UPDATE: On October 6, 2023, in Shalagin v. Mercer Celgar Limited Partnership, 2023 BCCA 373, the British Columbia Court of Appeal dismissed an appeal of the decision of the Supreme Court of British Columbia in Shalagin v. Mercer Celgar Limited Partnership, 2022 BCSC 112, discussed below.

*  *  *

In Shalagin v. Mercer Celgar Limited Partnership, 2022 BCSC 112 (Mercer), the Supreme Court of British Columbia dismissed an employee’s wrongful dismissal claim and held that his surreptitious recording of conversations with his colleagues justified the termination of his employment for just cause. 

Background

The employee is a certified professional accountant (CPA) who commenced his employment as a financial analyst with Mercer Celgar Limited Partnership (Mercer) in 2010.  In 2019, the employee was placed on the manager’s incentive bonus plan (Bonus Plan) under which bonuses were discretionary.  His first potential discretionary bonus for 2019 was to be issued in spring 2020.

Prior to Mercer announcing its 2019 bonuses, the employee met separately with the company’s human resources manager and his supervisor and argued that rather than being discretionary, the bonus should be calculated based on a formula. Following the meetings, the employee sent an email to these individuals in which he continued to make this argument and stated, “I am open to resolve this disagreement in timely manner and internally, without litigation.”  The recipients of the email were troubled by the employee’s apparent threat of litigation and, after consulting with other members of the senior management team, they terminated the employee’s employment on a “without cause” basis.  Mercer paid the employee the amount it calculated he was owed under the Employment Standards Act, 2000 (ESA).  He had already been paid his 2019 bonus.

Following the termination of his employment, the employee filed an ESA complaint, a human rights complaint, and made a claim for wrongful dismissal.  In the latter, the employee claimed his supervisor was dishonest with him in a meeting about the Bonus Plan payments, was rude, abrupt, and dismissive of his concerns, and Mercer terminated him as a reprisal for raising his Bonus Plan payment with his supervisor and the human resources manager. 

As part of his human rights proceeding, the employee produced information about recordings he made surreptitiously of conversations he had with colleagues while he was employed.  He stated he made the initial recordings to help him learn English but made the later recordings of interactions with supervisors and human resources staff, “…to create a record of interactions that I thought might relate to my rights, such as conversations about my contractual entitlement to a bonus and conversations related to discriminatory or bullying treatment of me or colleagues.”  Some of the recordings picked up sensitive family details that the colleague disclosed to the employee.  There was no evidence the employee shared the surreptitious recordings with anyone other than the British Columbia Human Rights Tribunal and Mercer, or that the employee sought to benefit financially from them, except to advance his position in relation to the proceedings he filed.  Based on evidence of the surreptitious recordings, Mercer argued it had just cause for the employee’s termination.      

Decision

Following the guidance of previous decisions that considered the appropriateness of surreptitious recordings in the employment context, the court concluded that the employee’s actions in making the surreptitious recordings fundamentally ruptured the employment relationship, such that the mutual trust between the parties was broken and, accordingly, Mercer had established just cause.  In making this determination, the court noted the employee’s stated purposes for making the recordings were unnecessary or ill-founded, and generally designed to benefit him alone.  The court also emphasized that the following factors weighed against the employee:

• The employee knew his colleagues would be uncomfortable with the recordings, and that it was ethically wrong to make them. 
• The employee did not conduct himself in accordance with his professional obligations as an employed CPA.  As a professional in a position of high accountability, he was expected to respect the standards of his profession; at least some of the recordings were solely “for the advantage of [the employee],” in contravention of the profession’s Code of Conduct. 
• There were ways the employee could have improved his English other than to surreptitiously record his colleagues.
• Many of the conversations the employee recorded included personal details about his co-workers and their family matters, and they felt violated by the recordings.
• The employee offered no evidence to support his allegation that the recording of some of the conversations was justified because of a fear of discrimination; in fact, the evidence was that he received substantial promotions.
• Although the employee asserted that certain recordings were justified because of a concern about financial improprieties, he had no concrete evidence of such improprieties, he could have raised these concerns with a manager, and the books were audited regularly. 
• The employee’s fear of under-compensation was based on his misapprehension that his bonus should have been calculated based on a strict formula; however, the bonus was clearly discretionary. 
• The employee made a significant volume of recordings over a long period of time.
• Acceptance of the employee’s conduct might encourage other employees who feel mistreated at work to begin secretly recording their colleagues.  This would not be a positive development from a policy perspective especially given the courts’ growing recognition of the importance of privacy. 
• Although allegations of after-acquired grounds for dismissal must be examined carefully, in this case that the grounds were “after-acquired” did not carry weight; the recordings were clandestine, and Mercer could not have discovered their existence until after termination. 

Bottom Line for Employers

After terminating an employee’s employment without cause, it may be possible for an employer to then terminate their employment for after-acquired cause if the employer discovers that during their employment the employee was surreptitiously recording their conversations with colleagues.  Employers seeking to establish this should consider, among other things, the reason why the employee asserts they made the recordings, the period of time over which the recordings were made, the number of recordings made, the sensitivity of the information recorded, and whether the recordings were made in contravention of applicable policies.