Aggravated Damages Awarded to Employee Falsely Accused of Theft and Terminated for Cause

Written by on June 26, 2017 in Blog, Focus on Canadian Cases
Notice of Termination

The British Columbia Supreme Court’s recent decision in Ram v. The Michael Lacombe Group Inc., 2017 BCSC 212 made headlines due to its egregious set of facts and the quantum of damages awarded to a fast food employee who was terminated after allegedly stealing a sandwich. The court awarded the employee $46,000.00 for wrongful termination, including aggravated damages for the manner of dismissal.

Background

At the time of her dismissal from the employer’s Vancouver area Burger King franchise, the employee, Usha Ram (“Ms. Ram”), was 55 years old and had been working as a cook at various Burger king franchise locations for nearly twenty-five years. Ms. Ram made about $21,000.00 a year and was the primary breadwinner for her family.

Ms. Ram was a valued employee with a clean disciplinary record when she was terminated without notice due to an alleged theft.

One day in December 2013, after finishing her shift, Ms. Ram took home a fish sandwich, fries and orange soda. While she admitted that she took the food without paying, Ms. Ram – who communicated in English at only a basic level- claimed that the general manager had given her permission to do so. The manager’s position was that Ms. Ram had permission to take a sandwich but not the entire meal.

Burger King’s policy was that employees were entitled to free drinks while working and otherwise received a 50% discount on food and drinks. With Ms. Ram’s employee discount, the alleged theft of the fries and drink amounted to a loss to the franchise of $0.50.

When confronted about the alleged theft, Ms. Ram apologized and offered to pay for the meal she had taken. The employer interpreted her apology as an admission of guilt and immediately dismissed Ms. Ram for just cause for stealing.

Ms. Ram sought damages for wrongful dismissal. She also sought aggravated and punitive damages for mental distress suffered as a result of her termination, claiming that the employer failed to discharge its obligation of good faith and dismissed her in a callous and reprehensible manner.

The Decision

Citing the decision of the Supreme Court in McKinley v. BC Tel, 2001 SCC 38, Justice Warren noted that dishonest conduct on the part of an employee does not always amount to cause for dismissal. Whether an employer is justified in dismissing an employee without notice on grounds of dishonesty, including theft, is a question that requires an assessment of the seriousness of the misconduct in the context of the particular case to determine whether dismissal without notice is a proportionate sanction.

In analyzing the facts, Justice Warren found that the employer could not prove that Ms. Ram actually intended to steal. Ms. Ram admitted to taking the food without paying for it. She thought that she had obtained permission to take it, she did not conceal it, she apologized when confronted and offered to pay for the food. In Justice Warren’s view, given the absence of any evidence of premeditation or attempted concealment of the alleged theft, Ms. Ram’s lengthy history of working for the Burger King franchise without any prior formal disciplinary action, the negligible loss to the employer, the nature of Ms. Ram’s position and her economic vulnerability as a 55 year old woman with little education, termination for cause was not a proportionate sanction.  A less serious sanction, such as a formal letter of reprimand, would have sufficed.

Justice Warren concluded that Ms. Ram was wrongfully dismissed and was entitled to reasonable notice that her employment was ending. She awarded Ram $21,000.00 reflecting 12 months’ salary in lieu of notice.

In addition, Justice Warren determined that the employer engaged in, “unfair or bad faith conduct sufficient to ground a claim for aggravated damages”, finding that Ms. Ram’s superiors were unreasonable, unfair, and insensitive during her dismissal. In assessing aggravated damages, Justice Warren applied the two-part test, inquiring:

  1. whether the plaintiff established that the defendant’s conduct in effecting the termination was unfair or in bad faith, and
  2. whether the plaintiff established that she suffered mental distress as a result of the manner of dismissal and not just as a result of the dismissal itself.

Justice Warren concluded that Ms. Ram satisfied both parts of this test, finding that it was unfair and unreasonable for the employer to have characterized her apology as an admission of guilt and not to have given her an opportunity to respond to the allegation of theft. Moreover, the allegation and embarrassment caused Ms. Ram mental distress beyond that associated with simply losing her job.

She awarded Ram $25,000.00 in aggravated damages.

Justice Warren did not award Ms. Ram punitive damages, however, concluding that the conduct of the employer did not rise to the required level of maliciousness.

Lessons for Employers

This decision reminds employers that to justify terminating an employee for cause and without notice, an employer must be able to demonstrate an “irreparable breakdown in the employment relationship”. If termination for cause cannot be justified, absent a contractual provision to the contrary, courts will consider an employee’s past service in determining an employee’s notice entitlements. Although Ms. Ram had worked at several Burger King locations owned and operated by different franchisees, the court nonetheless concluded that these particular circumstances warranted recognition of her past service.

This case also cautions employers about the manner of dismissal, demonstrating that if a court determines that the conduct of an employer in dismissing an employee is not fair or not in good faith, it could result in an award of significant aggravated damages awarded to the employee in addition to notice. Before dismissing an employee for misconduct, an employer should give the employee an opportunity to respond to the allegations. Regardless of whether an employer believes it has just cause to terminate, it is crucial that the employer treat the employee with dignity and respect. When faced with a situation of determining whether an employee should be terminated for cause, employers should seek the advice of experienced Employment Law Lawyers to guide them through this challenging area.

Lessons for Employees

Employees should be aware that damages in addition to notice may be awarded when employees are treated unfairly and in bad faith by their employer during the termination process. While the courts acknowledge that a certain amount of mental distress typically arises during a termination situation which is not compensable, the additional mental distress caused by improper conduct by an employer in the manner of dismissal may warrant financial compensation through an award of aggravated damages.  Employees who are concerned about how they have been treated by their employers during termination should obtain Employment Law advice to determine whether they may be entitled to additional compensation on top of notice.

Minken Employment Lawyers is your source for expert advice and advocacy on today’s employment law issues. Whether you are an employer or an employee, we can help. Contact us to see how.

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