Dismissals are always risky, and dismissals for cause should always be approached with caution
by Anique Dublin and Stuart Rudner
While perhaps this should go without saying, if an employer is going to fire someone for breaching company policy, it should be sure that the policy it relies on actually exists.
As an example, in a recent decision, the Manitoba Court of Queen’s Bench had to confirm that an employer does not have just cause to dismiss an employee for breaching a policy that had never been reduced to writing.
Background
In Klassen v. Rosenort Cooperative Limited, Barry Klassen was the general manager at Rosenort Cooperative for about 10 years. Klassen was also a member of the board for about 10 years, three of which he was president.
On all accounts, Klassen was very successful in his role as general manager. His performance reviews regularly had comments such as “exceeding expectations” and “exceptional performance going beyond job requirements”. On his last performance review, in April 2016, he was given a rating of 198 out of 200.
In November 2016, the Coop found two emails on Klassen’s computer that he sent to a local business owner. Upon reviewing those emails, the Coop concluded that Klassen had disclosed confidential information and acted in a manner contrary to the best interests of the Coop.
As a result, the Coop decided to terminate Klassen’s employment for cause, alleging a breach of confidentiality which, according to the Coop, was a major violation of its Employee Policy and Information Manual.
Consequently, Klassen brought an action for wrongful dismissal and sought general, aggravated and punitive damages. In its defence, the Coop argued that Klassen not only breached its confidentiality policy but also the common law duty of confidentiality, which is an implied term of every employment contract.
Decision
In deciding whether the Coop properly terminated Klassen for cause, the court evaluated the nature and extent of the behaviour and all the surrounding circumstances.
As Stuart Rudner discusses in his book, You’re Fired! Just Cause for Dismissal in Canada, case law such as McKinley v BCTEL, 2001 SCC 38 requires a contextual approach to be applied. You do not only consider the misconduct in question but all the relevant circumstances, such as the employee’s age, length of employment, past disciplinary history and any mitigating circumstances.
After considering the above principles, the court concluded that the Coop’s decision to terminate Klassen’s employment was not justified. Firstly, the Coop did not have a written confidentiality policy. As a result, the Coop coard could not agree about what confidentiality policy they were relying on when they terminated Klassen’s employment. As a result, it was hard to compellingly demonstrate a breach of policy.
Secondly, the court held that the information disclosed by Klassen did not meet the common law definition of confidential information.
The factors to consider when assessing whether information is confidential were summarized in the case of Stonetile (Canada) Ltd. v. Castcon Ltd.:
- the extent to which the information is known outside the owner’s business
- the extent to which the information is known by employees and others involved in the owner’s business
- the extent of measures taken by the owner to guard the secrecy of the information
- the value of the information to the owner and competitors
- the amount of money or effort expended by the owner in developing the information
- the ease or difficulty with which the information could be properly acquired or duplicated by others.
The court concluded that the information Klassen provided to the local business owner fell far short of meeting the legal test for confidential information. It was a list of products available for purchase by the Coop from a third party and it came from the manufacturer. The court also noted that the information was not only provided to this Coop, but to the whole network of 250 co-ops in Western Ontario, without any indication that it was to be kept confidential.
The court held that Klassen’s actions were neither wrong nor contrary to the best interests of the Coop. The court also noted that even if they were, the transgression was so minor that the Coop’s decision to terminate Klassen’s employment would have still been far from proportionate.
Klassen was awarded 10 months’ notice in lieu of termination. The court also awarded him $10,000 for aggravated damages after concluding that the Coop failed to act in good faith when dismissing him and another $8,000 in punitive damages.
Takeaway
This case reinforces the importance of:
- thorough workplace policies with clearly defined terms
- ensuring that all employees are aware and properly trained on workplace policies.
It also confirms that in order to prove a breach of policy, there must be a policy in place that was clearly communicated to the employees, and that an employer that fails to investigate or fails to investigate properly before terminating an employee for cause leaves itself exposed to additional damages.
In this case, the court held that the investigation was not conducted objectively and the Coop jumped to conclusions when reacting to the emails.
Dismissals are always risky, and dismissals for cause should always be approached with caution.
