Bad Behaviour 4.0: Employees getting away with . . . - LawNow Magazine

Bad Behaviour 4.0: Employees getting away with . . .

Employment Law Column

If an employee has been guilty of serious misconduct, habitual neglect of duty, incompetence, or conduct incompatible with his duties, or prejudicial to the employer’s business, or if he has been guilty of willful disobedience to the employer’s orders in a matter of substance, the law recognizes the employer’s right summarily to dismiss the delinquent employee.

Port Arthur Shipbuilding Co. v. Arthurs (Ont CA, 1967)


We scoured records across the country and found more random instances of egregious employee behaviour that Canadian courts and arbitrators have excused. In these cases, the employer had fired the employee, but the judge or arbitrator disagreed and ordered the employer to pay damages for wrongful dismissal and court costs.

On reading these, one asks: “What was that judge (or arbitrator) thinking?”

The Accountant Who Failed to Fully Disclose

McKinley v BC Tel is almost the poster child case for excusing bad behaviour in Canada. The law says that employers must be able to prove “just cause” to fire an employee without notice or severance. Grounds for summary dismissal include absenteeism, insolence, insubordination, neglect of duty, workplace conflicts, and breach of fiduciary duties. There is no exhaustive list of what kind of misconduct is “just cause”.

Today, the “McKinley principle” says that wrongdoing at work will be judged in the context of each case.McKinley was an accountant at BC Tel who suffered from high blood pressure. He had taken a leave of absence from work and told BC Tel that he could return to work if they found him a less stressful position. BC Tel did not find him a different position; they terminated his employment instead. After the incident, BC Tel learned that McKinley had withheld an email from his doctor stating he could go back to work if he took an additional medication. McKinley took the position that he had been wrongfully dismissed.

BC Tel’s defence was that McKinley’s dishonesty justified his dismissal for cause. The Supreme Court of Canada agreed with McKinley, saying at para 57:

. . . [it favours] an analytical framework that examines each case on its own particular facts and circumstances, and considers the nature and seriousness of the dishonesty in order to assess whether it is reconcilable with sustaining the employment relationship. Such an approach mitigates the possibility that an employee will be unduly punished by the strict application of an unequivocal rule that equates all forms of dishonest behaviour with just cause for dismissal. At the same time, it would properly emphasize that dishonesty going to the core of the employment relationship carries the potential to warrant dismissal for just cause.

McKinley walked away with more than two years of pay and benefits ($116,000) and reimbursement of his costs at all three levels of court. Today, the “McKinley principle” says that wrongdoing at work will be judged in the context of each case. For example, was the employee’s behaviour provoked? Did the employee have a good service record prior to the incident? Was the employee under unusual stress? Overall, is dismissal warranted or will other progressive forms of discipline, short of firing, suffice?

The Italian Wine Smuggler

Genesio Pagliaroli, an Italian immigrant to Canada, began work at Rite-Pak in 1982 at the age of 32. He worked his way through the organization and held different positions, including President, CEO and directorships of various companies in the Rite-Pak group. While working at Rite-Pak, Pagliaroli oversaw the illegal importation of wine from Italy to Canada.

The wine was packed into containers of other products imported by Rite-Pak, shipped without records, and paid for outside of Rite-Pak’s normal accounting system. Pagliaroli inherited this system from his predecessor but continued it after he took control of the department. After a falling-out with Rite-Pak’s principal shareholder, Rite-Pak significantly diminished Pagliaroli’s role at the company but did allow him to continue working. Pagliaroli found this role change unacceptable and claimed Rite-Pak had constructively dismissed him without cause. Rite-Pak argued that the wine smuggling constituted just cause to fire him.

Grounds for summary dismissal include absenteeism, insolence, insubordination, neglect of duty, workplace conflicts, and breach of fiduciary duties.The Ontario Supreme Court agreed with the arbitrator that Pagliaroli’s demotion was tantamount to a dismissal without cause. Rite-Pak had condoned or forgiven Pagliaroli’s actions because it did not dismiss him when it first became aware of the wine smuggling. Pagliaroli also breached his fiduciary duty to Rite-Pak, which could have been grounds for firing. However, Rite-Pak had prior knowledge of his actions and had not disciplined him at that time. The Court again found Rite-Pak had condoned Pagliaroli’s actions. Rite-Pak could not use these reasons to later justify his dismissal.

The Court awarded Pagliaroli $1.1 million for 20 months of salary, $25,000 in aggravated damages and $185,000 in costs.

The Angry Ice Cream Server

Sharon Rodrigues began work at the Dairy Queen in Castlegar, B.C. in 1993. She worked her way up to become the store manager. She had worked at the restaurant for 16 years when Tim Kenna bought the franchise in 2007. Rodrigues had a strong personality and did not attempt to hide her mood. When she disapproved of other employees’ performances, she used foul language and mocked them, even in front of customers. She disciplined employees by scheduling them for undesirable shifts. Her co-workers – and even owner Kenna – were afraid to confront her, especially if she was in a foul mood.

Eventually Kenna gave Rodrigues a letter stating that her “swearing, rudeness, insubordination and disrespect, anger, tardiness and retaliation” were unacceptable and she would be dismissed if her performance did not approve. Upon receiving the letter, Rodrigues became very upset. She discussed the letter with many co-workers and customers and referred to Kenna as an idiot and a moron. She refused to perform some of her duties, and gave some employees the silent treatment. The situation became so awkward that one of the other employees left work and refused to return until the staffing situation was resolved. At this point, Kenna fired her.

The Supreme Court of British Columbia decided that, “although she was performing inadequately in her position as manager”, Rodrigues was wrongfully dismissed because there was no serious misconduct warranting immediate dismissal. Even if the bad behaviour was obvious to everyone else, she had to be told that her general bad behaviour could get her fired. She should have been given time to improve her behaviour after being formally warned.

The Court awarded her 16 months of pay and bonuses.


Peter Bowal
Peter Bowal
Peter Bowal is a Professor of Law at the Haskayne School of Business, University of Calgary in Calgary, Alberta.

James Ragan
James Ragan earned an MBA at the Haskayne School of Business.

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