BC Supreme Court

Employee’s secret pay raise and bonus constitute “just cause” for dismissal

In Bohmer v. Burns Lake Native Logging Ltd., 2018 BCSC 1052, the BC Supreme Court recently upheld an employer’s after-acquired cause defence, and found that an employee’s secret pay raise and bonus warranted his summary dismissal.

The plaintiff, Mr. Bohmer, was employed by the defendant, Burns Lake Native Logging Ltd., for 18 years as operations manager. Mr. Bohmer was dismissed for cause on October 19, 2015. At the time of his dismissal, Mr. Bohmer was 61 years old and earned $83,257 per year.

During his employment, Mr. Bohmer reported to the general manager of the defendant’s parent company, Burns Lake Native Development Corporation (“NDC”). In September 2015, the general manager learned of several issues which caused him concern. The allegations were that Mr. Bohmer had, without the knowledge of the general manager or anyone at NDC, caused the defendant to: (1) borrow $100,000 from another company; and (2) make three capital acquisitions (the purchase of a truck, and two trailers). The trial judge accepted that Mr. Bohmer made these expenditures for the defendant’s benefit and not for his own interests.

On October 19, 2015, the general manager presented Mr. Bohmer with a letter outlining the defendant’s concerns about the loan and capital acquisitions. The letter requested that Mr. Bohmer provide a written explanation of the expenditures. On receiving the letter, Mr. Bohmer was furious, stormed out, and said he was quitting. In the face of Mr. Bohmer’s refusal to address the concerns, the defendant terminated Mr. Bohmer’s employment for cause.

The trial judge found that if matters had ended there, he would have had difficulty concluding that Mr. Bohmer was lawfully terminated for cause. However, the allegations against Mr. Bohmer did not end with the October 19th letter. Following Mr. Bohmer’s termination, the defendant discovered three further areas of concern, and alleged after-acquired cause. The three additional grounds were:

  1. In 2014, without the knowledge or approval of the general manager or anyone at NDC, Mr. Bohmer approved a pay raise of 6% for himself to be effective January 1, 2015. The raise was taken at a time when the company’s funds were scarce.
  2. In September of 2014, Mr. Bohmer took for himself a lump sum “self-authorized” bonus of $6,475, without the knowledge of NDC.
  3. On January 8, 2015, Mr. Bohmer used company money to purchase an all-terrain vehicle, at a cost of $10,615. The ATV was registered in Mr. Bohmer’s own name, and he kept it at his house. At his dismissal, Mr. Bohmer did not inform the company of the ATV. The missing ATV was discovered six months later. Mr. Bohmer had not sought or received authorization to buy or keep the ATV.

The Court concluded that each of the first two grounds, individually warranted Mr. Bohmer’s dismissal for cause, that the third ground probably did as well, and all three together also cumulatively justified dismissal for cause. The Court reasoned:

“No employee can obtain a raise or a bonus without the employer’s approval.  To do so deprives the employer of its money, without the employer’s knowledge.  Whether the raise or bonus is deserved is beside the point.  Either or both of the payments may have been deserved in Mr. Böhmer’s case.  The employee must still have permission before taking the money or else it is really a form of theft or fraud.”

For employers, this decision is helpful for two central reasons. First, although courts tend to carefully scrutinize after-acquired cause allegations given the concern about the potential for trumped up charges, this case re-affirms that genuine allegations which were discovered after the date of termination may be relied upon by an employer to establish cause. In Bohmer, the Court had no difficulty finding that the after-acquired cause allegations were genuine. Second, this is another clear case from our courts affirming that dishonesty and theft, in particular pay raises and bonuses taken by a senior manager without an employer’s approval, will generally constitute cause for an employee’s immediate dismissal.

Questions related to this article can be directed to Scott McCann.