Employee Theft, Fraud and Dishonesty

Where before, the Courts would view employee theft narrowly usually finding theft to amount to just cause for summary dismissal (without notice or pay in lieu), Courts are now taking a more qualitative approach. Some Courts have inquired into the quantum involved and the employee's disciplinary history before determining whether theft constituted just cause permitting summary dismissal. Here is a brief overview of some cases in the area of employee theft.

In one case, the theft of a flashlight and improperly charging the employer's telephone account for personal telephone calls over an extended time period, amounted to just cause. Similarly, a cashier failing to register all transactions and permitting customers to leave with merchandise that was not paid for, amounted to just cause. In some cases, Courts have found that a mere suspicion of theft will amount to just cause provided the facts reasonably support the suspicion. If however, the employee provides a reasonable explanation for his/her apparent dishonesty, cause will not be found. In such a case, the employee bears the onus to provide the reasonable explanation in the circumstances. For example, in a case involving improper commissions on the sale of a church organ, the Court held that the employee had an obligation to prove the righteousness of the transaction.

There is of course, an inherent danger in finding that a mere suspicion of theft amounts to just cause. Some employers could ruin an employee's career by summarily dismissing him/her upon a suspicion. Thus, some jurists have roundly rejected the notion that just cause may result from a mere suspicion of theft.

In Cooper v. Sears Canada Inc., a 1991 Nova Scotia case, an employee's act of theft was recorded on the store videotape. The employee provided an explanation that the Court found was reasonable. The Court found that the employer could not meet its evidentiary burden.

In Layton v. Co-op Atlantic Ltd., a 1991 New Brunswick case involved an employee with 15 years of service who made unauthorized long distance phone calls. The employee immediately offered reimbursement when confronted with her actions. The Court found that given her immediate offer of restitution and her length of service, summary dismissal was "a harsh reaction to what must appear as an example of poor judgment". There are similar cases where employee theft has been called "poor judgment" by Courts and just cause has not been found to have existed.

The employer's burden of proving that the alleged fraud or dishonesty amounts to just cause, is somewhat higher than the usual civil burden but not quite as high as the criminal burden of proof. This distinguishes this type of just cause from all others, which must be proven by the employer only on a balance of probabilities (the civil burden). It appears that some Courts are now prepared to look into and around the impugned incident to ensure that the impugned conduct is grave enough to warrant summary dismissal.

If your employment was terminated with cause allegedly for theft, dishonesty or fraud, please call me to discuss your situation.