Individual worked with HR manager to develop new wage grid with substantial increases
The Supreme Court of British Columbia recently addressed whether a band administrator's conduct during salary negotiations and financial management warranted termination for cause.
The administrator claimed he was wrongfully dismissed, arguing that he wasn't given a chance to respond to allegations or appeal his termination as required by the employer's personnel policy. He also maintained that he did not mislead the council about budgetary matters.
The case examined the intersection of fiduciary duties and executive compensation, particularly focusing on proper disclosure requirements and adherence to established financial protocols.
The worker started as band administrator for a First Nations band in September 2017 under a written employment contract. Within six months, his employment terms were modified to include a substantial pay increase.
The organisation was experiencing significant internal challenges. By spring 2017, three of seven recently elected councillors had resigned. In September 2017, the former chief and another councillor also stepped down, creating governance instability.
The band operated under a 2016 financial administrative law (FAL 2016) that established a finance and audit committee (FAC). According to court evidence, none of the chief or council members had financial backgrounds and indicated "significant reliance on the FAC for guidance on financial matters."
When pursuing salary changes, the administrator worked directly with the human resources manager, who was his subordinate. Together they developed a new wage grid that included substantial increases for senior positions, including the administrator's role.
The court identified this as problematic, stating: "Having determined to approach the issue through his subordinate HR manager, he ought to have separated that function from the coincidental negotiation of a long-term contract for [the HR manager]."
"Further, and at a minimum, he should have taken steps to disclose to Chief and Council at or before any presentation by [the HR manager] of the wage grid and the proposed contract changes, the role he had in the development of each of those," it added.
The chief financial officer (CFO), who was away when these changes were approved, raised serious concerns upon return about the process and retroactive payments.
The court concluded that while not all allegations were proven, including claims of fraudulent misrepresentation, the administrator's conduct breached his fiduciary duties sufficiently to justify termination.
The decision stated: "The breaches of duties that I have found are, collectively, the basis for [the employer/employee] relationship having been irreparably damaged. [The employer] need not prove all of its allegations. [The employer] had just cause to terminate."
The court ordered the administrator to repay the retroactive payment of $17,067 and any increased pay received after March 20, 2018. The ruling emphasised that his fiduciary obligations required him to actively ensure compliance rather than benefit from ambiguities in council resolutions.