Employer need not investigate before firing employee for cause: Manitoba Court of Appeal

While a Manitoban employer has no duty at common law to investigate before dismissing an employee, it risks liability for damages for breach of contract or for the manner of dismissal if it cannot establish just cause at trial.

In McCallum v Saputo, 2021 MBCA 62, the plaintiff, a sales representative for the defendant employer, was responsible for visiting stores selling the defendant’s cheese to determine if the cheese was unsaleable. In 2015, the plaintiff took from a grocery store 14 packages of cheese which he claimed to be unsaleable and which he apparently intended to throw away. Before he could drive off, he was detained for removing the product without paying for it.

The defendant employer, upon receiving information about what happened, terminated the plaintiff’s employment in writing without performing any further investigation, which prompted the plaintiff to file a claim for damages for breach of the employment contract, damages for bad faith, punitive damages, aggravated damages and costs.

The Court of Queen’s Bench of Manitoba dismissed the claim for wrongful dismissal, finding on a balance of probabilities that the defendant had showed that there was just cause for termination and had fulfilled its duty to treat the employee fairly and honestly, on the basis of the information that it had at hand on the day of termination.

The Court of Appeal of Manitoba, finding no reversible factual or legal errors on the trial judge’s part, dismissed the plaintiff’s appeal with costs. The appellate court ruled that, in Manitoba, there is no duty to investigate an employee’s misconduct prior to termination, as an employer dismissing an employee for cause has no inherent obligation to comply with the standards of natural justice or with duties of procedural fairness.

In this case, because the defendant managed to establish just cause at trial, it faced no legal consequences for failing to perform a meaningful, or any, investigation before terminating the plaintiff, the appellate court held.

The appellate court also dismissed the ground of appeal pertaining to after-acquired cause, considering that the lower court did not base its decision on this doctrine, which nevertheless remains good law in the province.

According to the appellate court, the doctrine of after-acquired cause requires an employer to successfully establish, as of the time of dismissal, that it knew facts sufficient in law to justify the dismissal. It does not matter that the employer was aware of certain misconduct and opted not to rely on such at the time of dismissal, unless the employer also condoned the misconduct.

The other four grounds of appeal were summarily dismissed for raising no arguable questions of law, fact or mixed fact and law.

Kathleen Nash of Stewart McKelvey wrote a post discussing this case. She emphasized that, while an employer has no free-standing actionable duty to investigate before dismissing an employee, it remains best practice to conduct an investigation because it may avoid a situation where the employer believes by mistake that the alleged misconduct justifies termination and because the investigation’s findings may further strengthen the employer’s case for cause.

Nash compared the legal regimes relating to this issue across different jurisdictions:

• Manitoba and the other Atlantic provinces provide no statutory duty to investigate an employee’s conduct before dismissal.
• New Brunswick statutorily requires employers to provide written reasons when terminating an employee for cause. Nova Scotia, Prince Edward Island and Newfoundland and Labrador have no such provisions in their laws.
• Federally-regulated employers also have no statutory duty to investigate before termination, but federally-regulated employees other than managers who have completed at least 12 months of continuous employment with the same employer are protected from unjust dismissal under the Canada Labour Code.

Nash noted that, in the case at bar, the employment fell under common law because the plaintiff was not a unionized employee.