Duty To Warn

At common law, an employer has an absolute right to terminate an employee's employment at any time upon reasonable notice or pay in lieu. The exception to the rule that notice should be provided is when there is "just cause" for dismissal without notice. One type of "just cause" is "fraud". It sounds simple but it often is not.

The starting point for any discussion about fraud as "just cause" is that there is an implied obligation at common law that employees will not steal or commit criminal acts against their employers. When an employee does commit fraud it is both a breach of their employment contract and a clear demonstration that the employee's character is incompatible with continued employment.

There have been some cases where a mere suggestion of fraud was sufficient justification for dismissing without notice. Where however, it is not clear whether fraud was committed, the employer should conduct a thorough investigation and then provide the employee with a fair and reasonable chance to know the details of the investigation and to explain his/her actions and intentions. If an employer takes any short-cuts in procedure and depending on the nature of the impugned behaviour, it will likely not succeed on its defence at trial and will find itself having to pay damages.

The employer wishing to terminate employment without notice claiming employee fraud should give serious consideration as to whether it really has justification. If the allegations turn out to be unfounded, the employee may have grounds for claiming additional damages at trial for bad faith dismissal and loss of reputation resulting from such allegations. Employers considering such a move should seek advice from an experienced employment lawyer before alleging fraud and firing the employee without notice.

Some examples of what courts have found to amount to fraud include theft of a flashlight; improperly charging the employer's telephone account for personal calls over an extended period of time and a cashier failing to register all transactions such that customers left the store with unpaid merchandise. On the contrary, a long-term employee found to have made unauthorized long distance phone calls and who immediately offered reimbursement upon confrontation was found not to have engaged in fraud warranting dismissal without notice.

The point in fraud cases is that careful scrutiny of the facts, circumstances, the employee's intentions, the investigation and the employee's opportunity to answer the charges must be undertaken early in the case by the lawyer. But as I said, it is best not to make any assumptions before such scrutiny.

If your employer terminated your employment without notice alleging fraud, do not assume that your case is hopeless before seeking legal advice. Please call me to discuss your situation.

The above is not legal advice.