Just Cause - Dishonesty, Breach of Contract, Good Faith

It is always difficult for an employer to prove just cause.  In an earlier post, we discussed performance based just cause.  This post looks at a recent case from British Columbia that found just cause based on dishonesty, breach of contract and breach of the duty of good faith.

Ernst was hired as a senior executive by a Vancouver based company to market a system for the secure distribution of recorded music over the internet.  At the time, he was living in Alberta.  He negotiated a written employment contract that said he would initially work from his home in Alberta, that if he was required to move to Vancouver the employer would pay the reasonable expenses of the move, and that his salary would be increased annually by not less than the cost of living increase in his province of residence.

Without telling his employer, and with a little deception along the way, Ernst moved to Mexico.  He eventually told the employer he was working from home in Mexico and the employer expressed its displeasure.  Ernst failed to respond to the employer's request to make a proposal on how he would deal with several concerns raised by the employer.  The employer did not take immediate action because Ernst was working on a major contract with Warner.  Three and a half months later, Ernst was dismissed for just cause.

The court found in favour of the employer.  It held that Ernst had breached his employment contract by moving to Mexico and that the unilateral move and his failure to accept his employer's directive that the move was unacceptable gave the employer cause.  The delay in dealing with the matter did not, in all the circumstances, mean the employer had condoned the move.

Ernst did not help his case by also being deceptive about some vacation and sick time and by his argumentative and evasive testimony at trial.  The court ruled that he had "breached his duties of good faith and honesty, and revealed a character that undermined and seriously impaired the essential trust and confidence [the employer] was entitled to place in him."

The decision, Ernst v. Destiny Software, has a helpful and comprehensive review of the basic principles of dismissal for cause (see paragraphs 117 - 126).

The employer won in this case, but proving cause is still an uphill battle.

breach of contract dishonesty employment obligation good faith honesty just cause revelation of character termination work from home

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