'If the employer thinks an employee has done something wrong, it's very hard to establish willful misconduct'
“If an employee has done something wrong - or if the employer thinks an employee has done something wrong - it's very hard to establish that it was willful misconduct.”
So says Emily Sheppard, an employment lawyer at Turnpenney Milne in Toronto, after the Ontario Labour Relations Board ruled that a company must pay a worker termination pay because it was unable to prove that the worker engaged in "willful misconduct" sufficient to disqualify him from such termination pay under the province’s Employment Standards Act, 2000 (ESA).
Aussie Stone Marble and Granite is a small company that supplies marble and granite countertops in Burlington, Ont. It hired the worker in November 2022 as a fabricator of these countertops.
According to the worker, when he was hired he said that he couldn’t afford to accept the job with the wages attached to it unless he was allowed to work on his personal fabricating business after hours at Aussie’s workshop. The company agreed to his proposal.
On the morning of Dec. 22, 2023, the worker was working at the workshop while the owner was away at a doctor’s appointment. There were no other employees present.
Later, the owner reviewed surveillance videos from the workshop. The videos showed the worker picking up pieces of quartz material belonging to the company and fabricating them for his personal business. The time stamp on the video was during the worker’s hours with Aussie and the worker never offered to pay Aussie for the materials.
The owner also viewed a video from the following day, Dec. 23, which was a Saturday and not a regular day of work. This video showed the worker coming into the workshop and taking acetone and epoxy materials for his own use.
The owner determined that, based on the videos, the worker had engaged in theft of product on both days and time theft by working on his own business during his work hours on Dec. 22.
The owner also discovered that the worker – who had been given a truck belonging to one of the owners to commute to work on time and was allowed to use it after hours – had been driving the truck on a toll highway to commute and charging the tolls to Aussie. Over a period of seven months, the toll invoices totalled $2,500.
Although the toll charges had been paid for seven months through automatic payment on the company credit card, Aussie didn’t discover the charges until January 2024 when it received a new credit card. According to the owner, when the worker was confronted with the charges, he agreed to have the company deduct them from his pay.
On Jan. 24, 2024, Aussie terminated the worker’s employment. The company didn’t provide any termination pay, so the worker made an employment standards complaint.
An employment standards officer found that the worker was entitled to two weeks’ termination pay, three hours of unpaid wages, and a 10-per-cent administrative fee. Aussie applied for a review of the decision, arguing that the worker engaged in time theft, product theft, and unauthorized use of company property, which constituted “willful misconduct” disentitling him from termination pay under the ESA.
The worker maintained that he hadn’t been working on his own business on company time and he had been permitted to take some materials in lieu or as part of his Christmas bonus. As for the company truck, he argued that the toll charges were incurred on his commute to and from work. He also said he didn’t authorize any deductions from his pay and Aussie didn’t bring the toll charges to his attention until after he was fired.
The board referred to s. 2(1) of Ontario Regulation 288/01 under the ESA, which exempts employees from termination pay only if they are “guilty of willful misconduct, disobedience or willful neglect of duty that is not trivial and has not been condoned by the employer.” In this case, there was no allegation of disobedience or willful neglect of duty, so the issue was whether the worker’s actions met the threshold of willful misconduct, the board said.
While Aussie alleged that the worker fabricated quartz pieces for personal use during work hours and misappropriated materials, the fact that the company had permitted the worker to use company resources for personal business during off hours and had failed to establish clear rules governing such usage resulted in “the mingling of the [worker’s] personal business with the employer's own business” that led to ambiguity around the worker’s actions, said the board, noting that Aussie also acknowledged that the times on the video time clocks weren’t reliable.
“[Aussie] thought it had this video showing that the worker had used materials during work hours, but there was an issue with the timing on them so they couldn't show that it was actually done during work hours,” says Sheppard.
Given that ambiguity around the rules and Aussie’s permissiveness in relation to the worker’s personal business, the board found that the worker’s actions related to time theft and product theft weren’t deliberate or pre-planned. This didn’t meet the high threshold of willful misconduct, the board said.
It seems like the board agreed with the employer that the worker likely engaged in misconduct to some extent, but it didn't meet the higher willful misconduct standard, says Sheppard.
“With respect to the time theft and the use of materials, the employer had permitted the employee to use the workshop for his own personal purposes, so the use of the workshop was, to some extent, condoned,” she says. “And even though the employer had a video of the employee using the workshop, the time that he was doing it wasn't clear, so the employer just wasn't able to establish that it met that higher standard.”
As for the worker’s repeated use of a company vehicle on a toll highway for personal commutes, there was no evidence that the company had clarified any rules prohibiting such use, the board said, finding that Aussie also hadn’t stopped it when it first started making toll payments. This lack of response undermined the argument for willful misconduct that wasn’t condoned, the board said.
“The employer didn't know about [the toll highway use], so they hadn't necessarily condoned it, but it was reasonable for the worker to assume that the employer was okay with it because it had been going on so long without any complaint,” says Sheppard. “And the other factor that the board looked at was the employer allowed the worker to use the vehicle and didn’t set out clear rules and policies about what was allowed and what wasn't - the lack of clear rules that the worker had broken or not followed meant that the employer wasn’t able to establish that it was willful misconduct.”
Aussie conceded that there was no written authorization to deduct the highway toll costs from the worker’s wages, which is required by the ESA to make such deductions.
The board determined that the standard of willful misconduct had not been met and the worker was entitled to termination pay. It upheld the decision ordering Aussie to pay the worker $2,077.50 for two weeks’ termination pay, $218.40 in unpaid wages and vacation pay, and a 10-per-cent administrative fee of $229.59.
Before moving forward on a termination, employers should ask themselves whether they have clear evidence to show that the conduct the employee had engaged in was misconduct, whether there were clear rules and policies broken, whether they gave warnings prior to the termination, and if there was any way that the employee could say that they didn't know the behavior was inappropriate, according to Sheppard.
“It's always best practice, if you’re giving warnings or reprimands, to keep a written record, so that if it came to a termination, there wouldn't be a dispute over whether those warnings were given,” she says. “And also make sure that you can clearly show that employees knew what the rules were by having them sign off on policies - keeping a good record of everything will help support these termination and disciplinary situations if they come up.”
See Aussie Stone Marble & Granite Inc. v. Murray, 2025 CanLII 39842.
