Update by Parmvir Padda, Lawyer and Erin Brandt, Cofounder

An employer can dismiss an employee without notice or payment in lieu of notice where the employee has engaged in very serious misconduct. We call this dismissal for just cause. We caution that the bar to prove just cause is quite high.

Whether dishonesty can be grounds for just cause was considered by the Supreme Court of Canada in McKinley v BC Tel, 2001 SCC 38 (“McKinley”).

Background

During his employment with BC Tel, Mr. McKinley suffered from high blood pressure. While on medical leave, Mr. McKinley sought a less stressful role. Instead, BC Tel dismissed him.

After Mr. McKinley filed a legal claim against BC Tel for wrongful dismissal, BC Tel argued that it had just cause for dismissing Mr. McKinley on the basis that Mr. McKinley was dishonest about his medical condition and the treatments available to him. This argument was rejected, and the BC Supreme Court awarded Mr. McKinley general damages, aggravated damages, special damages, and pension contributions.

BC Tel successfully appealed the BC Supreme Court’s decision to the BC Court of Appeal and Mr. McKinley then appealed to the Supreme Court of Canada.

Decision

The Supreme Court of Canada found that Mr. McKinley had not been dishonest. Nevertheless, the court provided helpful guidance that just cause for dismissal will be established where an employee’s dishonesty gives rise to a breakdown in the employment relationship. This could occur where the dishonesty violates an essential condition of an employee’s employment contract, constitutes a breach of faith, or is fundamentally inconsistent with the employee’s obligations to their employer.

Key Take Away

Since not all dishonesty will constitute grounds for a just cause dismissal, employers should use a balancing approach to assess whether an employee’s dishonesty is serious enough to justify immediate dismissal without any severance pay.