In Wilsher v Olympic Wholesale [“Wilsher”], the Ontario Superior Court of Justice (the “ONSC”) considered whether an employer had just cause to dismiss a long-service supervisor for allegedly engaging in “time theft” and “fraud” after approving adjustments to other employees’ timesheets, despite the fact that the practice had been openly followed for years by multiple supervisors, that the employee did not personally benefit from the adjustments, and that the employer failed to conduct a fair and balanced investigation before terminating his employment.

Background

The employee was employed by Olympic Wholesale (“Olympic”) as a Warehouse Labourer beginning in 2006 and was promoted to Night Shift Supervisor in 2015. As part of his supervisory duties, he was responsible for reviewing and approving employees’ timesheets, including making adjustments within the company’s time management system.

In October 2023, Olympic terminated the employee’s employment for cause after alleging that he had engaged in “time theft” and “fraud” by improperly “topping up” employees’ hours to reflect time they had not worked. Olympic maintained that these timesheet adjustments were unauthorized and constituted dishonest manipulation of the company’s payroll system.

The employee denied any wrongdoing and maintained that the practice had been openly followed by Night Shift Supervisors for nearly two decades to ensure employees received their guaranteed weekly hours under the collective agreement. He testified that he learned this practice while shadowing his predecessor upon being promoted to Night Shift Supervisor and was not provided with written policies or other training to the contrary. He also testified that he openly made all timesheet adjustments using his own login credentials, that he never attempted to conceal the adjustments, and that he received no personal financial benefit from them. Three long-serving warehouse employees corroborated his evidence, confirming that the practice had existed for years, had been followed by multiple supervisors, and continued even after the employee’s dismissal.

Following an internal workplace investigation, Olympic dismissed the employee for cause, alleging that he had engaged in fraudulent misconduct. The employee subsequently commenced a wrongful dismissal action, asserting that Olympic lacked just cause and had acted in bad faith throughout the investigation and termination process.

The Decision

No Just Cause

The Court held that Olympic failed to establish just cause for dismissal.

In determining whether Olympic had established just cause, the ONSC assessed the employee’s conduct in light of all of the surrounding circumstances, including the nature of the conduct, why it occurred, whether the employer had previously tolerated or condoned it, and whether dismissal was a proportionate response. Put simply, the question is not just whether the employee did something wrong, but whether the misconduct was sufficiently serious to irreparably damage the employment relationship and justify dismissal for cause.

The Court found that the evidence overwhelmingly established that the practice of topping up employees’ hours was a long-standing and accepted workplace practice that had existed for nearly two decades. The ONSC also accepted evidence that the practice continued even after the employee’s dismissal.

In these circumstances, the Court concluded that the employee reasonably believed he was carrying out his duties in accordance with established workplace practices and his understanding of the employees’ collective agreement. Accordingly, the ONSC held that the conduct did not justify dismissal for cause.

Reasonable Notice Period

Having found that Olympic lacked just cause to dismiss the employee, the Court was required to determine the appropriate period of reasonable notice.

Based on the employee’s age of 55, 17 years of service, supervisory position, and inability to secure comparable employment, the ONSC awarded a 19-month notice period.  The Court further found that the employer’s allegations of “theft” and “fraudulent activity” negatively affected the employee’s ability to obtain alternative employment.

Bad Faith in the Investigation and Termination Process

The Court was also highly critical of Olympic’s investigation and termination process. However, rather than awarding moral damages (the more typical remedy for bad-faith conduct in the manner of dismissal), the Court extended the employee’s reasonable notice period. The ONSC held that Olympic acted in bad faith by:

• Conducting a poor investigation that was one-sided and “closely resembled an interrogation.” The Court found that the employee was effectively ambushed, questioned without notice or a meaningful opportunity to respond, and that Olympic failed to investigate whether the practice extended beyond the employee or had been accepted within the workplace.
• Failing to investigate other supervisors despite evidence that the same practice had been followed for years.
• Dismissing the employee’s replacement for engaging in the same practice, which demonstrated that the practice was not isolated to the employee.
• Issuing a Record of Employment that recorded the employee’s separation as a “dismissal/suspension”, which prevented the employee from accessing Employment Insurance benefits.
• Not providing the employee with references following his 17 years of service, which hindered his ability to secure alternative employment and mitigate his losses.

As a result of Olympic’s conduct, the ONSC extended the employee’s reasonable notice period by 14 months. In total, the Court awarded the employee 33 months’ pay in lieu of notice, continuation of benefits throughout the notice period, and ordered Olympic to issue an amended Record of Employment.

The Court declined to award aggravated or punitive damages, concluding that while Olympic’s conduct justified an extension of the notice period, it did not meet the legal threshold for those additional heads of damages.

Key Takeaways

• Consistently Enforce Workplace Expectations: If an employer becomes aware of a workplace practice that is inconsistent with its expectations, it should address it promptly through clear policies, training, and consistent enforcement. Allowing a practice to continue unchecked may undermine a later assertion of serious misconduct or just cause.

• A Fair and Impartial Investigation Remains Essential: Before dismissing an employee for cause, employers should conduct a thorough and balanced investigation that considers all relevant evidence, including evidence that may support the employee’s explanation. Failing to investigate comparable conduct by other employees or reaching conclusions without adequate evidence may undermine a just cause defence.

• Bad-Faith Conduct in the Manner of Dismissal Can Substantially Increase Liability: Perhaps the most important lesson from Wilsher is the potential cost of mishandling a termination of employment. While the ONSC’s approach departed from the more typical practice of awarding moral damages to address bad-faith conduct in the manner of dismissal, the decision serves as a reminder that courts will not hesitate to impose meaningful consequences where an employer conducts a dismissal unfairly or in bad faith. Employers should ensure that investigations, meetings, and communications throughout the termination process are handled fairly, objectively, and in good faith to minimize the risk of enhanced damages.

This blog is provided as an information service and summary of workplace legal issues.

This information is not intended as legal advice.