Restaurant worker fired for buying stake in bar awarded 20 months' pay
By Jeffrey R. Smith
As employees gain experience and knowledge of their jobs, they may have the urge to spread their wings a little bit and search out more opportunities. This can be concerning to the employer if the employee decides to leave for other work, as it could mean a loss of valuable talent and knowledge that could be difficult to replace.
But it doesn’t always mean cutting ties. The employee might just want to expand her horizons while continuing what she’s doing with the employer. The question might be, can the employer handle that shift in focus, whether there’s a concern of competition or not? And is it really worth being worried about?
If an employee seeks other ventures within the industry, of course the employer might be concerned the employee is using the knowledge and connections gained in her work to potentially compete with the employer. But a close examination should be made to see if this is truly the case.
An Ontario inn and restaurant faced such circumstances when a shift manager bought a stake in a bar in a neighbouring community. The manager had been with the inn for almost 20 years and was responsible for running the inn’s bar, managing inventory, supervising staff and doing some marketing. Because he was the one who placed the orders for alcohol, he developed connections with suppliers.
The new bar in which the employee had invested was a bar only — not a restaurant — and catered to a different clientele in the other community. The employee also was a silent partner and didn’t work there. However, the inn’s owners were concerned the employee would use his connections to get bulk deals on ordering inventory for the new bar or could steal customers.
This led to some strife between the employee and the owners and, after the employee used the phone at the new bar to call in sick due to the stress the situation was causing, the inn’s owners said he had breached their trust by working there and disregarded the inn’s business interests. The owner’s claimed the employee had severed the employment relationship and told him to stay away.
A court found there was no reason for the inn’s owners to be worried about conflict of interest, as the employee wasn’t involved in the day-to-day operations of the new bar and the new bar wasn’t in director competition with the inn. Also, they were hasty in thinking the employee was working at the new bar just because he called from there without any other proof. And, finally, the court found that even if the employee used his connections to get deals from suppliers if he ordered something for his new bar — and there was no evidence he did — the owners’ weren’t able to show any evidence that this would hurt the inn’s business, said the court.
The court found the employee was wrongfully dismissed and the inn’s owners were ordered to pay him 20 months’ salary: see Carter v. 1657593 Ontario Inc., 2014 CarswellOnt 16431 (Ont. S.C.J.).
Ultimately, there was no indication the employee’s investment hurt his ability to do his job or would hurt the inn’s business, but the owners didn’t like it even though they didn’t really know the circumstances. Unfortunately for all involved, this led to a sequence of events that ended a long and productive employment relationship.
Should investment in a similar business be potential just cause for dismissal, or should there be proof of direct competition before it can be considered a breach of duty by the employee? If an employee has any connections to a potential competitor, is that enough to breach the employment contract?
