Office administrator fired for overpaying herself

Alberta court says employer was justified in terminating her employment because she breached the company's trust
|employmentlawtoday.com

An Alberta company was justified in firing an office administrator who paid herself for hours she didn’t work, the Alberta Provincial Court said in a recent ruling.

Tamara Stuart worked as the office administrator for Precision Mounting Technologies from May 12, 1999, to July 15, 2003. As part of her duties, she was responsible for the company’s payroll.

When she was fired on July 15, she was told by way of a lawyer’s letter that she was being dismissed for cause due to irregularities with regard to matters under her control and responsibility.

Particulars were set out in the letter and included the following:

•persistent lateness in getting to work;

•paying herself for lunch hours for which she was not entitled to get paid;

•providing herself with pay for hours in excess of that shown on the time clock; and

•providing others, including her husband, with pay for hours in excess of that shown on the time clock.

In May 2003 Stuart, by her own admission, paid herself 24.7 hours more than she had worked up to that point in time. She said that was an error on her part. But the court didn’t believe it was an error.

“After hearing the evidence of (Stuart), it is doubtful that this was an error,” said Justice J.T. McCarthy. “In my view, it was a deliberate act on her part.”

Even if it was an error, rather than a deliberate act, Stuart admitted on cross-examination that she concealed this from her employer, the court said. By the time Precision Mounting Technologies discovered the problem, Stuart had repaid some of it but still owed about 11.25 hours to the company.

The standard for just-cause dismissal

In

McKinley v. BC Tel

, the Supreme Court of Canada made the following comments on dismissing an employee for cause:

“In light of the foregoing analysis, I am of the view that whether an employer is justified in dismissing an employee on the grounds of dishonesty is a question that requires an assessment of the context of the alleged misconduct.

“More specifically, the test is whether the employee's dishonesty gave rise to a breakdown in the employment relationship. This test can be expressed in different ways. One could say, for example, that just cause for dismissal exists where the dishonesty violates an essential condition of the employment contract, breaches the faith inherent to the work relationship, or is fundamentally or directly inconsistent with the employee's obligations to his or her employer.

“In accordance with this test, a trial judge must instruct the jury to determine: (1) whether the evidence established the employee's deceitful conduct on a balance of probabilities; and (2) if so, whether the nature and degree of the dishonesty warranted dismissal. In my view, the second branch of this test does not blend questions of fact and law. Rather, assessing the seriousness of the misconduct requires the facts established at trial to be carefully considered and balanced. As such, it is a factual inquiry for the jury to undertake.”

The court’s decision

The court said Stuart’s actions warranted dismissal.

“The conduct of (Stuart), in this instance, was deceitful, the nature and degree of which, in my view, warrants dismissal,” said Justice McCarthy. “She had been given complete authority with regard to the proper recording of time for purposes of payroll and her employer trusted her implicitly to do this.”

The court said Stuart’s conduct in breaching this authority was sufficient to “undermine and impair” the trust the company placed in her — a trust that was necessary considering she was responsible for administering the company’s payroll.

It dismissed Stuart’s claim for wrongful dismissal. Her claim also included wages for the last day she worked. But the court said that claim is offset against the amount of hours that were still owed to the company because of the overpayment she made to herself. As a result, it also dismissed that claim.

The employer’s countersuit

The employer filed a counterclaim against Stuart, alleging she breached express and implied conditions of her employment contract.

But the court said Stuart provided a satisfactory explanation with regard to the discrepancies between the amount of time indicated on the time clock and her actually pay.

“These discrepancies resulted mainly from extra time being added in for time not taken for morning and afternoon breaks, as well as lunch hours,” said Justice McCarthy. “She has also provided a satisfactory explanation for the discrepancies in her husband’s time, when she states that her husband was paid bereavement leave and that this time was not recorded on the time clock of the company.”

Stuart also said her husband was shorted on one occasion and that he was paid for assisting the company with a move which was not recorded on the company’s time clock.

The court said the employer didn’t provide proof, on the balance of probabilities, to refute Stuart’s evidence in these matters.

It also said there were no damages accruing to the employer as a result of her allegedly coming into work late. As a result, the counterclaim was dismissed.

For more information see:

Stuart v. 899418 Alberta Ltd.

, 2005 CarswellAlta 672, 2005 ABPC 30 (Alta. Prov. Ct.)

McKinley v. BC Tel

, 2001 CarswellBC 1335, 2001 SCC 38, 9 C.C.E.L. (3d) 167 (S.C.C.)

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