Just cause upheld: Sales exec at auto dealer fired for $250 misconduct

A recent B.C. Court of Appeal decision upheld the just cause dismissal of an auto sales executive who, while the costs were small, was dishonest about submitting receipts of a personal nature for reimbursement.

Early last year the claimant’s original wrongful dismissal charge was denied by the B.C. Supreme Court on the grounds that his misconduct, while financially insignificant, was sufficient enough to damage the trust of his employer.

Roper Greyell partner Brandon Hillis in Vancouver told HRD that the case illustrates the importance of conducting thorough internal investigations into employee misconduct.

“The employer could have done a better investigation,” he told HRD. “In this case, it worked out for the employer in the end because the evidence went the way that the employer hoped that it would. I always recommend that employers do fulsome investigations before making these kinds of decisions.”

Thorough investigations necessary to establish just cause

The courts found that the executive had falsified the nature of a small number of meal receipts from a business trip, when he wrongfully claimed that employees and business associates had been present, while in actuality he had been dining with his wife. Other claims of misconduct were made by the employer, including sharing confidential financial information with a business partner and another meal that was submitted by the claimant as a “team building” event.  

The employer conducted an internal investigation that included the two co-owners reviewing receipts and interviewing the sales executive before deciding to terminate him. They did not interview any of the employees whom the claimant said were present at the meals, nor did they interview the CFO, who had approved the receipts in question.

One of the owners testified that “there was no point” in interviewing those individuals, and “it didn’t matter” because she already knew that they hadn’t been there.

Hillis pointed out that this crucial step being missed could have been a costly mistake for the employer.

“Had evidence come to light after the fact that one of these people was in fact there at the meal, or the other employee had okayed the characterization of the expenses, that could have very much changed the outcome,” Hillis said, adding that when establishing just cause for dismissal in such a case he would advise employers to interview “every single employee and get statements from every single employee who is implicated in this issue, one way or the other, so that you've got as full of a sense of the evidence as you can.”

Dishonesty: just cause for dismissal

The main basis for the just cause dismissal decision hinged on the sales exec’s refusal to admit the wrongdoing although given more than one opportunity to do so. His testimony was “vague, equivocal, and lacked genuineness and veracity,” according to the court’s decision, which concluded that he was “struggling to find a way around his having been caught in a deception of his employer.”

The executive’s employment contracts outlined that “falsifying records or information” were grounds for immediate dismissal. However, he alleged that the CFO had advised him to write incorrect names on a receipt in order to simplify the process, which the CFO denied, telling courts that he “assumed that the names on the receipts were accurate.”

The sales exec testified that he was never advised that there were any parameters around submitting receipts for alcohol consumed during business events. The CFO said that his process was reviewing receipts and approving them if “nothing was out of line.” This ambiguity may have been avoided with clearer policies, Hillis said.

“You don't need a policy to say you're not allowed to steal from your employer,” he said. “But it is always good to have policies around expenses and expense submission processes, and when you have those in place, that certainly does help you deal with these kinds of circumstances in a cleaner fashion.”

Employee role a factor in determining just cause dismissal

The sales executive was from Victoria originally but began his career in car sales as an auto salesman in Alberta in 2003. He worked at several dealerships throughout B.C. and Alberta throughout his career, being promoted consistently until being hired by the employer in 2020, allowing him to return to Victoria. He was promoted to President of Operations a year later.

He testified that the termination affected his mental health negatively, that he became angry and depressed, which affected his relationships with his wife and children. He said he began drinking more alcohol than usual and that the summer of 2022 was “the hardest summer of my life.”

However, the court upheld that his position of power and autonomy at the company was a sufficient breach of trust to warrant the dismissal as it went to “the very root” of the employment relationship.

“The higher up you go, the more important the trust relationship and the need to have that unconditional trust is. The other thing in this case was the absence of remorse or contrition from the plaintiff,” Hillis said.

“Had the plaintiff admitted to it right away and apologized and done all those things, I don't know if that would have changed the end result, but it would have been something that the employer would have wanted to consider before terminating.”