Looking for new work not considered just cause for termination

Looking for a new job or a business opportunity while you are still employed is not just cause for terminating your employment, even if you are contemplating competing with your present employer.

Fred worked as a nightclub manager for a couple of years. In addition to managing the club, Fred was responsible for promoting and marketing the club.

When Fred first took the job, the understanding was that eventually he would be given an opportunity to buy it. Unfortunately, Fred did too good of a job increasing the club’s business and he and his employer could not agree on a price for him buying the boss out. When negotiations failed, the employer terminated Fred’s employment. Fred sued for wrongful dismissal. He claimed that the employer did not give him enough pay in lieu of notice. While the employer had every right to terminate Fred if it wanted to, in the absence of a very good reason for the termination it had to pay him a decent severance package.

The employer defended the action and about a year after Fred was fired, it discovered that before Fred was terminated he had actually been scouting out properties to buy in order to open a club of his own.  Although the employer did not know about this when it terminated Fred, it is acceptable at law for it to claim that this was just cause to terminate Fred’s employment without any pay in lieu of notice. This is called “after-acquired cause”.

If I terminate you for a shortage of work but the next day I find out you’ve been stealing from the cash register, I don’t owe you pay in lieu of notice even though I didn’t know about it at the time of the termination.

The employer argued that since Fred was the manager of the club, he owed a fiduciary duty to the employer which included loyalty, good faith and an avoidance of any conflict of duty and self-interest.

All Fred had actually done was drive around in a car with an agent and look at buildings that were for sale and consider their feasibility for a nightclub. He did not try to recruit any employees or do anything that would actually have hurt his employer’s nightclub business. There was no evidence that he did anything but a good job managing that nightclub up until the date he was terminated.

The judge at trial, and the Appeal Court judge when the employer lost and appealed, said that Fred had done nothing wrong. All that he was doing was exploring the possibility of starting his own business. He had not hurt his employer’s business in any way or diverted its resources.

If you’re going to look for work or a new opportunity while you are still employed, whether it competes with your employer or not, follow some basic rules:

1. Never ever use your employer’s email, fax machine, photocopier or even their telephone to explore this new opportunity. Not only will you be found out, it could be said you were stealing resources;

2. If your employer confronts you, don’t lie. While looking for another opportunity is not a reason to terminate you without a severance package, in some circumstances lying about it could be. If you are in a management position, it could be said that you’ve destroyed the trust necessary for the relationship; and 

3. If, on the other hand you are sick of your job and would love to get terminated with a severance package, tell everyone what you are doing. If your boss is enough of a hothead, he will terminate you when he finds out you’re looking for new work. It’s amazing how many employers out there think that making plans to leave is just cause to walk you out the door without a package. A truly clever employee will wait until they’ve got another job lined up and then let it be known they are unhappy and looking for new work. They get a package and a new job too.

A truly clever employer will always talk to their employment counsel before terminating anyone’s employment. Experienced employment counsel may caution the employer that a termination is exactly what the employee is trolling for. Two can play the  game.