Case tests limits of anti-bribery policies when appearance trumps actual benefits
The Court of King’s Bench of Alberta recently dealt with a wrongful dismissal case involving whether an employee’s interactions with a third-party vendor constituted a policy breach serious enough to warrant immediate termination.
The worker argued that he never participated in any incentive programme and never received payments or benefits from the vendor, maintaining that his dismissal was unjustified.
The case presents arguments about anti-bribery policies and whether the mere appearance of a conflict of interest, without actual improper benefits, can justify dismissal for cause.
The worker sought damages including payment in lieu of reasonable notice, unpaid commissions, vacation pay, and punitive damages.
The employer defended its decision by arguing that the worker violated fundamental company policies designed to protect its reputation.
The organisation maintained that the worker’s conduct created the appearance of impropriety and that his failure to report potential conflicts represented a serious breach of trust.
Policy violations lead to investigation
The worker had been employed as a community manager since February 2010, initially with a home building company before a residential development employer acquired it in 2015.
The employer operates in developing planned communities and constructing residential houses. The worker managed sales and marketing processes at a show home whilst supervising sales associates.
Being part of a global company, the employer implemented comprehensive policies, including a Code of Conduct and an Anti-Bribery Policy.
All employees were required to participate in annual online training on both policies. The worker had signed compliance acknowledgement forms and completed the required training.
The situation began when the worker was approached multiple times by a representative from a closet systems company. During a March 2018 visit, the vendor representative discussed elements of an incentive programme.
The court found the timing significant, noting that “two change orders were discovered to have been initiated by [the worker] the very next month.”
Investigation uncovers conflicting vendor incentive evidence
On 14 April 2018, the employer’s vice president of business development attended an industry awards event where he learned that the closet company was offering incentives to sales staff.
This prompted an investigation that revealed two change order requests submitted by the worker in April 2018 for customers to remove closets from construction agreements and install the vendor’s products instead.
During the investigation, the closet company owner was contacted and asked to identify all the employer’s salespersons that the vendor had offered incentives to.
The owner’s text message response specifically named the worker. The court found this evidence compelling, noting emails where “[the vice president] asked [the representative] who at [the employer] had been given incentives, and [the representative’s] email response to [the owner] identified [the worker].”
The worker denied participating in any incentive programme and maintained he had never received payments.
He testified that the vendor representative only discussed a potential condominium incentive programme, which wouldn’t have applied since he sold houses.
However, the court preferred the owner’s evidence, noting the representative’s recollection occurred seven years after the events, while the owner’s communications were contemporaneous.
Just cause standards for policy breaches
The court applied established legal standards examining the nature and extent of misconduct, surrounding circumstances, and whether dismissal represents a proportional response.
The worker argued that even if he engaged in alleged conduct, it didn’t warrant termination without progressive discipline.
The legal test requires that “the employee’s behaviour must be such that gave rise to the breakdown of the employment relationship so that the employment relationship could no longer viably subsist.”
The employer’s Anti-Bribery Policy stated that “an employee or a member of his or her family may not solicit or receive payments, gifts, or other benefits from vendors, suppliers or other third parties as an inducement to do business.”
The policy featured text reading “ZERO TOLERANCE APPROACH TO BRIBERY. Do not give or receive bribes, including ‘facilitation payments’.”
The Code of Conduct required employees to “avoid situations in which your personal interests conflict, might conflict or might appear to conflict with the interests of the company.”
The court found the worker’s obligations extended beyond refraining from accepting incentives.
The judge explained: “the obligations imposed on [the worker] by the Code of Conduct and the Anti-Bribery Policy were not limited to his refraining from accepting incentives, it also included his avoiding situations which might appear to conflict with [the employer’s] interests.”
The Code required employees to identify and report potential conflicts, obligations that the court found the worker had failed to meet.
Trust breakdown justifies immediate termination
The court considered the worker’s position and the degree of trust placed in him. Although not in senior management, he had managerial responsibilities over sales associates.
The judge noted: “[the worker] held a position of trust; he was the senior employee at the Show Home and other employees at the Show Home would have looked to him for guidance.”
The court found the worker and supervised associates “primarily controlled the culture at the Show Home; this included how [the employer’s] employees interacted with vendor representatives who visited the Show Home.”
The employer’s global operations meant it “concerns itself greatly with its reputation and has taken the time to implement policies addressing concerns it has not only with bribery but also the appearance of bribery.”
The judge determined dismissal was necessary to avoid appearing to condone policy breaches, explaining: “accepting [the worker’s] conduct in the face of the Code of Conduct and Anti-Bribery Policy would have had the effect of suggesting to employees and the public that [the employer] no longer considered the Code of Conduct and Anti-Bribery Policy to be important.”
The court concluded that progressive discipline was unnecessary given legal precedent recognising conflicts of interest as grounds for immediate dismissal.
Commission entitlements survive termination for cause
Despite finding just cause for dismissal, the court awarded the worker unpaid commissions totalling $80,687.29.
The employment agreement provided staggered commission payments: 50% at Firm Sale, 25% at Staking, and 25% at Closing. The employer argued commissions should only be paid to salespersons who performed work at each stage.
The court found the agreement’s language clear regarding commission entitlement. The key provision stated:
“Commissions are not earned or payable until Closing. Upon Firm Sale and Staking, [the employer] will pay you an advance, structured as a draw against future commission earnings. At Closing, the Advance will be considered to have been earned, and any outstanding commissions will be paid.”
The court noted that whilst the employer “may have intended for commissions to be earned by the salesperson who performed the work for each stage, that is not what Schedule ‘A’ says.”
The agreement included provisions for cancelled sales but contained no conditions requiring continued employment for commission entitlement.
The judge explained, “there is no condition that the salesperson continue to be working at a particular residential community or sales office, nor is there even a condition that the salesperson even continue to be employed by [the employer].”
Court’s additional awards
The court also awarded the worker $8,577.46 in unpaid vacation pay, finding vacation pay should be calculated in addition to commissions rather than included within them.
The employment agreement provided different vacation entitlements based on years of service.
The court reasoned: “If the commissions, as set out in the tariff of commissions listed in Schedule ‘A’ of the Agreement, included vacation pay then there would be no benefit received by an employee when they hit the 10-year mark.”
The decision concluded with mixed results. The court stated:
“[The worker’s] claim against [the employer] for wrongful dismissal is dismissed” whilst simultaneously ruling “[the worker] is granted judgment against [the employer] for unpaid commissions in the amount of $80,687.29” and “[the worker] is granted judgment against [the employer] in the amount of $8,577.46 for unpaid vacation pay.”
The court also determined that “[the worker’s] claims for aggravated damages and punitive damages are both dismissed.”
The case shows employers can establish just cause based on policy violations and conflicts of interest without evidence of actual payments received, while contractual interpretation can favour employees when agreement language is ambiguous regarding continued employment requirements.
