Can a Relationship With a Subordinate Be Cause for Dismissal?

The New Brunswick Court of Queen’s Bench recently considered if and when a workplace romance could lead to just cause for dismissal.

Quick facts

The employee was a regional manager for New Brunswick and had been employed by the employer since at least 2002. He was dismissed in May 2017 when the employer became aware that the employee was involved in a sexual relationship with another employee whom he supervised and had failed to report the relationship, as required by policy.

Prior to the dismissal, the employer conducted an investigation which confirmed the existence of the relationship. But it also confirmed that the employee was providing advice to the employer to benefit the employee he was having the relationship with. Additionally, he was also providing that employee with information about company-related events. During the investigation, the employee lied to the employer when questioned about the relationship.

The employer no longer had confidence in the employee and had lost trust in him. This amounted to “a breakdown in the employment relationship.”

The employee refused to accept the termination letter that set out the reasons for his dismissal and sued for wrongful dismissal.

In his claim, the employee alleges that he was being dismissed without cause and never received a termination letter.

Court decision

Relying on the Court of Appeal decision in Henry v Foxco (trial and appeal), the New Brunswick Court of Queen’s Bench held that the employer had just cause to dismiss the employee; the employee had deliberately put himself in a conflict of interest and acted dishonestly, which created a breakdown in the employment relationship.

Henry v Foxco sets out the elements to consider when determining if an employer has just cause to dismiss. It says, “To determine if an employer has just cause to dismiss an employee, the trier of fact should ask two questions… (1) does the evidence establish employee misconduct on a balance of probabilities; and (2) if so, does the nature and degree of the misconduct warrant dismissal ‘because it gave rise to a breakdown in the employment relationship’; for example, did the misconduct violate ‘an essential condition of the employment contract, breach the faith inherent to the work relationship, or is fundamentally or directly inconsistent with the employee’s obligations to his or her employer.’”

The court held that the evidence established that the employee acted inappropriately and was making decisions based on his feelings for the employee and not the best interest of the employer, which had a negative impact on the employer’s business. For example, an examination of the emails between the employee and the subordinate demonstrated that the employee knew that what he was doing was inappropriate and could have serious consequences, but he continued doing so for over a year.

In light of the above, summary judgment was granted to the employer with costs of $2,500.

Takeaway for employers

The issue is not the sexual relationship, but the failure of the employee to disclose the relationship, as well as the negative impact and conflict of interest the relationship has on the employer’s business.

Had the employee followed the employer’s policy and disclosed the relationship, he could have avoided the severe loss of trust which ultimately helped the employer justify his dismissal.

Employers should implement a clearly drafted personal relationship (office romance) policy and communicate the policy to all employees. The most important context in which employers may regulate office relationships is between supervisors and subordinates. It is well established that the employer has a legitimate interest in knowing about and taking reasonable steps to control or prevent these situations. The key problem arising from the supervisor-subordinate romance is the existence of a power imbalance between the two. The prospect that the supervisor will abuse his or her authority in the course of the relationship is of great concern to employers.

As stated by lawyer, Robert Smithson, to act preventively, the employer can (and should) establish a policy, guidelines and training on appropriate workplace relationships and conduct. This can be a core component of the employer’s ongoing management training regimen and might be comprised of three primary elements.

1) The boundaries of appropriate workplace conduct should be defined in a policy. It can be useful for the policy to provide examples of appropriate and inappropriate forms of conduct.

Supervisors should be made to understand that they (more than the subordinate) are ultimately responsible for ensuring their conduct does not cross into inappropriate territory. They should be educated on how such inappropriate conduct can, and likely will, form the basis for a complaint of harassment.

2.) Ongoing attention can be given to the policy by way of periodic training sessions simulating real life situations. This will provide supervisors and subordinates alike with situational experience of what is and is not appropriate workplace behaviour. The objective is to establish a broad awareness of the boundaries of acceptable conduct. Empowering the employees to recognize the early signs of such a situation will equip them to take evasive measures.

3.) Supervisors and subordinates must be made to understand that the most important step is early disclosure of potentially inappropriate relationships. Disclosure allows the employer to assess the situation before any damage has occurred and to implement measures to resolve concerns of inappropriateness.

As with many aspects of the employment relationship, establishing conduct guidelines and taking early steps to deal with inappropriate relationships is the best approach.