In a recent decision of the British Columbia Supreme Court, Justice Branch was tasked with determining whether or not “the surreptitious recording of one’s fellow employees” could serve as a proper basis for dismissal.

The Parties

This case concerned the termination of Mr. Shalagin from his position as a senior financial analyst with the defendant employer, Mercer Celgar Limited Partnership (“Mercer”), a pulp mill. He had been working with the company since 2010. As senior financial analyst, Mr. Shalagin had access to sensitive financial and planning information.

Mr. Shalagin was not subject to any employment contract while working with Mercer, but was bound by the company’s Code of Business Conducts and Ethics (the “Code”) and a confidentiality policy. Under the Code, Mr. Shalagin was required to “conduct himself with honesty and integrity and to adhere to the highest ethical standards in carrying out his duties” on behalf of Mercer. The Policy further required him to be honest and ethical in dealing with other employees and third parties such as customers.

Mr. Shalagin had many issues with his employer including perceived discrimination, but above them all was his disagreement with the company’s view of his bonus determination formula and entitlement. He threatened Mercer with litigation over that bonus, and they decided to terminate him without cause in response.

Following his termination, Mr. Shalagin commenced a number of proceedings against his employer including an Employment Standards Act complaint, a human rights complaint and a wrongful dismissal complaint.

The “Surreptitious” Recordings

During Mr. Shalagin’s human rights proceeding, it was revealed that Mr. Shalagin had taken a number of surreptitious recordings while with Mercer. It was revealed he had made recordings during the following meetings:

  • several one-on-one training sessions from 2010 to 2014;
  • over 100 “Toolbox Talk” and safety meetings, at which he often presented personally (and where the meetings involved 20 to 30 people); and
  • at least 30 one-on-one meetings with supervisors and human resources personnel about compensation and recruitment.

It is clear that these recordings happened on many, many occasions. Notably, Mr. Shalagin never had permission to make these recordings. He admitted to knowing that the participants would have felt uncomfortable had they known they were being recorded. Some of these recorded conversations included confidential company information. Some recordings picked up sensitive personal family details of other employees.

However, there was no evidence to suggest that these recordings were ever shared with anyone other than the B.C. Human Rights Tribunal and Mercer. There was no evidence that Mr. Shalagin sought to obtain a financial benefit from the recordings.

Based on the new evidence that arose as part of the human rights proceeding, Mercer changed its position: instead of firing Mr. Shalagin without cause, they would now rely on just cause for his termination.

Was There Just Cause?

Justice Branch notes, firstly, that misconduct discovered post-termination can indeed constitute just cause. To rely on that post-termination conduct, the Court must determine whether the alleged misconduct “was something a reasonable employer could not be expected to overlook, having regard to the nature and circumstances of his employment.”

The key issue for Justice Branch, therefore, was whether or not Mr. Shalagin’s decision to surreptitiously record his co-workers amounted to just cause. Did the recordings “go to the root” of Mr. Shalagin’s contract, and “fundamentally struck” at his employment relationship? Although he was legally permitted to record the conversations, this is not the real issue: what matters is not the legality of the recordings, but whether his actions in making the recordings “fundamentally ruptured the relationship, such that the mutual trust between the parties is broken.”

Earlier jurisprudence has shown that surreptitious or secretive recording of a conversation in the workplace context can cause “material damage to the relationship of trust between employee and employer.” On this basis, Justice Branch held that the secret recordings indeed were a just cause for Mr. Shalagin’s termination. Justice Branch commented:

“I find that Mercer has established just cause: […]

  1. b)  Although the initial recordings said to be for the plaintiff’s own language training purposes may not, on their own, have supported just cause, they demonstrate how the plaintiff’s sensitivities towards his colleagues’ privacy began to loosen. He knew that his fellow employees would be uncomfortable with even these early recordings, yet he continued to make them. I find that he knew it was wrong, if not legally, at least ethically. … […]
  1. d)  With his sensitivities lowered, he carried on to record ever more sensitive conversations, including conversations that involved personal information on other employees. The conversations included personal details about his co-workers that had nothing to do with the workplace. […]
  1. h)  I accept that the plaintiff was not acting with malice in making the recordings and that this is a mitigating factor. However, the fact that his stated bases for the recordings were all unnecessary or ill-founded, and several were designed to benefit him alone, weighs on the other side of the ledger. Likewise, the fact that the recordings captured personal information from his subordinates and colleagues and, thus, could not have supported his alleged purposes in any case, also weighs against his position.
  2. i)  I accept that the fact that the plaintiff did not publish the recordings and did not seek to make use of them for his own benefit outside of the ongoing legal proceedings is a mitigating factor as well. However, on the other side of the ledger, the sheer volume of recordings, and the length over which they occurred, generally offsets this factor.
  3. j)  I accept the evidence provided by Mr. East and Ms. Ketchuk that they felt violated by the recordings. I also accept that this reaction was reasonable in the circumstances. Ms. Ketchuk clearly treated the plaintiff as a protegée and felt that the trust she invested in him had been violated—a trust that included telling him about personal family matters, which were recorded.
  4. k)  Looking at the effect on employment relationships more broadly, accepting the plaintiff’s argument may encourage other employees who feel mistreated at work to routinely start secretly recording co-workers. This would not be a positive development from a policy perspective, particularly given the growing recognition that the courts have given to the importance of privacy concerns.[…]”

Mr. Shalagin’s claim for wrongful dismissal damages was therefore dismissed, as the employer had successfully established after-acquired cause for his termination.

This case should be a lesson to employees that although secretly recording conversations with your employer or fellow employees may be legal, it will not prevent your employer from termination you for cause.