A recent Manitoba Court of Appeal decision focused on an employer’s duty to investigate prior to dismissing an employee for cause. In the decision of McCallum v. Saputo, 2021 MBCA 62 (“Saputo”), the Court reaffirmed that there is no inherent right to procedural fairness in a just cause termination, and neither is there a common law duty to conduct a thorough investigation prior to terminating for cause.
The incident
In Saputo, the plaintiff was a sales representative with the defendant, a business that manufactured dairy products that were sold at various customer stores. As part of the plaintiff’s duties, he was responsible for visiting these stores to inspect the defendant’s products and determine their saleability. Products were either deemed saleable or unsaleable, and there was a protocol in place for the proper disposal of unsaleable products. This involved disposing the cheese products on-site and filling out a credit form with the customer store.
While visiting a customer store, the plaintiff was stopped by a loss prevention officer and accused of stealing certain cheese products in the course of his duties. While explaining these were unsaleable items, the plaintiff had not disposed of the products on-site, nor had he filled out the credit form at the store. Upon learning of the incident in question, the defendant then terminated the plaintiff for cause based on the above incidents.
The case
At the time of dismissal, the defendant had not conducted a comprehensive investigation into the allegations in question, and it did not follow its internal policies. There were no interviews to substantiate the allegations against the plaintiff and there was no certainty as to the quantity of products taken. This information was not verified until after the plaintiff’s termination, when it was confirmed that the plaintiff stole saleable items from the store in question, including competitor products not manufactured by the defendant.
The plaintiff filed a claim against the defendant for wrongful dismissal in connection with his termination, arguing that the defendant’s basis for cause was unfounded and could not be upheld without a proper investigation. Despite these arguments, the trial judge upheld the dismissal for cause. The fact that no investigation took place was immaterial, as the cause had been established by the defendant in any event. The plaintiff appealed the trial judge’s decision, which was subsequently dismissed.
This case reaffirms principles previously cited in the Manitoba case Middelkoop v. Canada Safeway Limited, 2000 MBCA 62, which states that there is no common law duty in Manitoba to conduct an investigation prior to dismissal for cause, nor is there an inherent duty of procedural fairness at law. However, if expressly provided for in a written employment agreement or by statute, then an employer ought to conduct a full investigation.
Lessons learned
While this case suggests a good result for employers, it is a cautionary tale. Had the defendant failed to establish its case for cause, it would have been exposed to damages for breach of contract and likely punitive damages.
Other cases, such as Prashad v. ICI Paints (Canada) Inc., 1997 CarswellOnt 3454, illustrate this. In that case, an employee was found to have been wrongfully dismissed by his employer after he was alleged to have stolen certain goods from the defendant’s premises. The employer had dismissed him without conducting a full investigation. At trial, the court determined that the employer did not have cause to terminate the plaintiff’s employment and ought to have conducted an investigation to determine whether the plaintiff was truthful.
Therefore, notwithstanding the result in Saputo, a best practice for employers is to investigate alleged misconduct and obtain the fullest set of details possible before taking any action. It is important to follow internal policies and agreements with respect to investigation requirements and procedures, and to consult legal advice in connection with this process as necessary.
Laura Minuk is a Labour and Employment Lawyer at Thompson Dorfman Sweatman law, which provides services in over 25 areas of practice to clients locally, nationally, and internationally across every major sector.
