Copying thousands of emails by employee a lapse in judgment which does not constitute cause for dismissal: Ontario Superior Court of Justice
In Ratz-Cheung v. BMO Nesbitt Burns Inc., 2024 ONSC 161, the court had to grapple with whether an employee’s copying thousands of emails onto a USB key a few months prior to the employee’s dismissal constituted cause for dismissal. The emails were of a confidential nature. The court found that the employee’s actions did not constitute cause and awarded the employee damages in lieu of 24 months’ notice.
If an employee in Ontario is first dismissed but then their employer alleges that the employee engaged in misconduct that amounts to cause, that is after-acquired cause. And, in that situation, the employer will not pay the employee notice of termination or severance pay.
The facts in brief
The employee, Ms. Raz-Cheung, was an investment advisor who worked for the defendant in the action, BMO, for approximately 24 years. The employee was subject to a code of conduct which included various confidentiality requirements. Ms. Ratz-Cheung was terminated on a without cause basis at the age of 54. During the examination for discovery in the action, BMO discovered that Ms. Ratz-Cheung copied thousands of emails onto her USB key. As result, BMO amended its statement of defence to allege after-acquired cause and that Ms. Ratz-Cheung was therefore not entitled to any form of compensation.
The court’s findings and comments
The court confirmed the long-standing employment law principle that an employer is entitled to rely on an employee’s wrongdoing discovered after the dismissal as just cause for dismissal, so long as the wrongdoing occurred before the termination.
The court went on to cite the principle that whether a dismissal for cause is justified requires an assessment of the context of the alleged misconduct or act of dishonesty. The court must establish whether the employee’s dishonesty was deceitful and, if so, whether the nature and degree of the dishonesty warranted dismissal. When deciding whether dismissal is a proportional response, the court must assess whether the misconduct is reconcilable with sustaining the employment relationship.
In determining that BMO has failed to meet the threshold necessary to make a finding that Ms. Ratz-Cheung’s dismissal for cause was warranted, the court made the following findings:
- Ms. Ratz-Cheung did not intend to deceive BMO by copying emails onto the USB key;
- Copying of the emails onto the USB key did constitute a breach of BMO’s code of conduct and put the information at risk, even if it was a limited one;
- Ms. Ratz-Cheung did not copy documents that she was not entitled to access. The emails that were copied were her own emails which contained information that she was entitled to access and use while working at BMO;
- Ms. Ratz-Cheung did not disclose the documents or the information they contained to anyone, except for BMO in the context of the litigation; and,
- the issues that prompted the copying of the emails, i.e. the issues raised by BMO regarding Ms. Ratz-Cheung’s relationship with her assistants may have revealed an air of reality with respect to Ms. Ratz-Cheung’s view that she was not treated fairly by BMO in relation to the criticisms raised regarding the manner in which she was communicating with her assistants.
Following the court’s contextual analysis of Ms. Ratz-Cheung’s conduct, the court reached the conclusion that the breach was not sufficiently serious to give rise to a breakdown in the employment relationship, and a lesser sanction could have been effectively imposed. The court found Ms. Ratz-Cheung’s conduct to constitute a lapse in judgment in the context of a difficult year for her personally and in a situation where she thought she was not being treated fairly.
Having regard to Ms. Ratz-Cheung’s age (54 years old), character of employment (investment advisor), length of service (24 years), the court awarded her with 24 months’ pay in lieu of notice of termination equaling $240,091 and for lost commissions.
Legal lessons for both employers and employees
An employer can allege cause after they dismissed an employee. However, termination with cause is considered the “capital punishment” of employment law in Ontario. An assertion of cause by an employer has to a) be proven by an employer and b) reach a level of misconduct sufficiently severe to deprive an employee of their right to adequate compensation. The fact that an employer asserts cause does not mean that the court will necessarily agree with the employer even if the employer thinks that an assertion of cause was valid at the time. The court will carefully consider all the relevant factors, the context of the employee’s impugned conduct including the nature of the alleged misconduct before determining whether a termination for cause was warranted.
We have many blogs and articles about this topic and about termination with cause generally. You can read more in our articles “Termination for Cause is Still Possible in Ontario but the Bar for Cause Cases Remains High,” “Employees Terminated “For Cause” May Still Be Entitled to Statutory Benefits,” and “Terminated for Cause? You Still Have Rights.”
Want to learn more? Speak with an employment lawyer!
If you want to learn more about after-acquired cause or about any other topic about employment law, you can contact us at (905) 417-2227 or here to schedule a confidential consultation. We have helped many employers and employees in resolve their workplace disputes.
