EMPLOYERS’
•Issue 48 July 2013
A case decided by the Ontario Superior Court of Justice last month, is a potent
reminder of how difficult it is for employers to justify terminations for cause,
even when the employee’s workplace behaviour is highly questionable.
Failure to ask employee about questionable
expenses prior to termination means no just
cause
In Tsakiris v. Deloitte and Touche LLP (ONSC 4201 Can LII), the Court
considered the wrongful dismissal claim of a 33 year old senior manager, with 8
years of service. The accounting firm had fired him for cause, after he allegedly
breached its expense claim policy.
Deloitte had a business travel and expense reimbursement policy. The policy
allowed employees to be reimbursed for various client-related, and business
development expenses. The policy stipulated that filing a fraudulent expense
report was cause for immediate dismissal.
Some years into the plaintiff’s employment, a concern arose with respect to his
expense claims. The employer undertook its own investigation. The plaintiff
eventually admitted that he had routinely altered the supporting receipts that
accompanied his expense claims. He would tear off the date and time portion of
the receipt, or wrote over it, in order to obscure the date and time. These expenses
were almost all charged to a client.
The plaintiff explained that he believed that his expenses were appropriate.
For example, on one occasion, he expensed a meal with his girlfriend, after his
supervisor told him that to do that, because he had put in a lot of work that
weekend.
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The employer decided not to terminate the employee at that time, and to give him
a second chance. However, it issued a letter of reprimand and warning. For the
two subsequent months, the plaintiff’s expenses were in line. However, at month
three, he submitted expenses that were problematic. There were meal receipts
charged to clients on which the attendees had nothing to do with the client or
work being done for the client. The employer concluded that this violated the
policy, as well as the warning letter the plaintiff had received. It terminated the
plaintiff for cause. It did not ask for the employee’s explanation of the expense
reports, or the perceived anomalies with them, prior to letting him go.
LinkedIn
At trial, the employee said that the expenses related to recruitment and business
Chris Thomlinson spoke to the
ExecForum in Oakville about current
issues in employment law on June 25.
“While it is tempting to litigate just cause cases
on principle, the outcome for employers is always
risky.”
e: [email protected]
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What’s New at RT
Janice Rubin was a guest on the CBC
Radio One program Ontario Today on
July 12 where she discussed speaking
out at work.
Janice also spoke to the Legal Feeds
Blog on July 9 about confidentiality
agreements.
Cory Boyd also spoke to the
ExecForum in Oakville on June 25.
Cory discussed human rights.
20 Adelaide St. East • Suite 1104 • Toronto, Ontario • M5C 2T6
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Employers’ Alert
Failure to ask employee about questionable expenses prior to
termination means no just cause
Breakfast Seminar in Mississauga
Continued...
Managing the Sandwich Generation
development activities, and he had charged them to client matters, because he
did not know where else to put them. He also indicated that if a new matter was
eventually opened, he would transfer the expense to that new matter. Testimony
of other witnesses at trial confirmed that this was a common practice at the firm.
In addition, the plaintiff said that he had never been instructed on the use of nonclient codes. These expense claims, unlike the earlier ones on which the plaintiff
had been warned, did not obscure the date and time.
Monday September 16 8am to 9am at
the Living Arts Centre
The employer argued that the expense report was created well after the expenses
were actually incurred, and given the employee’s past conduct, showed a
recklessness that went to the heart of the employment relationship.
While the trial judge did not entirely accept the plaintiff’s explanation, he found
in favour of him. He stated that it is the employer’s onus to prove cause, and
that:
The defendant did not confront the plaintiff with these anomalies at the
time of his termination and gave the plaintiff no opportunity to explain the
context in which the expenses were incurred.
The trial judge also said that the termination for cause was not a proportionate
response. He noted that there were other less drastic measures available such
as not reimbursing the expenses, or providing the plaintiff with a warning or
instruction on the use on non-client codes.
The plaintiff was awarded 10 months’ pay in lieu of notice, plus a small bonus.
This amounted to approximately $110,000.
What does this mean for employers?
1. Even on evidence that an employer thinks is compelling and
proves employee misconduct, it is crucial that an employee be
given an opportunity to respond before he or she is terminated for
cause. The employer’s failure to do so in this case was mentioned repeatedly
by the trial judge as a factor he considered important. Had the employer done
so, the outcome of this matter might have been different.
2. The onus of establishing just cause is always on the employer, and
it is a high onus indeed. Most cases do not succeed, even on facts such as
these, which suggest the employee’s behaviour was problematic. While it is
tempting to litigate just cause cases on principle, the outcome for employers is
always risky. There are, of course, exceptions, but it is important to recognize
that in the vast majority of cases, succeeding in a case of just cause is an uphill
battle.
3. This trial of this matter took 7 days. There were discoveries, and
undoubtedly extensive trial preparation on both sides. Depending
on whether there was an offer to settle, the defendant may end up paying the
judgment, its own legal fees, and a significant portion of the plaintiff’s. The
total cost may well be in excess of what the plaintiff would have been prepared
to walk away with at the time of termination.
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t: 416.847.1814
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Due to popular demand, we are
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