In a recent Manitoba Court of Appeal decision, the court held that employers do not owe employees a duty to investigate misconduct prior to termination.
Employee Terminated for Cheese-Related Misconduct
The employee worked for the employer, a dairy company, as a sales representative. One of his duties was to go to stores that sold cheese manufactured by the employer, identify any cheese that was unsaleable, determine whether the store would get a credit, document his findings and have them approved by a designated store employee. The unsaleable cheese would be disposed of by store employees.
On August 21, 2015, the employee went to a grocery store in Winnipeg and took 14 packages of cheese from the shelves which he claimed were unsaleable. He claimed to have removed the cheese from the store because the store’s trash compactor was locked and he intended to dispose of the cheese himself.
However, once he reached his car, he was stopped and detained by an assistant store manager and a loss prevention officer for removing the product without paying for it.
Over the next few days, the employee attempted to resolve the matter with the store’s management, but he was unsuccessful. The employer told him to take one week off.
Subsequently, on September 1, 2015, the employer terminated the employee’s employment in writing, even though the employer did not know certain details of the employee’s actions at the store, such as the amount of cheese taken, that it was saleable, that some of the cheese was made by a competitor and that other cheese was “deli” cheese for which a credit could not be given.
The employee brought a claim against the employer and others, including the grocery store, seeking damages for breach of his employment contract, bad-faith damages, punitive damages, aggravated damages and costs. The claims against the store and its employee were discontinued prior to the trial.
Lower Court Rules Against Employee
A key issue at trial was whether the employee had acted dishonestly. After reviewing the evidence, the trial judge concluded:
“Weighed on a balance of probabilities, I am satisfied that the [employee] intended to steal the cheese that he removed from the [s]tore in the milk crate and that his conduct constitutes theft.”
As such, the trial judge dismissed the employee’s claim, finding that his conduct “gave rise to a fundamental breakdown in the employment relationship” and that the employer had been entitled to terminate his employment for just cause and without notice.
The trial judge also observed that the employer had made no effort to interview the employee prior to termination or to get a statement from any of the store employees. However, he stated that an employer does not owe a duty of procedural fairness to an employee when terminating a contract of employment, unless the employment contract so provides. The trial judge then concluded:
“[The employer] did not owe the [employee] a duty to investigate. It had a duty to treat him fairly and honestly based on the information that it had at hand on the day it terminated his employment and I find that it fulfilled that duty. [The employer] is also entitled to rely on the information that it subsequently obtained after the date of termination.”
The employee appealed to the Manitoba Court of Appeal, arguing that the trial judge erred in finding that the employer had no duty to conduct an investigation into the allegations before terminating his employment. He also argued that the judge had erred by finding that the employer was entitled to rely on information obtained after it terminated his employment, claiming it set a “dangerous precedent”.
Court of Appeal Dismisses Employee’s Appeal
The court reviewed the case law on the employee’s first ground of appeal and concluded:
“As the law in Manitoba continues to be that employers are under no inherent obligation to comply with the standards of natural justice or with any duty of procedural fairness when dismissing an employee for cause, it follows that there is no duty to conduct an investigation prior to termination.”
Turning to the second ground of appeal, the court also dismissed the employee’s arguments, stating:
“It matters not whether the employer knew of the particular misconduct and chose not to rely on it at the time of dismissal, unless the employer both knew of and condoned the misconduct.”
In the result, the court dismissed the employee’s appeal.
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