Many Canadian judges are reluctant to find that just cause for dismissal exists, as the consequences for employees are so harsh. However, as we often say, “just cause is not a lost cause.” An employee can be summarily dismissed where an analysis of the circumstances surrounding the employee’s misconduct, its level of seriousness, and the employee’s response to the misconduct makes it clear that the employment relationship cannot be preserved.
This was the case in Pahwa and Canadian Imperial Bank of Commerce, Re, 2021 CarswellNat 401, where it was held that progressive discipline would be inappropriate because the misconduct went to the core of the employment relationship and rendered it untenable.
The Complainant was employed by the Canadian Imperial Bank of Commerce (CIBC) in a management role for little over three years. In October 2018, Pahwa’s employment with CIBC was terminated for cause after an investigation revealed he manipulated several transactions so that he could receive credit for mortgage transactions involving clients and properties outside of his jurisdiction, involving clients he did not know and transactions he had not worked on or played any role in. This allowed Pahwa to inflate his performance metrics through unauthorized transfers of new client mortgages. This type activity not only allowed him to ‘game the system’ but it also created a conflict of interest. It was also prohibited by CIBC and in breach of its Code of Conduct.
Although the employee admitted the acts which resulted in the termination of his employment, he never apologized or took any responsibility for his actions. On the contrary, he tried to blame others, including his employer.
Pahwa brought a complaint against CIBC for unjust dismissal. He asserted that he had a clean disciplinary record and did not know that his behaviour was contrary to CIBC’s regulations. Further, he argued that dismissal was too severe a penalty because he did not just lose his job with CIBC, he was precluded from further employment in the banking industry because he was dismissed for cause. Pahwa submitted that his employment should be reinstated or in the alternative he should receive pay in lieu of reasonable notice. In its defence, CIBC argued that dismissal was appropriate because Pahwa’s actions were “serious, premeditated and repetitive and involved a breach of trust.”
The Adjudicator agreed with CIBC that summary dismissal was an appropriate response to Pahwa’s actions. The Adjudicator found that Pahwa
participated in and benefitted from a scheme that was harmful to his employer’s interests, unfair to his co-workers, contrary to the Code of Conduct and just plain dishonest.
The Adjudicator concluded that Pahwa’s conduct was not an oversight or a mistake, nor was it a momentary lapse in judgement. The Adjudicator found that Pahwa’s actions were “premeditated and deliberate”, and that this was not a performance issue for which progressive discipline would be appropriate.
The Adjudicator also held that even if Pahwa acted with the knowledge and consent of his managers, as he claimed, this would not exonerate him. If anything, it would only expand the number of persons whose behaviour warranted disciplinary action.
As is often the case, the employee’s response when confronted was an important factor. The Adjudicator noted that there was no evidence to suggest that Pahwa “saw the error of his ways”. His behavior only stopped because the individual who was sending him the files left CIBC and a subsequent policy change. The Adjudicator concluded that but for these interventions, his behaviour might have continued.
This decision confirms that although judges are often reluctant to find that just cause exists, dishonesty can justify dismissal for cause, even for a “first offence” where there has been no previous progressive discipline. This is especially true in the financial industry where trust is paramount.
There are so many misconceptions in the area of just cause, which is the main reason Stuart Rudner wrote his book: You’re Fired! Just Cause for Dismissal in Canada, which contains an extensive discussion of the law and a searchable database of cases. While some people are cynical and believe that “no one can ever be fired in Canada”, the reality is that Judges will find just cause where it is appropriate.