Lack of trust: How much evidence is enough?

July 22, 2012 - by: Louise Bechamp 0 COMMENTS

by Louise Béchamp

As a Québec employer recently learned, an alleged breach in the relationship of trust between employer and employee must be supported by objective evidence and facts if it is to form cause for termination of employment. In Senécal vs. CEGEP du Vieux Montréal, 2012 QCCS 1995, the employer was ordered to pay significant damages to Francine Senécal following her termination on that ground, in the absence of the required evidence to support their concerns.

Facts

In 2001, Senécal left her career in post secondary education to enter into municipal politics. She was elected as a counselor for Montréal and became vice president of the city’s executive committee. Throughout her term in office, Senécal’s spouse worked in a senior management position for the city’s housing and development corporation (in French, the “Société d’habitation et de développement de Montréal” or SHDM).

After 7 years in public life, Senécal decided she wanted to resume her career and applied for the position of director general of the CEGEP du Vieux Montréal. Senécal was the successful candidate. In October 2008, the CEGEP appointed her to a 5-year term, to begin in January 2009, so she resigned from public office.

In the days immediately after her resignation, an article was published in a Montréal newspaper that raised serious doubts about the integrity and management of Senécal’s spouse at the SHDM.  It alluded to possible links with certain notorious individuals. The article further referenced the “sudden” resignation of Senécal from her position as Vice President of the City’s Executive Committee as if the two matters were related.

As a result of the article, the CEGEP became worried about its own reputation. Its officials met with Senécal and asked her to confirm that she was never in conflict of interest while in municipal office. Senécal reassured them in several ways, including providing legal opinions and a signed affidavit. But the CEGEP still withdrew her appointment before she started the job. It alleged that the relationship of trust no longer existed. It then publicly announced its decision.

Senécal sued the CEGEP. She claimed $720,000 in damages for the loss of the 5-year contract plus $250,000 for loss of reputation and $150,000 in other damages.

Court’s decision

In alleging breach of the relationship of trust, the CEGEP argued that it had serious reasons to withdraw from its contract with Senécal.  Consequently, it owed no damages to her. The CEGEP alleged that Senécal had not reassured it and the general population about her integrity.

The court disagreed.

As the court reminded us, a serious reason for termination of employment exists when the employee does not fulfill or improperly fulfills her obligations. The burden of showing cause lies with the employer. It is often a heavy onus, especially when the reasons relied upon are subjective.

The court further explained that an allegation of breach of trust must be examined objectively, taking into account the entire circumstances. As the trial judge stated:  “If it were left to an employer to simply state that he has lost confidence in his employee to justify the unilateral termination of the employment relationship, the recourse of employees to contest the validity of their dismissal would become assuredly very random” [our translation].

Ultimately, the court considered that the CEGEP had failed to show cause for termination through objective facts. It noted that Senécal had complied with the CEGEP’s various requests to dispel any potential issues of conflict of interest while she was in municipal office. The CEGEP’s allegations were not only ill-founded but abusive.

The CEGEP was consequently ordered to pay damages representing lost earnings over the 5-year contract, including lost pension benefits and social benefits, and less mitigation (Senécal had been successful in finding alternate employment although at a lesser yearly salary). No damages for loss of reputation were awarded. In all, the CEGEP was ordered to pay more than $429,000 to Senécal, plus interest and court costs.

Lessons to be learned

Although this case is very fact-specific, it serves to remind all employers across Canada that it isn’t enough to allege breach of trust to justify an employee’s dismissal. An employer must have evidence of relevant, objective actions or omissions of the employee. Those must be sufficient to reasonably result in a loss of confidence such that the employment relationship has in fact been irrevocably tarnished. If you fail to do so, you may be exposing yourself to a similar result as the one summarized in this article.

About Louise Bechamp:
Louise Béchamp's practice focuses mainly on employment and labour law and she has significant experience in federal law matters. The clients under federal jurisdiction that she frequently represents come from many sectors, including the railway industry, the telecommunications' and the banking sectors. Furthermore, she regularly acts on behalf of manufacturing and service enterprises, counselling on all aspects of employee relations, be it employment contracts, employment standards, policy development, severance pay or implementing collective agreements. Her practice brings her to appear regularly before higher courts as well as administrative tribunals, such as the Canada Industrial Relations Board and adjudicators. She also counsels clients on human rights and matters of pay equity. She regularly gives training courses concerning harassment in the workplace and she accepts to act as examiner following harassment complaints filed against employers.
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