Dishonesty — Ontario Employment Law
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About Dishonesty
When an employee is caught lying or concealing information, it can severely damage the working relationship. However, a common misconception in Ontario employment law is that any instance of dishonesty automatically gives an employer the right to fire someone without notice or termination pay. The reality is much more nuanced. Ontario courts take a "contextual approach" when evaluating dishonesty in the workplace.
Under common law, an employer can only claim just cause for dismissal if the dishonest act is so serious that it irreparably destroys the core foundation of trust required for the employment relationship. To determine this, courts look at several factors. They evaluate the severity of the lie—for instance, a premeditated kickback scheme or falsifying expense reports carries much heavier consequences than a panicked, spur-of-the-moment denial to cover up a minor mistake. The employee's role is also critical: those in senior management or fiduciary positions are held to a much higher standard of trust, meaning less tolerance is afforded to deceitful actions. Furthermore, if an employee is dishonest during the hiring process—such as fabricating qualifications or hiding past employment issues that jeopardize security clearances—this can also justify termination if the truth would have prevented them from being hired in the first place.
Even if an employer successfully proves that the dishonesty warrants termination for cause at common law, the employee may still have protections under the Employment Standards Act, 2000 (ESA). The ESA requires employers to prove "wilful misconduct, disobedience or wilful neglect of duty" to withhold minimum termination pay. A momentary lapse in judgment or an uncharacteristic lie might breach the common law contract but fail to meet this strict statutory standard, leaving the worker entitled to their basic statutory notice amounts.
Navigating an accusation of deceit is highly complex, as the difference between a fireable offense and a disproportionate punishment rests entirely on the specific context of the incident. Discussing the intricacies of your situation with a qualified legal professional is the most effective way to understand where you stand.
Frequently Asked Questions
Can I be fired for a minor lie at work?
Not necessarily. Ontario courts require employers to use a contextual approach, meaning they must match the punishment to the severity of the offense. A minor or isolated lie usually does not destroy the fundamental trust of the employment relationship enough to justify termination for cause without notice.
What happens if I lied on my resume or job application?
If the fabrication played a massive role in your hiring, it can be grounds for dismissal without notice. Employers can often prove cause if the concealed information went to the core of your qualifications, such as faking a degree, hiding a criminal record, or covering up past issues that prevent you from obtaining necessary security clearances.
Do I lose my severance pay if I am fired for dishonesty?
Not always. An employer might be justified in firing you under common law standards but fail to meet the higher threshold of "wilful misconduct" under the Employment Standards Act. If the dishonesty wasn't premeditated or extremely detrimental, you may still be entitled to your ESA minimum termination pay.
Is lying to human resources during an investigation a fireable offense?
Lying during a formal workplace investigation often worsens an employee's standing in the eyes of the law. Courts frequently view a deliberate cover-up as evidence that the employee can no longer be trusted, which can elevate a minor initial infraction into just cause for dismissal.
Are managers held to a stricter standard of honesty?
Yes. Employees in senior, managerial, or fiduciary roles have a higher degree of responsibility. Because their positions rely heavily on autonomy and trust, courts are much more likely to uphold a termination for cause when a senior employee acts dishonestly.
When should I contact an employment lawyer if my boss accuses me of lying?
It is crucial to speak with a lawyer immediately upon being accused of severe dishonesty, such as fraud, expense account discrepancies, or self-dealing. Securing advice before providing written statements to your employer can protect you from inadvertently handing them the evidence they need for a just cause dismissal.
Common Scenarios
- A sales director is terminated without notice after an internal audit reveals they fabricated expense accounts and participated in an unauthorized kickback scheme for personal financial gain.
- An applicant for a sensitive government contractor role is dismissed for cause after the employer learns they neglected to disclose a prior termination on their background check, invalidating their required security clearance.
- A retail employee makes a genuine mistake at the cash register, but panics and alters the daily logbook to hide the error. They are subsequently fired for the deceitful cover-up rather than the initial mistake.
What You Should Know
- If you make a mistake at work, own up to it quickly; Ontario courts generally treat the initial error much more leniently than a subsequent attempt to cover it up through deceit.
- Do not assume your employer holds all the cards just because they yell "fraud" or "liar"—the law requires them to prove that your specific actions irreparably destroyed the employment relationship.
- Review your final pay statement carefully. If your employer withheld your Employment Standards Act minimums over an impulsive or minor lie, they may have misapplied the strict "wilful misconduct" standard.
- Avoid making extensive written apologies or admissions of guilt without first consulting an employment lawyer, as these documents can be used to solidify a termination for cause.
Featured Cases
Sunwing Airlines Inc. v. M.
2021 ONSC 1376 (CanLII) · 2021-07-28Termination for Cause: Kickback Scheme Damages
This is a wrongful dismissal case where an employee sued after being terminated for cause, alleging involvement in a kickback scheme. The court found that the employee's dishonesty and self-dealing justified termination for cause, dismissing the wrongful dismissal claim. Additionally, the employer was awarded $537,885 in damages for misappropriated funds.
R. v. D.
2018 ONSC 6166 (CanLII) · 2018-10-15Wrongful Dismissal Appeal: Just Cause and Dishonesty
This is an appeal to the Divisional Court from a trial judge's decision in a wrongful dismissal case. The appeal challenged the trial judge's finding that the employee's manipulation of a security camera did not constitute dishonesty justifying termination for just cause. The Divisional Court dismissed the appeal, finding no legal error in the trial judge's application of the McKinley principles.
A. v. Atomic Energy of Canada
2017 ONCA 598 (CanLII) · 2017-07-11Wrongful Dismissal: Dishonesty & National Security
This is an appeal from a motion judge's decision in a wrongful dismissal case where the employee was terminated for cause due to dishonesty and failure to disclose prior employment. The Court of Appeal for Ontario addressed whether the breach of honesty justified dismissal in the context of national security concerns and essential security clearances.
A. v Atomic Energy
2016 ONSC 8165 (CanLII) · 2016-12-30Termination for Cause: Dishonesty and Harassment
This is a summary judgment ruling in a wrongful dismissal case where the employer sought to terminate the employee for cause based on dishonesty during the hiring process and substantiated harassment allegations. The court applied the contextual approach from McKinley v. BC Tel and the Hryniak v. Mauldin framework, finding that the dishonesty went to the core of the employment relationship and that there was no genuine issue requiring a trial. The court granted summary judgment in favor of the employer, dismissing the employee's claim.
A. v. Gary Bean Securities Ltd.
2015 ONCA 49 (CanLII) · 2015-01-16Wrongful Dismissal: Just Cause for Dishonesty Upheld
This is an appeal from a wrongful dismissal trial where the employer argued just cause for terminating the employee due to dishonesty and unauthorized trades. The Court of Appeal upheld the trial judge's finding that the employee's conduct justified termination without notice and affirmed the calculation of monies owed by the employee for improper expense account use.
L. v. Simcoe Muskoka Catholic District School Board
2014 ONCA 745 (CanLII) · 2014-10-27Indemnity Clause & Dishonesty in Employment Contract
This is an appeal to the Court of Appeal for Ontario regarding the interpretation of an indemnity clause in an employment contract. The central issue was whether the School Board raised a prima facie case of dishonesty to exclude indemnification under Article 13.01, and whether a workplace investigation constituted a 'proceeding' triggering that clause. The Court dismissed the appeal, affirming that there was no admissible evidence of dishonesty and that the broad meaning of 'proceeding' included the investigation and termination.
R. v. K.
2011 ONSC 7460 (CanLII) · 2011-12-15Dismissal for Cause: Non-Fraternization Policy Breach
This case addresses whether a dismissal for cause was justified when a managerial employee engaged in a romantic relationship with a subordinate and failed to report it as required by company policy. The court examined issues of wilful disobedience, dishonesty, and the irreparable damage to trust and workplace safety, while also considering the employee's long service record and the principle of proportionality in disciplinary actions.
Bell v. Computer Sciences Corporation
2007 ONCA 466 (CanLII) · 2007-06-26Wrongful Dismissal Appeal: Dishonesty Upheld Under McKinley Test
This is an appeal from a wrongful dismissal action where the appellant was terminated for dishonesty and collusion with a subordinate. The Court of Appeal upheld the termination, applying the McKinley proportionality test and deferring to the trial judge's findings that the misconduct justified dismissal despite procedural irregularities and the employer's failure to follow internal policies.
T. v. Kellers Systems Inc.
2002 CanLII 5695 (ON CA) · 2002-01-17Wrongful Dismissal: 6.5 Months Notice Upheld
This is an appeal from a wrongful dismissal case where the employer argued the employee was dismissed for cause due to a single act of dishonesty. The Court of Appeal upheld the trial judge's findings that the act did not constitute just cause and that the employer had not provided sufficient notice of termination. The court affirmed the notice period of 6½ months awarded to the employee.
L. v. Arbor Management Services Inc.
2000 CanLII 22605 (ON SC) · 2000-07-13Wrongful Dismissal: Employee Awarded Nine Months' Salary for Improper Termination
A wrongful dismissal case where an employee was dismissed for alleged dishonesty and working for a competitor during parental leave. The employer failed to follow its own disciplinary procedures and did not provide sufficient warnings, and the employee’s conduct did not meet the threshold for dismissal for cause. The court awarded nine months’ salary and benefits for wrongful dismissal.
H. v. Marr's Leisure Holdings Inc.
1998 CanLII 14746 (ON SC) · 1998-06-25Wrongful Dismissal: Eight-Month Notice Awarded for Alleged Dishonesty
A wrongful dismissal case where the plaintiff was terminated for alleged dishonesty related to camping equipment and long-distance telephone charges. The court found the termination to be wrongful, applying principles from Wallace v. United Grain Growers Ltd., and awarded an eight-month notice period. The employer's reliance on after-acquired cause was rejected, and the burden of proof for dishonesty was not met.
R. v. Steelcase Canada Ltd.
1979 CanLII 1751 (ON SC) · 1979-07-30Wrongful Dismissal: Employee Terminated for Dishonesty
A wrongful dismissal case involving an employee who was terminated for dishonesty. The legal issue centers on whether the dismissal was justified under the master and servant relationship.