In Shalagin v Mercer Celgar Limited Partnership, 2022 BCSC 112, the BC Supreme Court dismissed an employee’s wrongful dismissal lawsuit on the basis that the employee’s secret recordings of his co-workers was just cause for his termination given the effect on the relationship of trust between employer and employee.
The employment relationship depends on a mutual trust between employer and employee.
In some circumstances that mutual trust may be broken by employee misconduct, such as an employee’s secret recordings.
If an employee’s secret recordings, viewed objectively through the eyes of a reasonable employer and with consideration of all the surrounding circumstances, fundamentally rupture the employment relationship such that the mutual trust between the parties is broken, then the employer has just cause to terminate the employment of the employee.
The court signalled that the recordings may have been an option available to the employee if the employee had legitimate concerns of discrimination or corporate mismanagement. Therefore, in order for employers to prevent employees from surreptitiously recording conversations in any circumstances it is advisable to address the issue in policies related to privacy, confidentiality and use of electronic communications.
The employee was a Certified Professional Accountant (“CPA”) employed as a financial analyst by the employer.
The employee did not have a written employment contract, but agreed he was bound by the company’s Code of Business Conduct and Ethics, and confidentiality policies. The employee also agreed he was bound by the CPA Code of Conduct.
The employee had a history of issues with one of his supervisors and felt discriminated against because of his ethnicity. Eventually, this supervisor’s employment was terminated, and the employee was asked to assume some of the supervisor’s responsibilities. While reviewing documents in the former supervisor’s office, the employee found documents showing the bonuses received by other employees in a previous year. With this knowledge, the employee then met with the company’s human resources manager and his new supervisor to discuss his anticipated bonus.
At the meeting, the employee asserted his bonus was not discretionary and should be payable in accordance with a formula. The company disagreed, noting any bonus payable was entirely discretionary. In an email following the meeting, the employee intimated that he would resort to litigation to resolve the bonus payment. The threat of litigation prompted the company to terminate the employment of the employee on a without cause basis.
Following the termination, the employee commenced a wrongful dismissal lawsuit and a human rights complaint. During these legal proceedings, the company discovered the employee had made over 100 secret audio recordings during his employment.
The employee asserted the recordings were initially made to help with his English but acknowledged his coworkers would have been uncomfortable if they knew they were being recorded.
The employee also asserted that other recordings with supervisors and human resources staff were to create a record of interactions that he thought might relate to his rights, such as conversations about contractual entitlement to a bonus and conversations related to discriminatory or bullying treatment.
There was no evidence the recordings were used for any purpose other than for his own pursuit of legal proceedings.
Upon discovering the secret recordings, the company amended its defence to the wrongful dismissal lawsuit to assert after-acquired just cause to terminate the employee.
Were the employee’s secret recordings just cause for termination?
Principles of Just Cause for Termination
The court summarized the general principles of just cause for termination as follows:
- Just cause for termination is behaviour that is seriously incompatible with the employee’s duties. It is conduct which goes to the root of the contract, and fundamentally strikes at the heart of the employment relationship.
- The test for just cause is objective, viewed through the lens of a reasonable employer taking account of all relevant circumstances.
- Both the circumstances surrounding the alleged misconduct and the degree of misconduct must be examined.
- The analysis requires a contextual approach including an examination of the category of misconduct and its possible consequences, all of the circumstances surrounding the misconduct, the nature of the particular employment contract, and the status of employee.
- Misconduct discovered after termination may constitute just cause.
Secret Recordings in the Employment Context
The court canvassed previously decided court cases that dealt with the appropriateness of recordings within an employment context. The cases all focused on the mutuality of trust in the relationship between employer and employee. These cases suggest the mutuality of trust forms part of the general duty of good faith, fidelity and fair dealing that both the employer and employee owe to each other.
Citing decisions from the BC Court of Appeal, the judge noted the strong support for the view that surreptitious recordings can cause material damage to the relationship of trust between the employee and employer.
The court concluded the overarching question is whether the employee’s secret recordings fundamentally ruptured the relationship, such that the mutual trust between the parties is broken.
Application to this Case
The court determined that the surreptitious recordings were just cause for the employee’s termination.
In particular, the court emphasized that the employee:
- knew his fellow employees would be uncomfortable with the recordings, and yet he continued to make them;
- knew it was unethical to make the recordings;
- owed professional obligations as a CPA and did not conduct himself as a CPA should have;
- used the recordings for his own advantage, contrary to the CPA Code of Conduct;
- had no evidence of any alleged discrimination, and therefore, had no legitimate basis to make the recordings based on fear of discrimination;
- had no evidence of financial improprieties by the company, and therefore, no evidence the recordings were required to protect the company’s best interests;
- misapprehended how his bonus was payable, which was an irrational concern that did not justify the recordings;
- did not act with malice making the recordings, but the purposes for the recordings were either unnecessary or ill-founded, and several for his benefit along, which weighed in favor of just cause for termination; and
- did not publish or use the recordings for his benefit outside of legal proceedings, but the voluminous amount of recordings negated this potentially mitigating factor.
The court also accepted the evidence of the employee’s supervisor who treated the employee as a protégé and felt that the trust she invested in him had been violated by the recordings, especially since he had recorded discussions of personal family matters.
The employee’s surreptitious recording of his colleagues constituted just cause for termination given the effect on the relationship of trust between employer and employee. The employee’s claim was dismissed on this basis alone.