The answer: it depends. Two decisions from Ontario are typical of how courts in other jurisdictions would deal with the question.
In Cosman v. Viacom Entertainment Canada Inc., the Ontario Superior Court of Justice decided that an employer could terminate an employee for cause. The employee was accused of falsifying expense reports and sales activity reports in order to recover $300 in membership fees with the Board of Trade.
Hired as a salesperson at Canada's Wonderland, Cosman was paid $40,000 in salary and there was a bonus program that entitled him to earn up to $25,000 per year.
The employer discovered that Cosman inflated mileage claims by documenting and submitting fictitious client visits and cited these reasons in the termination letter. Cosman brought an action for wrongful dismissal and argued that he was owed his bonus because he had met the sales targets by the time of his termination.
The Court found that although Cosman′s 1998 records could not be proven to be false, the 1997 records amounted to a series of dishonest and criminal acts made by the employee.
Further the Court stated that the conduct of the Cosman was not only dishonest, but also criminal as he knew that he was not entitled to receive compensation for his Board of Trade dues, and he falsely inflated his expense reports to be reimbursed for them. The deciding factor for the court was that the Cosman had access to several thousand complimentary entry tickets to Canada′s Wonderland each year (general admission was $40). The Court was satisfied that the Cosman′s embezzlement destroyed the position of trust between the employee and the employer and poisoned the relationship.
The Court dismissed the wrongful dismissal action. Although Cosman was awarded about $3,000 for monies owing to him prior to the termination, he was not awarded the bonus, because he was not employed at the time when the bonus was awarded. The court noted that if he had been found to have been wrongfully dismissed, the court would have awarded him the bonus in addition to termination notice.
In the case of Graham v. Cuddy Food Products the employee was accused of submitting an expense report indicating that he had made sales calls to two hospitals, when evidence revealed that he had gone snowmobiling with a client that particular day.
Graham admitted that he had been dishonest, but argued that he was engaged in company business on the day in question, and that the accounting department would not have understood that the snowmobiling trip was for business purposes. Graham brought an action for wrongful dismissal claiming three months’ notice, and reimbursement for mileage expenses pursuant to his employment contract.
Small Claims Court decided that the Graham′s dismissal was too harsh and should have taken the form of a lesser penalty. The court commented that Graham′s assertion that his boss backed him and other salespeople in their on-going battles regarding their expenses with the accounting department and stated it "had a certain common sense ring of truth to it". The employer presented no evidence that this was not the case.
The court acknowledged that if Graham had outlined the nature of his trip to the accounting department, there would have been another big battle between the sales and accounting departments.
Thus, even though the Graham lied repeatedly to the employer, there was some aspect of protection of the employer inherent in the lie. In addition there was the fact that the Graham actually made work-related calls on the day in question and did not directly benefit (except as a part of the sales team having fun).
Therefore, the court concluded that the employer did not have just cause to dismiss the employee. It awarded three months' notice to the Graham. In addition the court also decided that Graham was only entitled to the mileage amount as suggested by the employer.
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