Jul 26

Failing to disclose new competing job can be cause for termination, Toronto Employment Lawyer

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The Ontario Labour Relations Board issued a decision in May 2019 regarding whether an employee’s conflict of interest by accepting a job offer from a competitor lead to a termination for cause.

The Employer, in CIBC Mellon Global Securities Services company v Stuart Baltman, 2019 CanLii 51825, claimed that the Employee owed a fiduciary duty to the employer and was bound by a code of conduct. The Employee occupied a senior position allowing him to attend leadership meetings where discussions covered client opportunities, internal improvements and other confidential and sensitive information. In his defence the employee asserted that there was no rule obliging an employee to disclose acceptance of employment with a competitor and that he did not disclose any confidential or sensitive information to the other employer.

The Labour Board analyzed the situation through the lens of the Bank’s expectations from senior employees and members of the leadership team who having access to confidential and sensitive business information. The Board confirmed that such a position would place fiduciary obligations of good faith on the employee to the benefit of the employer (Felker v. Cunningham). The Board also found as a finding of fact that the employee was or ought to have been aware that the employer would expect him to disclose a new competing job and leave the workplace immediately, as had happened with other colleagues.

The Board also found a breach of the employer’s written policies in the Code of Conduct. The Code specified that an employee is to disclose a conflict of interest and if the employee is not clear, he/she should discuss the potential conflict with their manager. Accordingly, the Board concluded that employee acted dishonestly for his own benefit as he hoped to remain employed with the Bank until he started his new job and in order to do so failed to disclose.

As a result, the Board confirmed that there was willful misconduct which amounted to cause for termination.

This is another example of how an employee’s dishonesty makes an already untenable situation potentially worse. If an employee is going through an investigation or has questions about whether they are entering into a conflict of interest with their employer, it is advisable to get legal advice, as sometimes an attempt to cover up ‘bad’ behaviour may lead to being appropriately  terminated for cause, when perhaps the underlying behaviour would not have.

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