In Dove v Destiny Media Technologies Inc., 2023 BCSC 1032 , the Supreme Court of British Columbia found that an employer had just cause for the dismissal of a full-time employee who worked on a side business during working hours and did not provide the employer full-time service.

Background

The employee was employed full time by the employer on August 4, 2009. Before she was hired, the employee was permitted to use the employer’s premises to work on her crystal business; in return, she did administrative work for the employer. When she became the employer’s full-time employee in 2009, the employer advised the employee that she could no longer work on the crystal business in the employer’s office.

After January 1, 2017, during the employer’s regular office hours, the employee began to perform work for a different external business that was purchased by the employer’s CEO, with whom she had a close personal relationship.

The employee worked for the external business during the employer’s regular business hours while being paid by the employer. In addition, she failed to perform a specific job duty for her employer – i.e., create a business plan requested by the Board of Directions. The employee was regularly absent from work and did not communicate promptly or effectively with the employer’s other employees. The employer had to chase her for information about her attendance and other matters. The employee used the employer’s offices, office equipment and staff for the external business. She was late in filling out her vacation requests and often did so after the fact, contrary to the employer’s policy. When, on June 22, 2017, the employee was placed on an administrative suspension during an investigation into her conduct, she refused to cooperate with the investigation, as required by the Board.

On June 28, 2017, the employee was terminated for cause. She made a claim for wrongful dismissal.

Decision

The court dismissed the employee’s wrongful dismissal claim,¹ finding that just cause existed.

Applicable Legal Principles

In providing its reasons, the court reviewed the applicable legal principles, which provide: (a) employees have a duty to provide full-time service to their employer unless otherwise agreed. Working for an outside business during business hours without approval can be a basis for dismissal; and (b) prior to dismissal, the employer must seek an effective balance between the severity of the alleged misconduct and the sanction imposed. Progressive discipline, usually starting with clear and unequivocal warnings, followed by suspensions prior to dismissal is the usual course; however, when the employee’s performance is so grossly deficient that the likelihood of discharge is obvious, warnings and reasonable notice are not required.

Just Cause for Dismissal

The court found there was just cause for the employee’s dismissal based on, among other things, its finding that the employee was doing substantial and broad-reaching work for the external business across its operations during the employer’s work hours without prior approval from the employer’s management, impacting her ability to stay up-to-date with her work for the employer.

The court rejected the employee’s argument that she was fitting her work for the external business around her work for the employer, noting that she failed to meet the employer’s deadlines, and that employees may not allocate their work time to other activities without their employer’s consent, regardless of how busy they are.

No Additional Warning Required

Regarding the need for a warning, the court found that the employee ought to have understood that her job was in jeopardy if her conduct continued, especially as it pertained to her failure to produce a business plan, and her refusal to cooperate in the employer’s investigation. The court noted that, “An employer’s decision to investigate is reasonably related to the provision of a warning.” The employee’s refusal to cooperate with the investigation—a good-faith means of alerting the employee to the employee’s concerns and giving the employee an opportunity to explain her actions—caused the court to conclude that an additional warning was not required.

Bottom Line for Employers

Employers that discover that an employee is working for an outside business during business hours without their prior approval may have just cause to terminate the employee’s employment without notice.

Employers are encouraged to conduct an in-depth investigation into the employee’s conduct prior to dismissing them; although not a formal warning per se, an investigation is likely to be viewed by a court as reasonably equivalent to a warning, and may protect the employer from being criticized by a court for not providing a warning, should the employee claim they have been unjustly dismissed.

Finally, employers are encouraged to put a workplace policy in place or include a provision in their employment agreements clearly indicating that employees may not work on a side business during working hours and are expected to provide full-time service to the employer.

Footnotes

^​1 Except for a $1,000 nominal damage award relating to the delayed delivery of the employee’s share certificates under the employer’s employee share purchase plan.