Close this search box.
Reading Time: 3 minutes

An employee of the Canadian Pacific Railway Company (“CP”) was terminated for cause in March 2015 for charging personal expenses to his corporate credit card and failing to repay them within a reasonable timeframe. On May 20, 2016 an arbitrator appointed under Part III of the Canada Labour Code agreed with CP that a dismissal was justified in the circumstances.

While the result in Mark Reynolds v. Canadian Pacific Railway Company is not surprising, the arbitrator’s analysis and reasoning are interesting.

The Complainant, Mr. Reynolds, worked for CP for 18 years. Essentially, his entire adult career was with CP. The Complainant held numerous unionized positions earlier in his career and later ascended to more professional roles. The last position held by the Complainant was Instructor, Training. In that role, he was responsible for ensuring mechanical employees were certified to perform safe work around locomotives and “rolling stock” at CP’s various yards. The Complainant conducted the safety courses and managed the examination process. His direct supervisor was located in Calgary. As a result, he was supervised remotely for the most part.

Because he travelled throughout Ontario to provide his safety training and certification, CP issued to him a travel and entertainment expenses corporate credit card. CP’s practice of paying travel was rather simple. Employees would obtain pre-approval to charge their travel expenses directly on their corporate credit card. When the monthly statement was issued, they were expected to seek reimbursement from CP. The company’s policy was to satisfy such requests within seven days – well in advance of the credit card’s due date.

The Complainant acknowledged that he was aware of the policy governing the corporate credit card, which prohibited the charging of personal expenses; however, he expressed a belief that he could “get away with” doing so as long as the personal expenses charged to the card were immediately repaid.

Unfortunately, the Complainant suffered a serious injury to his leg outside of work. He commenced a sick leave in July 2013. He soon began receiving LTD payments, which were two-thirds of his working income. As well, his evidence at the hearing was to the effect that he separated from his spouse around the same time and was responsible for support payments. In short, he faced significant financial pressures.

Almost a year after going on sick leave, the Complainant began using his corporate credit card for personal purchases. Over the following months, 16 significant such purchases were made. The Complainant also made a number of payments, but not enough to clear the balance, and he also incurred several late penalties. The credit card issuer suspended the card and brought the matter to CP’s attention. When CP became aware of the situation in October 2014, the outstanding balance was over $5,000.

A representative of CP contacted the Complainant by email to advise of the situation. In addition, the Complainant’s immediate supervisor sent an email to the Complainant seeking to have a telephone call with him “ASAP”. In response to his supervisor’s email, the Complainant responded: “Already taken care of!” In fact, the Complainant did not make any payments and would not make himself available to speak to his supervisor by telephone. The Complainant made an allegation that he was dealing with the credit card company over fraudulent charges made on the card; however, the credit card company had no information about a fraud investigation.

At one point, the Complainant indicated he would make a payment of over $2,000 with a plan to repay the rest later. He failed to make the promised payment. In fact, by the time the Complainant’s employment was terminated in March 2015, he had not repaid anything.

The arbitrator took note of the Complainant’s 18 years of “satisfactory service”, and emphasized that no matter the conduct in question, there is an expectation the employer will consider the context, and craft a disciplinary measure proportional to the wrong. On the one hand, the arbitrator noted that “personal financial hardship cannot excuse what amounted to the misappropriation of Company funds”; on the other, he cited from a leading Supreme Court of Canada decision (McKinley v. BC Tel) to remind the parties that “not every act of dishonesty justifies the most extreme disciplinary response of termination”.

The arbitrator upheld the dismissal, principally because of the Complainant’s response when CP confronted him with the inappropriate credit card use. If he had responded honestly (instead of fabricating a story about fraudulent charges or advising the debt had been taken care of when it had not) and immediately paid off the debt, the arbitrator may have “permitted some modification of what one might regard as the presumptive penalty of discharge”. The arbitrator could foresee the possibility of putting the Complainant back in the workplace, but not in a position that required use of a corporate credit card, and conceivably in a position of lesser authority.

This decision should serve as a reminder to employees that there is a “presumptive penalty of discharge” for breaches of financial policies, and that an employee’s response to a suggestion of wrongdoing is just as important as the alleged wrongdoing itself. Employers should be reminded that even in circumstances such as this, the law still requires that a discipline decision be made using a contextual approach and with a view to considering a proportional response.


This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2021 Nelligan O’Brien Payne LLP.

Have Questions?

Enjoy this article?
Don’t forget to share.

Related Posts

Employment Law for Employees
Reading time: < 1 mins
Union FAQs: Everything You Need to Know Have you ever wondered what being part of a union means? Watch as[...]
Labour Law
Reading time: 4 mins
Ontario has now passed new legislation that imposes a contract on 55,000 education workers, relying on the notwithstanding clause to[...]
Employment Law for Employees
Reading time: 2 mins
Any unfavourable WSIB decision can be appealed, however, all appeals must be filed within the documented timeframes or you will[...]