By Lewis Waring, Paralegal, Student-at-law, Editor, First Reference
In Underhill v Shell Canada Limited, 2020 ABQB 341, the Court of Queen’s Bench of Alberta decided that a senior employee had been wrongfully dismissed after she became tangled up in a subordinate’s attempt to bid on a project independently of the employer.
The employer’s reason for the senior employee’s dismissal had been that she had engaged in misconduct in her handling of the subordinate’s bid attempt. However, the court found that her behaviour was not serious enough to merit her dismissal for cause. Instead, the employer should have responded to the employee’s misconduct with a less serious form of discipline, such as a verbal warning, written warning, retraining or a negative performance review.
The employee had worked for the employer for seventeen years until it dismissed her for cause on September 14, 2015. She was described as a “loyal and dedicated (at para 105)” employee, an “exceptional talent (at para 93)” who had earned a performance bonus of over $100,000 in the year before her dismissal. Nonetheless, the employer stated that it had dismissed her because of a lack of competence.
This decision by the Court of Queen’s Bench relied heavily upon what it learned about the employee’s working history with the employer. During her relationship with the company, she was shown to have been a hard worker who was dedicated to the company and had no disciplinary record. The court also noted the fact that the employee’s misconduct had not caused any serious consequences for the employer’s organization.
All the events in Underhill happened in the context of the Alberta oil sands project. The employee in this case worked as Vice President Commercial Strategy and Business Development, Heavy Oil for Shell Canada Limited. Her subordinate was Shell’s commercial representative on the Oil Sands Safety Association (“OSSA”), a collaborative safety organization for oil-sands companies. OSSA was largely staffed by members of involved oil companies, including Shell. OSSA was beginning a project, Personal Safety Collaboration (“PSC”), which aimed to standardize safety procedures across companies and was about to take bids to see who would take on the project. These bids contained confidential information about the bidders. Shell had tasked the subordinate employee in Underhill to analyze the bids.
The events which led to the employee’s dismissal began when she told a subordinate that she was going to be dismissed during planned layoffs in the near future. After discussing details of her upcoming dismissal, the subordinate brought up the fact that she “had an idea” about the upcoming project, PSC. The subordinate was in a unique position to come up with such an idea as her role involved analyzing the existing bids, which included confidential information.
Unbeknownst to the senior employee, the subordinate had already sent a bid proposal to PSC’s project director. The senior employee was also unaware that the bidding for the PSC project would take place in a few days.
The day after her talk with the senior employee, the subordinate asked the senior employee to be let go with severance pay as fast as possible so that she could make her proposal bid for the project without any conflict of interest. In response, the senior employee talked with one of Shell’s lawyers, who said that the subordinate’s plan to be dismissed quickly and make her proposal was “murky” and would likely cause conflicts down the road.
Meanwhile, the subordinate pitched her idea to the chair of the board of OSSA, who responded by telling Shell’s representative on OSSA. Shell then opened an investigation into the subordinate employee. During the process of this investigation, Shell interviewed the senior employee, who revealed that she had told the subordinate about her impending dismissal. In response, Shell dismissed the senior employee.
The Court of Queen’s Bench in Underhill decided that the senior employee had been wrongfully dismissed. It looked at her long track record with the employer, which showed that she was a great employee who was very appreciated by Shell. It also looked at the nature of her mistake and found that it was not serious enough to deserve dismissal. The court did not see the employee’s behaviour as sufficient to damage her relationship with Shell. Instead, it saw that Shell had many lesser and more appropriate forms of discipline available to it. As such, the senior employee was awarded $800,000 in damages for wrongful dismissal.
Although Underhill is full of complicated oil-sands deal-making and conflicts of interest, the lessons for employers are fairly straightforward. Namely, a single mistake is often not grounds to dismiss an employee for cause. Although the senior employee was recognized to have made a mistake in her dealing with the subordinate employee, the Court of Queen’s Bench decided that this mistake could have been addressed by lesser forms of discipline. That is, instead of dismissing the employee for cause, Shell could have given her a verbal or written warning, made her undergo training or given her a negative performance reviews.
In short, it seems that Shell overreacted to the subordinate employee’s abuses of its trust in her. Although the employer may have been right to get upset, it seems to have attempted to respond by scapegoating the senior employee. While senior employees do have responsibilities to manage the behaviour of subordinate employees, they are not necessarily responsible for all the decisions of those subordinates. Instead, senior employees are responsible for their conduct in managing their subordinates.
Employers should always approach discipline with a clear head. In responding to mistakes or situations involving intentional wrongdoing, employers have a duty under law to discipline employees proportionately. That is, a disciplinary response must be designed to match the seriousness of an employee’s mistake or wrongdoing.
In Underhill, the senior employee did make a mistake. Namely, she breached confidence by telling her subordinate about her upcoming dismissal. While the court recognized that the senior employee should not have disclosed that information, it did not agree that the appropriate response was dismissal. Employers facing similar situations should take their time and ensure that discipline is always proportionate and objectively fair.