Termination of Employment based on theft and an Employer’s Duty to Investigate:
Key takeaways from McCallum v Saputo, 2020 MBQB 66
By: Cindy Lazar and Mark Alward
The plaintiff was a 13 year employee of Saputo, a cheese manufacturer and wholesaler, prior to his termination on September 1, 2015. He sued claiming wrongful dismissal. Saputo defended on the basis that it had just cause to terminate the plaintiff’s employment without notice.
The plaintiff worked as a sales representative. His duties included attending at Saputo’s customer’s stores for marketing purposes and to deal with cheese credits, which act as a credit to the store’s account with Saputo. Grocery store employees put any unsaleable Saputo cheese into a storage bin in the back of the store, away from customers. Saputo sales representatives were to go through this storage bin and provide credits for cheese that was unsaleable due to a manufacturer issue, such as a blown package or cheese that had gone mouldy before its best before date. Cheese that was unsaleable due to an in store issue, such as a cut package or improper storage would not have a cheese credit issued. It should go without saying that cheese credits would only be offered for Saputo products. Following inspection by the sales representative, the sales representative was to have a manager from the store sign off on the cheese credit form, and then the cheese is to be destroyed within the store, so that it cannot be credited a second time on a subsequent visit, and so it is not inadvertently sold to the public.
On Friday, August 21, 2015, the plaintiff attended a supermarket in his territory. The supermarket’s loss prevention officer stopped the plaintiff in the store’s parking lot with 14 units of cheese for which credit had not been given, and which had not been purchased. The plaintiff’s evidence was that this was unsaleable cheese for which a credit was to be given, and that he had begun but not completed the paperwork required to issue a credit. The assistant store manager of the supermarket, who inspected the cheese taken by the plaintiff from the store testified that the cheese was in saleable condition. Further, he testified that one of the cheeses was a Saputo competitor’s product, and another was a Saputo deli cheese, for which credit was never given.
On Monday, August 24, 2015 the plaintiff met with the supermarket’s store manager in the hopes of explaining himself. The store manager led evidence to the effect that the plaintiff had asked him to cover for him, and the store manager refused. After the meeting with the store manager, the plaintiff finally reported the incident to his supervisor at Saputo. There was considerable contradictory evidence led at trial regarding what was said at this meeting. Rempel J. accepted the supervisor’s account of the meeting, including that the plaintiff had stated he was removing the cheese without the proper paperwork to donate to a social (the decision defines a Manitoba social!), and that the plaintiff did not tell his supervisor about the competitor’s cheese or the deli cheese.
Saputo then received an email from the supermarket’s head office banning the plaintiff from conducting business in any of its locations.
Saputo did not conduct any sort of investigation into the allegations of theft against the plaintiff, but on September 1, 2015 the plaintiff was called to the Saputo offices and his employment terminated. Saputo relied solely on the plaintiff’s comments in the meeting with his supervisor. At the time of termination, Saputo had no information regarding how much cheese was in question, its condition, or that the plaintiff had taken a competitor’s cheese and some deli cheese.
An employer bears the onus of proof when alleging just cause for the termination of an employment contract, weighed on a balance of probabilities. The plaintiff argued at length that the standard of proof is elevated beyond a balance of probabilities when there are allegations of theft made against the plaintiff. This was rejected by the trial judge who indicated that, at most, an employer had to prove that the employee intended to take something and thereby deprive the owner of it. Therefore, Saputo was required to prove that the plaintiff intended to take the cheese and deprive Saputo or the supermarket of it. Motive was not required to be proven.
If theft is proven, termination for cause is not a given. Rather, a contextual analysis of the alleged misconduct must occur. This is a factual inquiry of whether the employee’s dishonest action gives rise to a breakdown in the employment relationship with consideration to the nature of the employment and status of the employee. When an employee is a senior, long service employee, misconduct must be more serious to justify summary dismissal. The overriding concept is that “An effective balance must be struck between the severity of an employee’s misconduct and the sanction imposed” (McKinley v BC Tel, 2001 SCC 38).
In terms of the lack of independent investigation, the trial judge cited the Manitoba Court of Appeal’s decision in Middelkoop v Canada Safeway Limited, (2000 MBCA 62), which set out that there is no duty of procedural fairness owed to an employee unless there is an express term in an employment contract requiring it. Further, the Middelkoop decision was used to indicate that an employer can justify a summary dismissal by relying on grounds not known to it at the time of the dismissal.
The trial judge found that the plaintiff intended to remove the cheese from the store, and that following 13 years of work with Saputo, the plaintiff was familiar with Saputo’s products to the point where the inclusion of two units of cheese that were not creditable was not reasonably possible without intent. Further, Rempel J. accepted that the cheese taken was in saleable condition, and stated the plaintiff could not have removed 14 saleable units in error. Further, the plaintiff “volunteering” to dispose the cheese himself drew additional scrutiny. It was not reasonable to think that someone with as much experience dealing with cheese as the plaintiff would throw away 14 perfectly saleable units. The evidence of the store manager, store assistant manager and Saputo supervisor was accepted. For these reasons, the trial judge found that the plaintiff intended to steal the cheese, therefore constituting theft.
The plaintiff’s conduct led to a fundamental breakdown in the employment relationship. Saputo placed a high level of trust in the plaintiff to perform his duties in a largely unsupervised environment. Further, sales representatives were given discretion to issue or deny cheese credits honestly with a view to maintaining good customer relationships. By removing 14 units of saleable cheese, 2 of which were not even eligible for cheese credits, the plaintiff failed to maintain good customer relations. This dishonest conduct violated an essential condition of the employment contract in a manner that was irreparable, and therefore, termination was appropriate in the circumstances.
Further, the trial judge found that the facts as known by Saputo on the date of termination constituted just cause for dismissal, and the facts learned thereafter reinforced that decision. While Saputo had a duty to treat the plaintiff fairly and honestly based on the information it had, it fulfilled that duty.
- An employer relying on theft by an employee to establish just cause must be able to prove intention to take and a corresponding deprivation of another party, but the onus remains at the civil standard of a “balance of probabilities”.
- There is no duty of procedural fairness owed to an employee unless explicitly set out in an employment contract, but there is a duty to act fairly and honestly.
- An employer can rely on grounds not known to it at the time of dismissal to establish just cause for a summary dismissal.