding that his conduct constituted just case.

BCCA Decision

Mr. Shalagin appealed the BCSC decision. The BCCA ultimately dismissed the appeal and upheld the BCSC decision.

The BCCA noted that Mr.Shalagin's motivation for making the recordings was not to protect his rights in a relationship that was already headed to termination, but rather to "catch" a colleague saying something that would provide the basis for afuturecomplaint. However, the BCCA refused to express an opinion as to whether, in other circumstances, secretly recording conversations in the workplace might be justified if the employee has a reasonable belief that they are being discriminated against on the basis of a protected groundandif the recordings bear some relationship to the protection of the employee's legal position.

The BCCA applied the McKinley contextual approach to analyzing just cause, as set out by the Supreme Court of Canada in McKinley v. BC Tel, 2001 SCC 38 ("McKinley"). The McKinley contextual approach requires an analysis of both the circumstances surrounding the misconduct as well as its nature or degree to determine whether the employment relationship can be sustained. The analysis requires the particular facts of each case to be carefully considered and a balance must be struck between the severity of an employee's misconduct and the disciplinary action imposed. In particular, when assessing whether the employee's misconduct gives rise to a breakdown in the employment relationship, there must be evidence of the employee's misconduct and the nature and degree of the misconduct must warrant a dismissal.

In Shalagin, after applying the McKinley contextual approach, the Court noted that while Mr. Shalagin did not expressly mislead or lie to his employer, the secret recordings were nonetheless underhanded and undermined the trust relationship with the employer and also violated individual privacy interests.

Key Takeaways

While the Shalagin and Mechalchuk decisions have not changed the law with respect to just cause terminations, both suggest that it might be easier to establish just cause in situations where an employee in a position of trust engages in dishonest behaviour. In particular, misconduct which involves confidentiality issues, privacy issues or misleading or lying to an employer is likely to constitute just cause when it leads to a breakdown of the trust relationship between the employer and employee, especially if the employee is a professional or fiduciary.

However, as discussed in our previous post, each termination is unique and fact specific. As such, prior to deciding to terminate an employee, employers are encouraged to consult with experienced legal counsel to help mitigate their exposure to complaints and claims.

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.