The law surrounding constructive dismissal is full of potential pitfalls, both for employers, who may inadvertently constructively dismiss an employee and expose themselves to significant liability for failing to provide adequate notice, and for employees, who are faced with the difficult decision of asserting that a constructive dismissal occurred, or accepting an unwelcome change to their employment contract.  In order to successfully avoid these pitfalls, it is important for to have a basic understanding of the circumstances under which a constructive dismissal may occur.  

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At its core, constructive dismissal rests on assertion that employees are entitled to rely on the terms of their contract of employment remaining fixed, and that fundamental changes to the employment contract cannot be made without the employee’s consent.  A constructive dismissal occurs when an employer, through their conduct, shows that the employer no longer intends to be bound by the contract of employment.

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What is a constructive dismissal?

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In the leading case of Potter v New Brunswick Legal Aid Services Commission, 2015 SCC 10, [2015] 1 SCR 500, the Supreme Court of Canada articulated a two-branch test to determine whether a constructive dismissal has occurred.  First, a constructive dismissal can occur through a single unilateral act that breaches an essential term of the contract of employment.  Secondly, it can also occur where the employer’s conduct, taken as a whole, shows the employer no longer intends to be bound by the employment contract.  Notably, a written employment contract is not required for this doctrine to apply, although the absence of a written contract can make determining whether a breach has occurred more challenging.

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The first branch requires that the unilateral change must substantially alter an essential term of the employment contract.  There are two stages to this analysis.  First, it must be shown that there was a breach by way of a unilateral change by the employer.  Secondly, it must be shown that a reasonable person in the employee’s situation would feel that the breach was a substantial change to an essential term.  This is a highly-fact driven exercise, and will depend on the exact circumstances of the change.  

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The second branch requires a finding that the employer has shown they no longer intend to be bound by the employment contract.  The key question is the employer’s perceived intention; ie, whether a reasonable person in the same circumstances as the employee would view the employer as intending to no longer be bound by the contract.  This does not require a single act, but can occur through the cumulative effect of past acts.

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Examples of constructive dismissal

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A non-exhaustive list of conduct that Canadian courts have found to constitute constructive dismissal is found below.  It is important to note that this conduct is only sometimes, but not always, sufficient to establish a constructive dismissal:

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• Demoting an employee to a position of lower prestige and status;
• Failing to provide a promised promotion;
• Requiring an employee to perform a fundamentally different type of work or systematically removing an employee’s duties;
• Changing the employee’s work location, such as a transfer to another city, province or country;
• Changing the employee’s hours of work;
• Changing the employee’s work conditions, such as a transfer to a smaller office with reduced amenities and access to other employees;
• Engaging in abusive behaviour that renders continued employment intolerable, such as verbal abuse, foul language, unsubstantiated accusations, or threats of termination;
• Failing to prevent the harassment of an employee by co-employees;
• Breaching the employee’s privacy, such as through unwarranted surveillance;
• Suspending an employee, either for discipline or for administrative reasons;
• Removing an employee’s support infrastructure and preventing them from accessing information and meetings necessary for them to perform their duties;
• Demanding an employee resign;
• Laying an employee off temporarily, when a lay-off is not explicitly authorized by the employment contract or by past conduct;
• Placing an employee on probationary status without cause; and
• Changing an employee’s remuneration significantly

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When does a constructive dismissal kick in?

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Once an employee has been confronted with a unilateral change to the employment relationship, they must choose to accept the change, or reject it and refuse to go to work.  Until the employee has indicated, by action or by word, that they do not accept the change, there is no constructive dismissal.   An employee will typically be allowed a ‘reasonable’ period or time, typically two or three months, to decide whether they wish to accept the repudiation of the contract.  In certain cases, a delay of six or even seven months has not found to constitute condonation.  However, an employee is not entitled to wait forever before asserting constructive dismissal, and delaying too long will result in a court finding that an employee condoned the change to the employment relationship.  

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It is critically important for both employees and employers to understand that every case is fact-specific and what is a constructive dismissal in one case may not be one in another.  Because of this, one of the challenges that confronts both employers contemplating a change to the employment relationship, and employees faced with a change, is that it often be unclear when the line has been crossed and grounds for asserting a constructive dismissal actually exist.  

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The consequences for both employees and employers in failing to correctly determine if a constructive dismissal has occurred can be significant. From the employer perspective, for example, a good faith change to the work location of a long-term employee could result in paying up to 24-months salary for failing to provide adequate notice.

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From the employee perspective, if the employee assert a constructive dismissal and the court finds that the employer did not actually dismiss them, the employee will be found to have resigned, and to have lost any entitlement to notice or wages in lieu of notice.

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Conclusion

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Employers should consult with legal counsel before making significant changes to the employment relationship, to ensure that they are not inadvertently terminating an employee and exposing themselves to potentially significant claims for constructive dismissal.  

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Employees who believe that they have been subject to a constructive dismissal should seek legal advice as soon as possible to avoid inadvertently condoning a fundamental change to the employment relationship, and to determine if the change is sufficient to constitute constructive dismissal.

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Note to Readers: This is not legal advice. If you are looking for legal advice in relation to a particular matter please contact one of our group members. We communicate all these updates to our clients and readers on our Employer Resources Portal and through monthly Newsletters.

 As part of their licensing process, realtors in British Columbia will learn about many laws that will impact their day-to-day work. However, there are a few lesser-known legal obligations that can have a massive impact on your career. In particular, these are 3 legal obligations that every realtor in the province should keep top of mind:

‍1. Earning Commissions Under a Listing Agreement‍

Listing Agreements must be absolutely clear about how commission is earned and how long the property can be listed for. Occasionally, realtors will have a client sign a listing agreement, and then verbally agree to change some of the terms in order to give the client a deal. The final listing agreement must exactly match what the realtor and client agreed to, and the agreement must be signed by the client. A realtor can be shorted on their commission if the listing agreement doesn’t accurately reflect what they’ve agreed to with the client, or if someone signed on behalf of a client company but was not an authorized signatory.

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There have been court cases in BC where clients have tried to avoid paying their realtors the commission owed under a listing agreement, arguing that the person who signed the listing agreement on behalf of the client company was not one of the company’s authorized signatories (in most cases, a director or officer). Realtors should always ensure that the person signing a contract is authorized to bind a company to that contract.

2. Realtor’s Duty of Care and Avoiding Negligence Claims

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A buyer can only sue a listing agent for negligence if the buyer can establish that:
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1. The listing agent owed a duty of care to the buyer; and
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2. The listing agent was negligent in carrying out that duty (i.e., the listing agent fell short of the standard of care).

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A listing agent is obligated to disclose all material facts known to them that could affect a reasonable purchaser’s willingness to enter into an agreement to buy a property.

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Usually, the listing agent can satisfy this duty by asking the seller and other sources for information about the property. The realtor is not obligated to inspect the actual property or independently verify what they’ve been told, unless they have a reason to doubt what they’ve been told.

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Damages for negligence claims are typically equal to the actual loss suffered as a result of the realtor’s actions. In many cases, this would be the difference in the property’s value had the defect been disclosed to the buyer.

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This issue often comes up in situations where agents recommend to their clients that the inspection subject clause be removed from the contract, but there is reason to believe there are issues with the property (e.g., drainage issues) which are not disclosed to the buyer.

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As a realtor, always tell your clients to seek independent legal advice, but the key takeaway here is that you are obligated to discover facts relating which a reasonably prudent agent would have discovered in order to help their clients avoid error, misrepresentation, or concealment of facts with respect to a certain property.

3. Obligations To Collect or Pay GST

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Although realtors should never give tax advice (refer clients to tax lawyers or accountants for tax advice, if needed), realtors are often asked by their clients to provide off-the-cuff tax information, especially regarding GST. Many realtors will often provide mistaken information about GST. If you are asked by a client to provide some commentary on GST, ensure that you keep these key points in mind:

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1. GST payable on deposits: GST is payable on the entire assignment amount – not just a deposit. However, once that deposit has been applied to the full price for the property, it is subject to GST as part of the whole amount. For example, if a buyer puts down a deposit for $100,000 on a property being purchased for $1 million, no GST is payable at that time, but once the buyer pays the remaining $900,000 of the purchase price, the deposit becomes part of the total consideration paid for the purchase, and GST may be payable on the full $1 million.
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2. ‍GST on assignments: The standard form Assignment Agreement covers who pays GST between an assignor and assignee. When dealing with pre-sales, if a developer also requires its own form of assignment agreement to be signed, realtors must make sure that the GST section of the developer’s agreement does not conflict with or contradict the Assignment Agreement’s terms regarding who pays GST. The 2 documents should align exactly regarding who is responsible to pay GST.
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3. Assignments involving Non-Residents of Canada: As a realtor, you should make sure that the appropriate party remits GST to the CRA, as the CRA has the power to chase either the buyer or seller for unpaid GST, and if one party is a non-resident, it’s likely the CRA will go after the other party for the unpaid tax. This is particularly troubling for Sellers, as the Excise Tax Act makes it clear that the party selling taxable property is responsible for indicating to a buyer the amount of GST owing, and then also responsible for collecting the GST and remitting it to the CRA. The seller can only sue the buyer for not paying the GST if the Seller carried out its duties to flag for the Buyer the amount of GST that was owing.

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When in doubt, the Canada Revenue Agency provides helpful info on its website, and always remember, you can know enough to provide tax information, but do not provide tax advice. Always refer clients to a tax lawyer or accountant for detailed tax questions regarding specific scenarios.

Most people who run their own business operate through a corporation or a company as it’s commonly known. A company is a separate legal entity that acts independently. As an entity, it can do things like enter into contracts, own property and sue others.

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A company’s activities are tracked in its minute book. The minute book contains important information including the rules that govern the company, a register of the company’s directors and shareholders and resolutions authorizing the company to take certain actions such as paying dividends or obtaining loans.

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Other than it being legally required, it’s important to have a minute book in order to provide updated records to people who regularly want to see them such as shareholders, buyers and lenders.

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Generally, a minute book is kept at the company’s registered and records office. Due to the sensitive nature of the information, a lawyer usually prepares and keeps the minute book at their office. Having a law firm act as your registered and records office ensures that your minute books are kept up-to-date which can save substantial money when you are thinking of borrowing funds or potentially selling the company. Rectifying an incomplete minute book can also be very expensive.

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If you are thinking of incorporating a new company or would like to prepare a minute book for your existing company, reach out to Aman Bindra at [email protected] or call 604-591-7321 today.

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When terminating an employee in BC and Canada, it is important to remember that the concept of “at-will” employment does not exist. The law surrounding the termination of employees involves far greater consideration and obligation on the part of the employer than in jurisdictions that subscribe to “at-will” employment. Each situation will turn on its own set of facts.

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The Requirement to Provide Notice

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Unless a non-unionized employee acts in a manner that would constitute “just cause” for termination (which is a narrow category of behaviour), or the employment relationship expires at the end of a fixed term, the employer is obligated to provide the employee with either:

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• Advance notice of termination.
• Compensation in lieu of that notice.

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The employer's obligation to provide the employee with reasonable notice of termination does not apply where:

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• The employee resigns their employment
• The employment relationship is frustrated
• There is just cause for termination of employment
• The employment contract contains a valid term providing for the amount of notice to be given in the event of termination
• The employment contract is for a fixed term

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As it is often practically undesirable to have an employee continue to work after receiving notice of termination, paying out the notice period is the more frequent choice.

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The notice of termination provided to the employee must be specific and unequivocal. Moreover, it must be clearly communicated to the employee.

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In BC, there are three types of potential notice that the employer must give the employee at the time of termination of employment:

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• Statutory minimum termination notice or pay in lieu of notice.
• Common law reasonable notice.

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Alternatively, the parties may contract for a set period of notice, provided that period is not less than the statutory minimum requirements. Employers cannot contract out of the statutory minimum requirements.

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Both unionized and non-unionized employees are potentially entitled to the minimum statutory notice and severance pay. Common law reasonable notice is potentially available to non-unionized employees, but not to unionized employees who have their employment governed by a collective agreement.

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Statutory termination notice – BC Employment Standards Act

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There is a statutory minimum period of termination notice that must be given according to length of employment, outlined in the BC Employment Standards Act. Where groups of employees are terminated with a short period of time, mass or group termination notice periods may apply. The minimum standards legislation applicable to the employee must be consulted before structuring a termination package.

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Common law reasonable notice

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The notice periods that have been held to be reasonable at common law have traditionally been much longer than the minimum standards termination notice period, sometimes greater than 24 months of notice. Unless the employment contract limits the notice period to the statutory minimum, or to another amount that is greater than the statutory minimum, the employer must provide compensation for the common law notice period.

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In determining “reasonable notice” under the common law, the Courts will consider such factors as:

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• The length of service.
• The age of employee.
• The character of the position, including the degree of responsibility and the employee’s level of training and education.
• The availability of similar employment, having regard to the experience, training and qualifications of the employee.

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The employer has the choice of asking the employee to work through the notice period, or to pay compensation in lieu of such notice. If pay in lieu of notice is given, the employer is to pay the compensation to which the employee would be entitled as though the employee had worked through the notice period. The employer may also be required to continue medical and dental benefits to the employee for the duration of the notice period and pay for unused vacation time.

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Contractual notice

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An employer can control some of the uncertainties that might arise at the time of termination of an employee by clearly setting parameters in the original employment contract. While the employer cannot contract out of statutory minimums (such as minimum notice periods that must be provided on termination), contracts can be used to limit or exclude the common law concepts that would otherwise apply. For example:

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• A contract can specify that certain acts will constitute just cause or willful misconduct, effectively broadening the common law definitions of these concepts.
• A contract may also set out what period of notice will be given, how payment on termination will be structured and how various types of incentive compensation will be dealt with on termination.

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Unless the employee’s duty to mitigate is outlined in the termination provisions of the employment contract, mitigation will not apply to the termination provision amounts.

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Note to Readers: This is not legal advice. If you are looking for legal advice in relation to a particular matter please contact one of our Employment & Labour group members.

We communicate Employer updates to our clients and readers on our Employer Resources Portal and through monthly Newsletters.

For those with children, moving after a separation or divorce is not as simple as it may sound. Even if you think your matter has resolved and you have an order or agreement outlining the parenting time you and the other parent have with your children, the Family Law Act and the Divorce Act create extra restrictions around moves, also known as “relocations,” that can limit your movement without first obtaining the consent of the other parent or the court.

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Relocation is one of the more complex and challenging matters to address in a family law action. The Family Law Act and the Divorce Act both address the limitations and requirements around proposed relocations, and while these Acts are similar in nature, their requirements are slightly different from one another. If you are not sure which act applies to your situation, make sure to consult with a lawyer first before taking steps to relocate.

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This article will only summarize relocation requirements under the Family Law Act. Each individual case is fact specific in these matters and they can quickly become complicated. There are various factors the court must consider before either granting or prohibiting the relocation. Because of this, it is best to consult with a family lawyer early on to discuss your options and strategize for the best approach. Our office would be happy to assist you in navigating this matter and assessing the strengths and weaknesses to a relocation proposal.

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What is the difference between a move versus a “relocation” pursuant to the FLA?

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Under the Family Law Act, in situations where you do not already have an agreement or court order that addresses parenting arrangements, a move that can reasonably be expected to have a significant impact on that child’s relationship with another guardian is considered a “change in residence”.

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Similarly, in cases where there is an existing agreement or court order about parenting arrangements, a “relocation” is also defined to mean that a change in the location of the child’s residence, or the residence of that child’s guardian, that can be reasonably expected to have a significant impact on that child’s relationship with a guardian or someone else that has a significant role in their life.

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What this means is, any move that will significantly impact the child’s relationship with their guardian or important person in their life, is a “relocation.” This also means that if you are the guardian to a child and you are seeking to move without the child, and that move would impact the child’s relationship with you to a significant extent, that is also considered a “relocation” and that decision comes with statutory obligations to address prior to moving.

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What is required of the parent wishing to move – either with or without the child?

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If there is no agreement or order already in place, then the guardian wishing to change the child’s address will need bring an application pursuant to section 45 of the Family Law Act to address parenting time accordingly.

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If there is an agreement or order that addresses parenting arrangements, then the guardian looking to relocate, either with or without the child, must give 60 days advance written notice to all other guardians and persons that have contact with the child, that specifies the date of the relocation, and the name of the proposed location.

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What if I don’t agree to a guardian relocating with the child?

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Object! Object! Object!

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Ideally, you will have done your best to communicate with the other guardian and persons having contact with the child to cooperate and resolve the issue of the proposed relocation with creative solutions – however, this is not always possible.

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The reality is, if you are not confident an agreement can be reached to resolve the issue, you only have 30 days to file an application for an order to prohibit the relocation. This is the only way to formalize your objection and it must be done quickly.

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Otherwise, if you do not file the application objecting to the relocation within 30 days, section 68 of the Family Law Act permits the relocation to occur on or after the date that was set out in the notice.

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Notice of relocation was given and an application for an order to prohibit the relocation was filed – now what?

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This is where things can get a little complicated. The test for the court to determine whether the relocation should be granted first depends on the current parenting time allotment. This means, it depends on whether or not the parties have substantially equal parenting time.

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Ultimately, in applications by a guardian seeking to prohibit the relocation, there are three aspects the court will consider in its analysis:

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1. Is the proposed relocation is made in good faith;
2. Is there a reasonable and workable arrangement to preserve the relationship between the child and none relocating guardian; and
3. Is the relocation in the best interests of the child pursuant to section 37 of the Family Law Act.

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The responsibility of which parent has to prove those things depends on who has the majority of parenting time or if the time is shared equally.

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What does it mean for a proposed relocation to be made in good faith?

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When the court is asked to determine whether a proposed relocation has been made in good faith by the guardian seeking to relocate, the court must consider all relevant factors, including but not limited to the following:

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1. The reasons for the proposed relocation;
2. Whether the proposed relocation is likely to enhance the general quality of life of the child and, if applicable, of the relocating guardian, including increasing emotional well-being or financial or educational opportunities;
3. Whether notice was given under section 66 of the Family Law Act;
4. Any restrictions on relocation contained in a written agreement or an order.

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As you can see, considering a relocation, particularly with your child, can quickly become a complicated matter. There are various factors the court must consider before either granting or prohibiting the relocation. Because of this, it is best to consult with a family lawyer early on to discuss your options and strategize for the best approach. Our office would be happy to assist you in navigating this matter and assessing the strengths and weaknesses to a relocation proposal.

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We have noticed recently that employment lawyers and immigration lawyers, often come across cases where a business or employee is faced with a lawsuit and their first reaction is "But I followed my immigration consultant's or hr consultant's advice!" When asked why they chose to use the services of a consultant rather than a lawyer, they often indicate that the main reason was that a consultant would be cheaper than a lawyer. Often, this is an untrue assumption; some consultants will charge their clients $50,000 for a single immigration matter or over $80,000 for providing employment contracts and templates (which may or may not in fact even be enforceable).

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Of course, there are many very cost-effective (and competent) consultants out there. However, there are also many cases where a consultant is in fact more expensive and less reliable/effective than a lawyer. This is due in part to the fact that as lawyers, we are governed by our provincial law society and owe a duty of loyalty and honesty to our clients. We are also obligated to address any conflicts of interest and cannot, for example, give conflicting advice to both sides.

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My suggestion would be to at least consider speaking to a lawyer before engaging a consultant. A good lawyer will be able to give you a realistic estimate of their fees (at least, to the extent possible) and outline the process/steps that are needed during the course of an initial consultation.

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Generative Artificial Intelligence (Generative AI) has revolutionized the way we perceive AI's capabilities. By leveraging large quantities of data and advanced algorithms, Generative AI, such as OpenAI's ChatGPT, has gained significant attention for its ability to create human-like content in various forms such as text, images, audio, and synthetic data. OpenAI's ChatGPT is a prime example of Generative AI, a highly advanced Chatbot introduced to the public in November 2022. Its exceptional ability to mimic human speech has significantly influenced perceptions of Generative AI and its potential applications. With its rapid adoption and diverse applications, employers face crucial decisions regarding the integration of Generative AI into their workplaces. This article explores the key issues employers need to consider when implementing AI and in the workplace.

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The Paradigm Shift - Replacing Human Effort

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Generative AI offers a tantalizing prospect for employers by providing a cost-effective and efficient alternative to certain job tasks traditionally performed by employees, vendors, and consultants. This technology offers the promise of enhanced organizational productivity, reducing both time and costs while maintaining or surpassing quality standards. However, as employers contemplate the replacement of human workers with AI systems, they must navigate a myriad of legal implications, especially in relation to job security and working conditions.

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Depending on the industry and specific job roles, Generative AI may be employed to partially or entirely replace employees' responsibilities. In such cases, legal implications arise concerning job security and working conditions, which differ for unionized and non-unionized employees.

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Non-Unionized Employees - Treading Carefully

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If an employer decides to entirely replace employees with Generative AI, standard considerations related to termination will apply.

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Replaced employees must receive their appropriate statutory, contractual, or common law entitlements. It is crucial for employers to make termination decisions in good faith, avoiding arbitrariness or discrimination. Particular care should be taken to prevent age-based discrimination, as assumptions about older employees' ability to adapt to Generative AI could be detrimental.

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Employers must also be cautious of potential claims of constructive dismissal if the adoption of Generative AI significantly alters or reduces an employee's job duties. Proactively addressing this risk involves including explicit language in employment contracts that reserves the right to change duties and responsibilities, while limiting the magnitude of such changes through measures like providing advance notice or obtaining employee consent.

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Additionally, the inclusion of provisions that maintain the contract's applicability despite changes to position, responsibilities, salary, or benefits can help avoid challenges based on the "changed substratum" doctrine, which invalidates contractual provisions when an employee's job substantially changes.

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Unionized Employees – Navigating Collective Agreements

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In the case of unionized employees, the doctrine of constructive dismissal does not typically apply. Consequently, unionized employers may exercise their management rights to modify bargaining unit employees' duties, subject to the language of the collective agreement and relevant statutes. However, employers may face restrictions when it comes to using non-bargaining unit employees or external personnel specially trained in Generative AI to perform tasks traditionally handled by bargaining unit employees. Such actions may be deemed outsourcing or contracting out, prohibited by collective bargaining agreements. Additionally, collective agreements often contain provisions requiring employers to consult with unions and provide notice before implementing technological changes that affect working conditions or employment security. Similar obligations may be imposed by labor statutes in some jurisdictions, even without collective agreement language. Compliance with these requirements depends on factors such as the definition of technological change, the impact of Generative AI on individual employees' conditions and security, and the employer's motivations for implementing the technology.

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Data Privacy, Intellectual Property, and Confidentiality Considerations

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While still in its early stages, Generative AI has already triggered privacy concerns, leading to investigations by privacy commissioners. Employers must tread carefully to safeguard confidential and sensitive information from inadvertent disclosures through Generative AI outputs. Robust privacy impact assessments and algorithmic impact assessments should be undertaken to address these concerns effectively.

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On the other side of the spectrum, employers must be cautious not to infringe upon individuals' privacy rights or intellectual property when utilizing Generative AI-generated content. Collaborating with Generative AI developers and incorporating privacy-compliant practices is crucial to mitigate these risks.

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Navigating Humam Rights and Biased Outputs

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Generative AI's outputs may unwittingly perpetuate biases present in the training data, leading to potentially discriminatory outcomes. Employers must be vigilant, especially when using Generative AI for customer service, marketing, or employee performance evaluations. Employers can minimize liability by reviewing public-facing outputs and avoiding high-stakes decision-making tasks unless the AI's decision-making process is transparent and defensible.

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Workplace Investigations - Guarding Against Deepfake Threats

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Generative AI's capacity to create deepfake content raises concerns for workplace investigators. Employers must equip their investigators with training to detect and mitigate potential deepfake misuse during workplace investigations.

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Cybersecurity Risks

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Generative AI can be exploited by threat actors, leading to cybersecurity-related risks for organizations. Phishing attacks, malware creation, and social engineering attacks using deepfake technology are significant concerns. Employers should implement policies, protocols, and employee training programs to verify identities, enhance cybersecurity controls, and mitigate these risks.

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Conclusion

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Generative AI presents a new frontier for employers, revolutionizing workplaces while introducing complex challenges. By proactively addressing data privacy, intellectual property, confidentiality, human rights, workplace investigations, and cybersecurity concerns, employers can harness the potential of Generative AI while mitigating associated risks. Staying abreast of evolving regulations, adopting best practices, and prioritizing transparency and security will enable employers to navigate this transformative technology with confidence.

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Note to Readers: This is not legal advice. If you are looking for legal advice in relation to a particular matter please contact one of our group members. We communicate all these updates to our clients and readers on our Employer Resources Portal and through monthly Newsletters.

A frequent question that we deal with from employers in BC is "what is just cause to terminate an employee?" On a basic level, just cause means that the employer has a valid and serious reason to end the employment relationship without notice or pay in lieu of notice.

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In this update, we will review five recent BC employment law decisions where the employers were successful in defending against claims on the basis of just cause. Specifically, the cases involved employees who were terminated for just cause as a result of:

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1. False business expense claims, dishonesty and misconduct;

2. Secret recordings of workplace conversations; and

3. Time theft & side hustle during business hours.

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Termination for False Business Expenses

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In Mechalchuk v Galaxy Motors (1990) Ltd., 2023 BCSC 635, the employee was the president of a car dealership who was terminated as a result of submitting false business expense claims and then being dishonest when confronted about those expenses.

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In this case, the amount of the expenses falsely claimed was low (approximately $250) but the court held that there was just cause as a result of:

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1. The fact that the employee was the most senior employee of the company, and held a position of trust; and

2. The fact that the employee hid his dishonesty from the company and failed to come clean when confronted about the expenses by the CFO.

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Another example of a very recent decision issued on June 16, 2023, dealing with termination for just cause and misconduct is Chura v. Batten Industries Inc., 2023 BCSC 1040.

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Here, the employee was fired after engaging in various forms of dishonest conduct, such as making false expense claims, benefiting personally from trading company products, and misusing corporate accounts. The most significant allegation in this case was that the employee entered into a contract with a website company, without disclosing a conflict of interest, resulting in a kickback to her husband.

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The Court found the employer had just cause to dismiss her, dismissed her claim for damages against the employer, and held:

Taken together, however, the various forms of misconduct in which Ms. Chura engaged leave no doubt that she engaged in a long-standing pattern of dishonest and deceptive behaviour that meant that the employment relationship could no longer viably exist. Simply put, it would be impossible for Mr. Roberts to ever again trust Ms. Chura.

[319]    For these reasons, I dismiss Ms. Chura’s action for wrongful dismissal in its entirety. As a result, I need not consider her damage claims.

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Secret Workplace Recordings = Just Cause

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Shalagin v. Mercer Celgar Limited Partnership, 2022 BCSC 112 was a case involving an employee who worked for the company for over 10 years and was a certified professional accountant (CPA) at the time of his dismissal.

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Although the employer initially dismissed him without cause, it asserted after-acquired cause after discovering that the employee had been secretly recording conversations with his colleagues. In this case, the fact that there were over 135 recordings made by this employee over the course of several years likely played a significant role in the court's decision. Similarly, the court's decision likely hinged in part on the fact that: 1) the employee was a CPA, 2) acted contrary to the Employer's code of conduct, and 3) recorded private conversations with his coworkers despite subsequently acknowledging that he knew that this would make his coworkers uncomfortable.

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The takeaway, in other words, is that secret recordings by an employee, even discovered after the fact, can be just cause for dismissal. However, whether this will in fact be successful will depend on multiple factors including the volume, contents, and purpose of the recordings.

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Time Theft = Just Cause AND Compensation to the Employer?

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In Besse v. Reach CPA Inc, 2023 BCCRT 27, the Civil Resolution Tribunal found that the employee committed time theft and, notably, ordered that the employee pay damages to their employer for that time theft.

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In our view, this is likely an outlier case, as this is one of the first instances that we are aware of in which an employer was awarded damages for time theft (vs. simply being found to have just cause for the termination). Furthermore, as a Civil Resolution Tribunal decision (vs. a BC Supreme Court decision), this decision will not be binding on any of our courts, who may choose to simply ignore the decision.

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In this case, factors that likely assisted the employer significantly in the outcome were:

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1. The employee signed an employment agreement allowing her to work remotely; and

2. The employer in that case was able to prove the exact number of hours that the employee did and did not work, based on a time-tracking software that it had installed (Note: there are important legal and privacy considerations that should be discussed with us prior to implementing such software).

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Moonlighting During Business Hours

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In the recent wrongful dismissal case Dove v Destiny Media Technologies Inc., 2023 BCSC 1032, the boundaries of employees engaging in "side-hustles" during work hours came under scrutiny. The case involved an employee, Ms. Dove, who was terminated for engaging in moonlighting activities during business hours.

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Ms. Dove had a diverse work history in the food industry before joining Destiny Software Productions ("Destiny"), a technology company. During her employment, the she became involved in unpaid work for a café and general store owned by Destiny's CEO and another partner. Conflicting representations emerged regarding her status at the business, but she was referred to as an "owner" in various correspondences. Ms. Dove increasingly devoted time during work hours to tasks related to the side business, leading to concerns about her absenteeism and inability to fulfill important work obligations. She was eventually dismissed from her position at Destiny.

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The court ruled that Destiny had just cause for termination based on a combination of factors, including the volume of evidence showing significant side business work during company hours without approval, the broad reach of the side business work, its impact on Ms. Dove's ability to fulfill her duties at Destiny, and her neglect of a requested business plan she failed to deliver.

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The court emphasized that employees have a duty to provide full-time service to their employer, unless otherwise agreed upon. The ruling concluded that Destiny had just cause for termination and would not award Ms. Dove wrongful dismissal damages.

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In Summary:

This case highlighted the importance of employees' commitment to their employers during work hours and the potential consequences of unauthorized moonlighting. The court decision reaffirmed employers' rights to dismiss employees who engage in outside business activities without proper permission. It serves as a reminder for both employers and employees to understand and adhere to their contractual obligations and ethical responsibilities within the workplace.

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Conclusion

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Despite these cases, it is essential to remember that just cause remains difficult to establish and depends on the facts and circumstances of each case.

Therefore, we highly recommend seeking legal advice before deciding to terminate an employee for just cause, as we will be more likely to be able to assist in assessing and building a strong case for a just cause termination, if appropriate.

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Insights

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1. Dishonesty can be grounds for a just cause termination, especially for senior employees. Even an isolated incident of dishonesty can amount to just cause if it is sufficiently serious and damages the employment relationship beyond repair, especially if the employee fails to show remorse.
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2. Secret recordings of an employee's coworkers (at least, without very good reason) can support a finding of just cause.
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3. Time theft can not only form the basis for just cause, but, in extreme cases, it can even form the basis for a successful counterclaim against the employee. Engaging in unauthorized business activities during work hours can lead to dismissal.

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Note to Readers: This is not legal advice. If you are looking for legal advice in relation to a particular matter please contact one of our group members. We communicate all these updates to our clients and readers on our Employer Resources Portal and through monthly Newsletters.

In B.C., where necessary factors exist, one can generally seek remedies for harassment with the B.C. Human Rights Tribunal or WorkSafeBC. However, there is no common law tort of harassment in either British Columbia or Canada (see for example, Stein v. Waddell, 2020 BCSC 253 at paras. 30–35; Gaucher v. British Columbia Institute of Technology, 2021 BCSC 289; and Merrifield v. Canada (Attorney General), 2019 ONCA 205). This long-held position of the Canadian courts was recently changed when Justice Colin Feasby of the Alberta Court of King’s Bench established a new tort of harassment in that province in Alberta Health Services v Johnston, 2023 ABKB 209 (“Johnston”).

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Johnston Background

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In Johnston, Mr. Johnston who was a candidate for mayor of Calgary in 2021 spewed misinformation, conspiracy theories, and hate, targeting Alberta Health Services (“AHS”) and Sarah Nunn, who was employed by AHS as a public health inspector. Mr. Johnson’s engaged in persistent harassment of those who acted in the course of their duties enforcing public health orders during the COVID-19 pandemic. Mr. Johnston identified Ms. Nunn by name and shared pictures of her and her family that he obtained from her publicly accessible social media accounts, making derogatory comments about them.

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Tort of Harassment

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Having considered the facts and relevant authorities, Justice Feasby established the tort of harassment as follows:

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                [107] Based on the foregoing, I define the tort of harassment as follows.  A defendant has committed the tort of harassment where he has:

                    (1) engaged in repeated communications, threats, insults, stalking, or other harassing behaviour in    person or through or other means;

                    (2) that he knew or ought to have known was unwelcome;

                    (3) which impugn the dignity of the plaintiff, would cause a reasonable person to fear for her safety    or the safety of her loved ones, or could foreseeably                                 cause emotional distress; and

                    (4) caused harm.

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The Court in Johnston found Mr. Johnston to have met the test for the tort of harassment, and awarded $100,000 in general damages against him for the breach of the tort, as well as general damages for defamation in the amount of $300,000 and aggravated damages of $250,000.

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Takeaway

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While it remains to be seen how the B.C. courts will respond to this new tort of harassment, employers should be aware of this new tort and the potential risk it presents. Where employees engage in harassment, employers could be held vicariously liable. In view of this newly established tort, in addition to the statutorily imposed legal obligations to discourage and prohibit harassing conduct, employers should consider policies to control harassment in the workplace.

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Note to Readers: This is not legal advice. If you are looking for legal advice in relation to a particular matter please contact one of our group members. We communicate all these updates to our clients and readers on our Employer Resources Portal and through monthly Newsletters.

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