Gap Appears Between Ontario and BC Regarding the Test to Determine Just Cause for Dismissal

The recent split decision of the British Columbia Court of Appeal in Steel v. Coast Capital Savings Credit Union, 2015 BCCA 127 (“Coast Capital”) appears to have opened a gap between Ontario and British Columbia regarding the factors that must be considered when a court applies the contextual approach to determine if an employer has cause to summarily dismiss an employee. The majority held in Coast Capital that the trial judge has discretion whether to consider the dismissed employee’s length of service and prior employment record when deciding whether an employer’s decision to summary dismiss an employee was a proportionate response to an employee’s misconduct.

Coast Capital is inconsistent with the leading Ontario decision, Dowling v. Ontario (Workplace Safety and Insurance Board), 2004 CanLII 43692 (ON CA)(“Dowling”), which mandates that Ontario courts must consider factors such as the employee’s length of service and prior employment record when applying the contextual approach mandated by the Supreme Court of Canada in McKinley v. BC Tel, 2001 SCC 38 (“McKinley”).

Facts

Ms. Steel had worked on the IT helpdesk at the credit union for 21 years when she was terminated from her employment for cause. Her role on the helpdesk gave her unfettered access to every document in the credit union’s database. However, she was forbidden by the company’s policy from accessing any other employee’s personal folder without that employee’s permission.

In breach of that policy, Ms. Steel accessed a manager’s confidential personal folder in order to view a document that contained a waiting list of employees eligible for parking lots (parking spots were apparently coveted at the credit union). The document Ms. Steel accessed also contained the pay grades for the employees. She was discovered because the manager tried to access that document at the same time and learned that it was being remotely viewed by Ms. Steel.

The motion judge held that the credit union had cause to terminate Ms. Steel. She found that the misconduct was of a sufficient character to cause the irreparable breakdown of the employment relationship. In particular, the judge relied on the fact that Ms. Steel was in a position of trust.

The motion judge wrote:

Ms. Steel violated that trust in two distinct and important ways. First, she opened a confidential document in another employee’s file for her own purposes, not as part of her duties and not at anyone’s request. Second, she violated the protocols that were to govern situations in which remote access of such documents was undertaken. Specifically, she did not have permission to do so from the document’s owner, or from anyone entitled to grant such permission.

The Decision of the British Columbia Court of Appeal

The Court upheld the motion judge’s decision. Applying McKinley, the question of whether the misconduct provided just cause for dismissal is a question of mixed fact and law, subject to a standard of review of palpable and overriding error. The majority of the Court found that the trial judge made no palpable and overriding error in finding that Ms. Steel had resulted in a fundamental breakdown in the employment relationship

Writing in dissent, the Honourable Mr. Justice Donald found that the motion judge had failed to properly apply the contextual analysis set out in McKinley because she had failed to include in her analysis the fact that Ms. Steele had worked for the credit union for 21 years and, prior to the incident, had an unblemished performance record. Justice Donald wrote at para. 12:

[12] What is absent from the trial judge’s reasons is an explanation why a single instance of a breach of the privacy rules should end a 21-year career. The judge does not find this to be a case of dishonesty. The record does not show deceit, fraud, theft or stealth. The misconduct was serious, as the judge found, but her analysis of the proportionality of the penalty left out a vital factor.

In reaching his decision Justice Donald recognized that Ms. Steel had engaged in a serious act of misconduct but noted that the matter was an internal administrative issue (the allocation of parking lots) rather than the business of the credit union. As a result, the integrity and probity of the credit union were not compromised by Ms. Steel’s actions.

The majority of the Court rejected Justice Donald’s approach writing at paragraphs 28 to 30:

[28] The governing principle from McKinley is that a trial judge is tasked with determining whether, in the totality of the circumstances, the alleged misconduct was such that the employment relationship could no longer viably subsist: McKinley at paras. 56-57. However, the inherent value of the job to the employee need not be expressly considered in determining whether there was just cause to dismiss. Put differently, the trial judge is not obligated to formally balance the length and quality of service with the nature and severity of the misconduct in determining whether there was just cause to dismiss, though it may be appropriate on the facts of a particular case to engage in just such an analysis.

[29] The framework adopted by the Court in McKinley focuses on the nature and severity of the misconduct in relation to its impact on the employment relationship; it is not a balancing exercise between the value of the employment to the individual and the severity of the misconduct. As a result, considerations that underpin the value of the employment to the individual simply go to the fact-specific understanding of the particular employment relationship against which the impact of the misconduct is determined. All of this is done to determine whether, as a matter of fact, the employment relationship has irrevocably broken down. The Court explains:

57 … I favour an analytical framework that examines each case on its own particular facts and circumstances, and considers the nature and seriousness of the dishonesty in order to assess whether it is reconcilable with sustaining the employment relationship. Such an approach mitigates the possibility that an employee will be unduly punished by the strict application of an unequivocal rule that equates all forms of dishonest behaviour with just cause for dismissal. At the same time, it would properly emphasize that dishonesty going to the core of the employment relationship carries the potential to warrant dismissal for just cause.

[30] Misconduct “going to the core of the employment relationship” includes, as the Court explains at para. 48, behaviour that “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.” In a case where the employee admits to having engaged in the misconduct, the sole issue for the trial judge to consider is whether that conduct caused a breakdown in the employment relationship. Therefore, whether the length of service or the quality of service is a relevant factor that mitigates the effect of the misconduct on the employment relationship is a question for the trial judge to determine based on the specific facts and circumstances of a particular case. [emphasis added]

The Gap Between the BC and Ontario Courts of Appeal

Justice Donald did not reference the Ontario Court of Appeal’s decision in Dowling in his dissenting decision. However, he applied the same analytical approach.  In Ontario, a court must consider factors such as age, employment history, seniority, role and responsibilities of the dismissed employee when considering the surrounding circumstances. This is made clear in Dowling at paras. 49 to 53:

[49] Following McKinley, it can be seen that the core question for determination is whether an employee has engaged in misconduct that is incompatible with the fundamental terms of the employment relationship. The rationale for the standard is that the sanction imposed for misconduct is to be proportional — dismissal is warranted when the misconduct is sufficiently serious that it strikes at the heart of the employment relationship. This is a factual inquiry to be determined by a contextual examination of the nature and circumstances of the misconduct.

[50] Application of the standard consists of:
1. determining the nature and extent of the misconduct;
2. considering the surrounding circumstances; and,
3. deciding whether dismissal is warranted (i.e. whether dismissal is a proportional response).

[51] The first step is largely self-explanatory but it bears noting that an employer is entitled to rely on after discovered wrongdoing, so long as the later discovered acts occurred pre-termination. See Lake Ontario Portland Cement Co. v. Groner, 1961 CanLII 1 (SCC), [1961] S.C.R. 553.

[52] The second step, in my view, is intended to be a consideration of the employee within the employment relationship. Thus, the particular circumstances of both the employee and the employer must be considered. In relation to the employee, one would consider factors such as age, employment history, seniority, role and responsibilities. In relation to the employer, one would consider such things as the type of business or activity in which the employer is engaged, any relevant employer policies or practices, the employee’s position within the organisation, and the degree of trust reposed in the employee.

[53] The third step is an assessment of whether the misconduct is reconcilable with sustaining the employment relationship. This requires a consideration of the proved dishonest acts, within the employment context, to determine whether the misconduct is sufficiently serious that it would give rise to a breakdown in the employment relationship.

Conclusion

In British Columbia, it remains open to the trial judge to determine whether the dismissed employee’s length of service and prior employment record is a relevant factor when determining whether the employer has just cause to terminate the employee’s employment. In contrast in Ontario, the employee’s length of service and prior employment record are factors that must be considered when applying the contextual approach.

The majority’s decision in Coast Capital has moved the needle in favour of the employer in British Columbia.