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Firing for Dishonesty

As professional managers, you have no doubt learned through experience the following truth: firing an employee for just cause is hard. A just cause termination has serious consequences which is why it is referred to as the “capital punishment” of employment law. It can also be expensive since it often leads to a wrongful dismissal lawsuit against your company. When faced with such a lawsuit, the manager who “pulled the trigger” will often ask “Did I do the right thing?”, and more importantly “Will a judge agree with me?”

In summer and fall issues of this newsletter, we will provide you with a practical guide to the law of just cause in circumstances managers typically encounter in the workplace. In this issue, we will look at one of the most common reasons for firing an employee – dishonesty.

Malcolm MacKillop
Senior Partner,
Shields O’Donnell
MacKillop LLP
Before delving into dishonesty, a basic review of the employment relationship is needed. The employment relationship is a contractual relationship. All employment contracts are deemed to have a clause which says that an employee is entitled to receive reasonable notice of termination unless the employer has just cause. If an employer has just cause, the employee is not entitled to any compensation upon termination.

Dishonesty by an employee can provide just cause for termination. Dishonesty can range from trivial “white lies” to far more serious misconduct such as theft or fraud. A common question is whether any act of dishonesty justifies termination. Prior to 2001, there was a line of court cases that said exactly that. However, in McKinley v. BC Tel, (2001) 2 SCR 161, the Supreme Court of Canada rejected this line of cases.

In McKinley, the employee (the Controller and Treasurer) had high blood pressure that caused him to be absent from work. The employee wanted to return to work but in a position that was less stressful. So he told his employer that his doctors said he could only return to work in a lower level position. This was untrue. The employee’s doctor had actually said he could return to his former job as long as they used drugs to control his blood pressure. The employer uncovered this lie and took the position that it had just cause to fire the employee. The Supreme Court of Canada concluded that this single act of dishonesty did not provide the employer with just cause to terminate.

The McKinley decision sets out the test that is now used in all just cause cases. Broadly speaking, the test is “proportionality”. The punishment must fit the crime. Only serious misconduct will justify the “capital punishment” of summary dismissal.

In light of McKinley, whether an employer has just cause to terminate is now always a question of fact. The question a judge must ask is whether the particular circumstances show employee misconduct that is fundamentally inconsistent with the continuing existence of an employment relationship. This question is answered by looking at the nature and degree of the employee misconduct, whether the misconduct violates the essential conditions of the employment contract or whether the misconduct breaches the necessary faith and trust an employer must have in the employee.

Most cases involving dishonesty typically turn on whether the employer has justifiably lost all faith and trust in the employee. Theft is probably the most common example of employee dishonesty that ends in a successful termination for cause. For example, in Cosman v. Viacom Entertainment Inc., (2002) O.J. No. 1828, an employee who submitted inflated mileage expenses in order to recoup his membership fees in a local business association was found to be terminated for just cause.

Hendrik Nieuwland,
LL.B., Associate,
Shields O'Donnell
MacKillop LLP
Even the theft of very small sums can justify termination for cause. For example, in Chatten v. Linamar Transportation, 2011 CarswellNat 3467, a case that our firm argued for the employer, a payroll administrator with over 20 years of service secretly removed a small but mandatory deduction from her regular pay. The employee had pocketed less than $20.00 when the employer learned what she had done and fired her. The adjudicator concluded there was just cause because the employer needed to trust employees working on the payroll, and the theft, however small, was sufficient to destroy that trust.

But not all thefts result in cause for termination. In Kidd v. Hudson’s Bay Company, (2003) O.J. No. 1474, the employee (a manager) left a Zeller’s store (a subsidiary of the employer) without paying for two items in his pockets. When confronted by security, the employee said he was upset by a personal matter and simply had forgotten that he had the items. No charges were laid. The next day the employee told his supervisor about the incident and apologized. He was fired shortly thereafter. The judge found there was no just cause because the employee had no intention of stealing the items and termination was therefore a disproportionate response.

Similarly, in Varsity Plymouth Chrysler (1994) Limited v. Pomerleau, (2002) A.J. No. 929, the employee (a new car sales manager) personally used one of the employer’s trucks without paying for it and then sold the truck for personal profit. The trial judge found there was no just cause because the employer had tolerated similar bad behaviour from other employees in the past.

These last cases emphasize the central importance that context plays in just cause cases. When faced with dishonest conduct, the responsibility falls on managers to carefully examine the context (including any mitigating factors) to determine whether “capital punishment” fits the crime.

In the next issue, we will examine another common problem faced by managers, employee absenteeism and the circumstances when absenteeism provides just cause for termination.

Malcolm MacKillop and Hendrik Nieuwland practise employment law with the firm Shields O’Donnell MacKillop LLP of Toronto.

Abrasive Leaders: Mistakes You Make in Managing Them

Here’s a fundamental truth: Abrasive leadership is tolerated, even rewarded, almost everywhere. Chances are that in the course of your career as a senior leader, you too have allowed it to happen on your watch.

Abrasive managers are often stellar (even brilliant) performers. If they weren’t, you wouldn’t keep them. However, their interpersonal conduct is excessively harsh. Often referred to as bully bosses, they exhibit poor emotional restraint, shouting, belittling, over-control and marginalizing. You can find abrasiveness across organizational cultures, sizes and sectors, even as you pride yourself on fostering a progressive and respectful culture.

Sharone Bar-David
If you’ve managed an abrasive leader, you’ve probably done some things right and obtained good results. Which of the following common mistakes did you make?

Mistake 1: You cherished false myths

Chances are that in your dealings with abrasive managers, you subscribed to three common misperceptions that prevented you from analyzing the situation accurately and taking appropriate action.

First, you believed that the abrasive style was essential to the manager’s success. In other words, without the abrasiveness, the person would not maintain their effectiveness. Secondly, you convinced yourself that the manager was inherently incapable of changing (the old “you can’t teach an old dog new tricks” adage). Finally, you may have believed that those who complain about the manager’s style should acquire ‘thicker skins’, quit complaining and instead focus on real work.

The reality is that none of these perceptions is true. But as long as you believed them, you enabled the abrasiveness.

Mistake 2: You ignored the real costs

An abrasive manager’s conduct is bad for business. True, he or she may not intend to harm others. In fact, they’re probably highly committed to the organization and are doing their utter best to achieve top notch results. However, their rough style can trigger high staff turnover, increased sick and stress leaves, transfer requests, low morale, human rights or harassment complaints, union upset, legal or mediation costs, stifled innovation and damage to your brand. Top that up with valuable executive resources wasted on dealing with the matter and the cost becomes pretty hefty.

The trouble is that you (or those to whom the abrasive manager reported) may have ignored these costs. You focused on visible performance markers such as sales figures and did not tabulate the hidden costs. You didn’t evaluate what the manager’s professional performance was worth compared with the price of his or her interpersonal conduct. Rather, you acted as though these two spheres are divorced from each other.

Mistake 3: You turned a blind eye

Granted, you may not have been fully aware of what was going on. But in situations where you did, you may have turned a blind eye. Maybe it was because of the fear of losing this manager’s expertise (or Rolodex). Perhaps you told yourself that the abrasive manager had the organization’s best interest at heart and therefore deserved the benefit of the doubt. Bottom line, you did nothing.

Mistake 4: You rewarded the behaviour

When you provided the abrasive manager with public recognition, performance bonuses, praise or a promotion, the underlying message was clear: “You’re doing a great job, keep doing exactly what you’ve been doing”. In essence, you condoned the problematic behaviour.

Mistake 5: You applied wrong solutions

In all fairness, you may have attempted to help the manager change. However, for the most part, the remedy you applied was only partially or not at all effective. Typical solutions include 360 feedbacks that in reality provide data that may not be footed the bill for executive coaching which failed because the manager in question had no motivation to change. Other times, you may have initiated a frank “you’ve got to change” chat, but didn’t follow up with meaningful consequences. Conversely, you may have thrown indirect hints with the unfounded hope that the abrasive manager would magically decide to change.

Getting it right

For each of the above mistakes there’s an alternate option that offers a compelling win-win: turn around the abrasive manager’s interpersonal conduct, while also retaining them in your employ.

Quit believing in myths. In real life, most abrasive managers do have the ability to change. Furthermore, they can do so without compromise to their performance.

Calculate the real cost. Place a realistic price tag on the issue by mining available data and mapping the effects of the abrasiveness on hard indicators such as staff turnover levels, sick leaves and employee engagement survey results.

Stop measuring success solely on technical abilities. Rather, tie the abrasive manager’s performance to additional indicators as suggested above.

Address the issue head on. You will not only help the abrasive manager but also protect your culture and your people. Furthermore, you will reduce your personal liability should a lawsuit be launched by someone who was adversely affected by the manager’s conduct.

Apply abrasive-specific solutions. Instead of dead-end generic interventions, bring in solutions that are targeted specifically for dealing with abrasiveness.

A rough diamond can be turned into a polished gem. If you want to help an abrasive manager change, the place to start is with changing yourself. If you get it right, it sure will be worth it.

Sharone Bar-David, LLB, MSW is President of Bar-David Consulting, a company offering REAL solutions for creating respectful workplaces and can be reached at info@sharonebardavid.com

The Value of Professional Certification

There has been a trend over the past decade to ask managers to accomplish more with fewer resources. To demonstrate “value for money” there is increasing emphasis on minimum standards for professional groups. With the 2012 Federal Budget and its concomitant workforce reduction, such pressures can be expected to accelerate. Managers of the future will have to meet accepted standards to ensure they are well-prepared to navigate their programs through challenging times.

Thomas K. Gussman
T.K. Gussman
Associates Inc.
This article reviews some characteristics of the principal options for establishing professional standards: licensing, accreditation, certification and credentialing.

Full accreditation and licensing are similar and require the most rigour, both in terms of the requirements to become licensed or accredited and from the perspective of establishing and administering a system. To issue licences would require national acceptance of standards, standardized testing and a licensing authority to administer tests. Moreover, such approaches open the door to legal challenges. It would take only one court challenge from an individual denied official status to derail the process. If the goal is to create greater certainty about the professionalism of particular groups, the potential costs of such regimes far outweigh the expected benefits.

Certification seems to be a more preferred avenue in the federal sector. The Professional Development and Certification Program emerged as a key human resource renewal initiative in support of Modern Comptrollership, Human Resources Modernization and the new Policy for Continuous Learning in the Public Service. It also supports the Treasury Board Secretariat management agenda and commitments made over the past decade. The two components, Professional Development and Certification, were designed to provide employees in the Procurement, Materiel Management and Real Property Community with the learning tools to help acquire the skills, knowledge and expertise required to meet evolving and complex business needs, government priorities and management initiatives.

The intent was to require that critical positions, and not necessarily everyone, be certified. A key element of this program was a self-assessment tool to support individuals and their managers to develop learning plans. Various complexities arose as this was rolled out and questions remained unanswered regarding review boards and appeal mechanisms.

The Internal Auditor community, with existing standards and institutions, was expected to have a smoother certification process.

As an example, the Canadian Association of Management Consultants (CAMC) offers a Certified Management Consultant (CMC) designation, but this is not required for membership in the association. Candidates receive their designation from provincial boards. The requirement for designation is not mandatory to practice management consulting. Since 1998 the national organization has been setting the standards with provincial input. The CMC designation requires academic equivalencies in specified fields, a comprehensive exam and several years’ experience, along with a mentoring requirement.

There has been debate for years about credentialing or establishing standardized competencies for evaluators. In Canada, the Treasury Board Secretariat and Canadian Evaluation Society jointly recognize guiding principles and standards for evaluation.

It is generally agreed that a means of ensuring basic competence would serve to maintain a level of credibility for public service evaluation groups, particularly as Internal Audit groups have strengthened their credentials. Many academics opine that licensing or certifying individuals as “evaluators” could create more problems than it solves. There is support for certifying institutions with delegated responsibility to determine who has the appropriate competencies.

Universities can help by ensuring that social science graduates demonstrate at least the core competencies determined for public service entry level positions. These programs could also be available part-time to public servants or consultants to help match their skill sets with the grid for their required work. There are part-time certificate programs to upgrade skills for “accidental evaluators” (most of whom have graduate degrees) who find themselves in jobs that require knowledge and skills in the theory and practice of evaluation.

By keeping the accreditation of programs voluntary and granting a “credentialed” status to individuals who demonstrate their competency to a professional board or governing body, it is possible to provide quality assurance to government clients without the need for a government-level examination. Ultimately, the market will screen out people who do not meet the standards.

Voluntary accreditation has several merits. Many legal and administrative problems can be removed from Government if agreement can be reached to designate academic institutions to certify that individuals meet acceptable standards and display the necessary levels of competence as specified for the job. At the same time, the transition to such a regime would create a gap in that the bulk of current practitioners have not received such formal training. In a voluntary system, and without an enforcement body, consideration would be required for people already working in the field. Current practitioners could be “grandparented” to grant them status on application and review (subject to a fee).

There will be adjustment costs and growing pains because some people will be certified as having appropriate competencies when they may not merit that status. Even a full certification system would have some flaws and likely misclassify people. But after a reasonable transition period, many of the older evaluators will have retired. The next generation will have much more standardized training and will have benefited from the emergence of programs that train and test the key skills and competencies. The critical factor in following such a path is the avoidance of the legal pitfalls and administrative costs associated with a full certification or accreditation system. These problems will not emerge in a system that attests to competence and skills.

Thomas K. Gussman is President of T.K. Gussman Associates Inc. and can be reached by email at tkg1948@gmail.com.


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