The British Columbia Court of Appeal's decision in Shalagin v. Mercer Celgar Limited Partnership, 2023 BCCA 373 ("Shalagin"), confirms that surreptitious recording of colleagues may constitute just cause for termination of employment.
Facts in Shalagin
Roman Shalagin, who had been employed by Mercer Celgar Limited Partnership ("Mercer") since January, 2010, was dismissed without cause on March 25, 2020. At the time that his employment was terminated, Mr. Shalagin was a senior financial analyst with Mercer and had access to sensitive financial information. Despite the absence of a written agreement governing the employment relationship, Mr. Shalagin was bound by Mercer's policies, including a code of business conduct and ethics, and a confidentiality policy. In addition, Mr. Shalagin was subject to the ethical code of the Chartered Professional Accountants of British Columbia.
Mr. Shalagin filed a wrongful dismissal claim with the B.C. Supreme Court, and filed separate complaints with the Employment Standards Branch and B.C. Human Rights Tribunal (the "Tribunal"). During the Tribunal proceedings, evidence surfaced that Mr. Shalagin had surreptitiously recorded many conversations and meetings over the ten-year period that he had been employed at Mercer, including several one-on-one training sessions, over 100 "Toolbox Talk" and safety meetings, and at least 30 meetings concerning compensation and recruitment with his supervisors and human resources employees. He had also recorded many conversations with colleagues using his mobile phone's recording feature.
Mr. Shalagin said that when he started making these recordings, it was to help him learn English, as he had emigrated from Russia in 2002. However, his behaviour eventually progressed to the point of making recordings for the purpose of "catching" his colleagues engaging in potentially discriminatory or bullying behaviour towards him.
Upon discovering these recordings, Mercer amended its pleadings in the B.C. Supreme Court to argue that Mr. Shalagin's surreptitious recording activity constituted after-acquired cause for his dismissal.
Decision of the B.C. Supreme Court1
The B.C. Supreme Court dismissed Mr. Shalagin's wrongful dismissal claim, concluding that Mr. Shalagin's surreptitious recordings constituted after-acquired cause for Mercer to terminate his employment given their effect on the fundamental trust that is the hallmark of every employment relationship.
The B.C. Supreme Court found no evidence to support Mr. Shalagin's argument that his recordings were justified because he had concerns about being discriminated against. While the B.C. Supreme Court acknowledged that Mr. Shalagin's lack of malice in making the recordings was a mitigating factor, it concluded that this was offset by their sheer volume and the length of time over which his recording practice occurred, as well as Mr. Shalagin's knowledge that the recordings were unethical.
Mr. Shalagin appealed this decision on the basis that the trial judge erred in applying the test for just cause and improperly found that that Mr. Shalagin offered no evidence to support his discrimination claim.
Ruling of the Court of Appeal
The Court of Appeal upheld the trial judge's decision.
It began its analysis by concluding that the trial judge had properly adopted the test for just cause from McKinley v. BC Tel, 2001 SCC 38 ("McKinley"), affirming that, in cases such as this, just cause requires a "contextual approach" and a determination of whether the nature and degree of dishonesty warranted dismissal. The trial judge had rightly acknowledged the context in which Mr. Shalagin had made the recordings and did not apply a "strict" or "absolute" rule to assessing just cause.
The appellate court also upheld the trial judge's conclusion that Mr. Shalagin offered no evidence of discrimination, and affirmed that there was no rational connection between any discriminatory incident and Mr. Shalagin's recordings.
With regards to the public policy implications of this case, the Court of Appeal also agreed with the trial judge's comments that, if Mr. Shalagin's argument was accepted, other employees who feel mistreated at work may be encouraged to surreptitiously record their co-workers. The Court of Appeal held that Mr. Shalagin's conduct had violated the privacy interests of both the persons recorded and those discussed on the recordings, and noted that this was a relevant fact for the trial judge to have considered in reaching a decision. While Mr. Shalagin did not intentionally mislead Mercer in making the recordings, it resulted in a breakdown of the employment relationship that warranted his dismissal for just cause.
Key Takeaways
In a world where privacy concerns are of significant concern for many, this case highlights that surreptitiously recording co-workers may constitute just cause for dismissal in British Columbia. However, in assessing whether termination for just cause is justified, an employer should consider the particular circumstances surrounding an employee's behaviour as this decision leaves open the possibility that surreptitious recordings could be permissible in some circumstances, particularly if discrimination against an employee is substantiated and rationally connected to the making of such recordings.
In addition, this decision affirms that employers may successfully defend a wrongful dismissal claim on the basis of after-acquired cause if the employer later finds out about conduct that would have given it the right to dismiss for cause. Regardless of whether after-acquired cause is being argued or not, the key issue is whether an employer can establish that, at the time of dismissal, there were facts sufficient in law to warrant dismissal for cause and there was no condonation of the employee's misconduct (if known by the employer). In circumstances such as this, where the clandestine nature of an employee's wrongful behaviour gives an employer no real ability to discover the basis for just cause dismissal until after terminating an employee's employment, the likelihood of establishing after-acquired cause may be higher.
Footnote
1 Shalagin v. Mercer Celgar Limited Partnership, 2022 BCSC 112.
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