Manitoba’s top court says employers do not have a duty to investigate before terminating for cause

A recent decision from the Manitoba Court of Appeal confirms that a just cause dismissal may be defensible in certain cases even if the employer has not completed a thorough investigation or given the employee an opportunity to respond to allegations of misconduct.

In McCallum v. Saputo, 2021 MBCA 62, Mr. McCallum was an employee of the defendant, Saputo Dairy Products. One of the employee’s tasks was to visit stores that sold Saputo cheese, identify what was unsaleable, determine whether the store could get reimbursed, document his findings and have them approved by a designated store employee. Once completed, the unsaleable cheese would be disposed of by store employees.

On one occasion, the employee took 14 packages of cheese from a store’s shelves and instead of disposing of them in store removed them and placed them in his car. When he got to his car, the employee was stopped and detained by the store manager and a loss prevention officer for removing the product without paying for it. Saputo terminated the employee the following week without conducting a detailed investigation. In particular, Saputo did not investigate: how much cheese was taken; how much of the cheese was Saputo product; whether it was saleable; or whether the store could receive a credit for it if it was unsold.

At trial, it was not disputed that Saputo did not know certain details of the employee’s actions at the time he was dismissed. The court also found that Saputo did not try to interview the employee or any of the store employees that had knowledge of the incident. At trial, the employee put forward evidence that he was tired and rushed and had decided to throw the cheese out at home, while Saputo adduced evidence that the employee had confessed afterwards that he had taken the cheese to donate to a wedding event.

Ultimately, the trial judge did not believe the employee’s explanation and found that he had acted dishonestly and had intended to steal the cheese. The trial judge held that the employee’s theft and dishonest conduct gave rise to a breakdown in the employment relationship and the employer was entitled to terminate for just cause. The trial judge also found that an employer terminating an employee for just cause does not owe a duty of procedural fairness unless there is an express term to that effect in the employee’s contract. Saputo was entitled to terminate the employee without an investigation and in advancing a just cause defense was also entitled to rely on information learned after the termination.

The employee appealed the trial judge’s decision arguing that he had erred in finding that Saputo did not have a duty to investigate before terminating his employment and in finding that Saputo was entitled to rely on information obtained after termination in defending its decision to terminate for just cause. The Court of Appeal rejected both arguments and dismissed the appeal. The Court confirmed the trial judge’s finding that there is no common law obligation on an employer to provide procedural fairness in terminating employment and no requirement for an investigation or fair hearing. The Court of Appeal also found that if an employee brings a wrongful dismissal claim, the employer’s only burden is to provide sufficient evidence of just cause and in that regard, the employer may rely on evidence obtained after the termination.

Implications for Employers

This decision clarifies that the common law does not require private sector employers to conduct a thorough investigation of an employee’s conduct if they believe they have sufficient evidence to terminate for cause. Nonetheless, this decision should not be seen as giving employers carte blanche to terminate employees with cause, without an investigation.  If employers are considering terminating an employee for cause, they must be aware that the burden remains with them to prove that they have just cause. As such, in our view, it is still best practice for employers to conduct a thorough investigation prior to terminating an employee for cause. Ultimately if an employer is unable to prove just cause based on allegations or insufficient findings, they will likely have damages awarded against them, which could include aggravated or punitive damages.

For more information on this and other similar topics, please contact Neal Parker at [email protected] or anyone else from our team listed on the Authors page.