In Shalagin v. Mercer Celgar Limited Partnership, 2023 BCCA 373, the British Columbia Court of Appeal (BCCA) upheld the lower court’s dismissal of an employee’s wrongful dismissal claim and its finding that his surreptitious recording of conversations with his colleagues justified the termination of his employment for just cause.

Background

The employee is a certified professional accountant (CPA) who commenced his employment as a financial analyst with the employer in 2010. In 2019, the employee was placed on the manager’s incentive bonus plan (Bonus Plan) under which bonuses were discretionary. His first potential discretionary bonus for 2019 was to be issued in spring 2020.

Prior to the employer’s announcing its 2019 bonuses, the employee met separately with the company’s human resources manager and his supervisor and argued that rather than being discretionary, the bonus should be calculated based on a formula. Following the meetings, the employee sent an email to these individuals in which he continued to make this argument and stated, “I am open to resolve this disagreement in timely manner and internally, without litigation.” The recipients of the email were troubled by the employee’s apparent threat of litigation and, after consulting with other members of the senior management team, terminated the employee’s employment on a “without cause” basis. The employer paid the employee the amount it calculated he was owed under the Employment Standards Act, 2000 (ESA). He had already been paid his 2019 bonus.

Following the termination of his employment, the employee filed an ESA complaint, a human rights complaint, and made a claim for wrongful dismissal. In the wrongful dismissal complaint, the employee claimed his supervisor was dishonest with him in a meeting about the Bonus Plan payments, was rude, abrupt, and dismissive of his concerns, and the employer terminated him as a reprisal for raising his Bonus Plan payment with his supervisor and the human resources manager.

As part of his human rights proceeding, the employee produced information about recordings he made surreptitiously of conversations he had with colleagues while he was employed. He stated he made the initial recordings to help him learn English but made the later recordings of interactions with supervisors and human resources staff, “…to create a record of interactions that I thought might relate to my rights, such as conversations about my contractual entitlement to a bonus and conversations related to discriminatory or bullying treatment of me or colleagues.” Some of the recordings picked up sensitive family details that the colleague disclosed to the employee. There was no evidence the employee shared the surreptitious recordings with anyone other than the British Columbia Human Rights Tribunal and the employer, or that the employee sought to benefit financially from them, except to advance his position in relation to the proceedings. Based on evidence of the surreptitious recordings, the employer argued it had just cause for the employee’s termination.

Decision of the Lower Court

The lower court concluded that the employee’s actions in making the surreptitious recordings fundamentally ruptured the employment relationship, such that the mutual trust between the parties was broken and, accordingly, the employer had established just cause; the employee’s stated purposes for making the recordings were unnecessary or ill-founded, and generally designed to benefit him alone. Furthermore, the fact that the grounds were “after-acquired” did not carry weight; the recordings were clandestine, and the employer could not have discovered their existence until after the employee’s dismissal.

Employee’s Position on Appeal

The employee appealed the decision of the lower court. He argued, among other things, that the trial judge erred in law by misapplying the just cause test, namely by failing to consider relevant context. Furthermore, the employee argued that the “contextual analysis” mandated by a Supreme Court precedent is a “micro‑level analysis” that should not be influenced by macro‑level factors such as public policy considerations: the trial judge erred in “relying on public policy” when he said that accepting the employee’s argument may encourage other employees who feel mistreated at work to routinely start secretly recording co-workers, and this would not be a positive development from a policy perspective, particularly given growing judicial recognition of the importance of privacy concerns.

Decision of BCCA

The BCCA dismissed the appeal and upheld the lower court’s decision. It found that the trial judge applied the approach of the Supreme Court of Canada in McKinley v. BC Tel, 2001 SCC 38. McKinley, which provides that the question of whether an employer is justified in dismissing an employee on the grounds of dishonesty “is a question that requires an assessment of the context of the alleged misconduct.” The facts of each case must be analyzed with a balance struck between the severity of the employee’s misconduct and the discipline imposed on them by their employer. The BCCA held that the trial judge correctly considered the specific circumstances surrounding the employee’s behaviour and whether its nature and degree justified his dismissal. The BCCA emphasized that “the recording activity was underhanded and would be regarded by most employers as misconduct undermining the trust relationship between employers and employees.”

Furthermore, the BCCA acknowledged that the trial judge considered public policy when it stated that if the employee’s argument was accepted, other employees who feel mistreated at work might be encouraged to “routinely start secretly recording co-workers.” The BCCA’s found, however, that the trial judge was free to consider this factor, which was not irrelevant.

Bottom Line for Employers

The decision of the BCCA in Shaligan v. Mercer confirms that courts may find just cause for the dismissal of an employee when the employee behaves in a manner that is dishonest and underhanded and would be regarded by most employers as misconduct that undermines the trust between employer and employee. Although the facts of each case must be carefully considered, an employee’s misconduct that disregards the privacy of others may be especially likely to be considered just cause for their dismissal.