HomeMy WebLinkAbout2006-2260.Sheptytsky.08-04-07 Decision
Commission de
Crown Employees
Grievance Settlement
règlement des griefs
Board
des employés de la
Couronne
Suite 600 Bureau 600
180 Dundas St. West 180, rue Dundas Ouest
Toronto, Ontario M5G 1Z8 Toronto (Ontario) M5G 1Z8
Tel. (416) 326-1388 Tél. : (416) 326-1388
Fax (416) 326-1396 Téléc. : (416) 326-1396
GSB# 2006-2260
UNION# 2006-5107-0026
IN THE MATTER OF AN ARBITRATION
Under
THE CROWN EMPLOYEES COLLECTIVE BARGAINING ACT
Before
THE GRIEVANCE SETTLEMENT BOARD
BETWEEN
Ontario Public Service Employees Union
(Sheptytsky)
Union
- and -
The Crown in Right of Ontario
(Liquor Control Board of Ontario)
Employer
BEFOREVice-Chair
Michael Lynk
FOR THE UNION Val Patrick
Grievance Officer
Ontario Public Service Employees Union
FOR THE EMPLOYER Gordon Fitzgerald
Counsel
Liquor Control Board of Ontario
HEARING January 21, 2008.
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Decision
This is a dismissal case involving an allegation of retail theft by an employee. Ms. Vera
Sheptytsky, a nine year employee of the Liquor Control Board of Ontario (?The Employer? or
?The LCBO?), was terminated on 21 November 2006 on the grounds that she committed a
serious breach of trust. Specifically, the LCBO accused Ms. Sheptytsky of accumulating Air
Miles (AM) reward points by crediting customer purchases to her own Air Miles card on
multiple occasions over the course of six months in 2006. The LCBO has also accused her of
crediting her AM card with AM points from scratch cards as part of a LCBO product promotion.
Both sets of actions are contrary to written Employer policy, which the LCBO maintains had
been clearly brought to Ms. Sheptytsky?s attention.
Ms. Sheptytsky does not deny the substantive factual allegations. Rather, she states that she did
not realize the seriousness of her conduct, and she admitted to the misappropriation when
confronted by her supervisors. Ms. Sheptytsky asks this Board to reinstate her because, in her
view, she has learned her lesson, and she contends that the employment relationship has not been
irretrievably broken.
× Ûª·¼»²½»
The facts are not in substantial dispute. Ms. Sheptytsky is a single mother living with her son, a
community college student in Toronto. She was hired by the LCBO in May 1997. At the time of
her dismissal, she was a casual customer service agent working at a LCBO store in the west end
of Toronto. Although she had a casual status, her seniority permitted her to work close to full
time hours each week. A customer service agent performs a variety of job tasks, including
working the store cash register, answering customer queries, stocking shelves, and checking
customers for their age and their sobriety. As a senior customer service agent, Ms. Sheptytsky
regularly worked as a shift leader when the store manager was not present.
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The parties agree that, at some undetermined time in the past, the LCBO had entered into an
agreement with Loyalty Management, the corporate organization that operates the Air Miles
reward program in Canada. The AM program encourages consumer loyalty towards participating
businesses by permitting their card holders to accumulate AM points for purchases at these
business. These AM points can be subsequently redeemed by the customers for various rewards,
including different forms of travel. The agreement between Loyalty Management and the
participating business requires the business to pay a specified financial fee to Loyalty
Management for every AM point accumulated by customers of the business. Because the LCBO-
Loyalty Management agreement is clothed in confidentiality, counsel for the LCBO was not able
to provide the precise amount of the fee that the Employer pays Loyalty Management for its
participation.
On 24 June 2003, Ms. Sheptytsky was asked by the LCBO to sign a one page Air Miles Policy
Acknowledgement Form. Apparently, all LCBO employees were required to sign this document.
The Form contained the following relevant provisions:
1. An Air Miles Collector card may only be presented by the customer making the purchase. If
the customer does not have an Air Miles card, employees cannotissue Air Miles Reward
Miles to their own personal account or the account of any other customer, employee, family
member or friend.
3. LCBO employees cannot, under any circumstances, issue Air Miles Reward Miles to
themselves, their family, friends or other customers in an unauthorized manner while they are
on duty at any LCBO store. Employees are also prohibited from using the purchase by any
customer to issue Reward Miles to their own personal account or the account of other
employees, family, friends, other customers or any other person.
Unusual patterns of Air Miles activity are monitored by Loyalty Management Group (Air Miles)
and/or by the LCBO and will be investigated. Failure to comply with the policy or guidelines
noted on this sheet and/or the Air Miles Reference Binder will result in disciplinary action up to
and including termination.
I, Vera Sheptytsky [name printed in handwriting] hereby acknowledge that I have read and
understood the above policies and those contained in the Air Miles Reference Binder regarding
the issuance of Air Miles Reward Miles and that any violations will be subject to disciplinary
action up to and including termination.
[Bold and underlined emphasis in original]
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The LCBO subsequently requested Ms. Sheptytsky to sign a second document that pertained to a
specific Air Miles promotional campaign. In early September 2006, the LCBO issued Circular
No. SO-3255 to its managers and staff. One of the items in the Circular stated the following:
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On Sunday, September 10, 2006 the LCBO will begin the Buy to Fly ? Airmiles Scratch Card
Contest. Your store should have received an ?Employee Implementation Guide? along with a
?Cash Desk Reference Card?. If your store does not have these items please contact Image
Hotline @ 416-365-5932.
Along with the program the following information must be reviewed by all employees in your
store.
Please note that all LCBO employees and their immediate families are not eligible to participate
in this contest. This applies to all employees on or off duty that meet all other contest
requirements such as purchasing Ontario wine and being an Air Miles Collector.
On the following page, the Circular also contained the following statement:
LCBO staffs are not permitted to issue Air Miles Reward Miles to themselves, their family, friends
or other customers in an unauthorized manner. Staffs [sic] are, also prohibited from using the
purchase by a customer to issue Reward Miles to their own personal account or the account of
other staff, family or friends.
The LCBO may from time to time, monitor Air Miles card usage, for any potential use of fraud
activity. For this purpose, please note that the LCBO will collect names and addresses of
cardholders from the Loyalty Group. If it is determined that fraudulent activity may have
occurred, appropriate disciplinary action will be taken.
Ms. Sheptytsky, along with several other employees, signed an Acknowledgement Form on 9
September 2006. Above the employees? signatures, the Form stated that:
must
Store employees sign and datethis Acknowledgement Form to confirm that they have read
and understood Circular SO-3255. Please keep a copy of this form in the store logbook.
[Bold and italics emphasis in original]
Mr. Scott Tranton was called to testify for the Employer. He is a district manager for the LCBO,
and supervises the operations of 18 stores in the west end of Toronto. He testified that, in early
September 2006, he received a memo from a LCBO quality control official who had been
monitoring the repeat use of Air Miles reward cards by an LCBO employee. The information
provided by the quality control official indicated that Ms. Sheptytsky was using her AM card to
acquire Air Miles points on purchases of LCBO products by customers who had paid by cash or
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debit card and had not claimed Air Miles points. Customers who pay by cash or debit are not
identified through their means of purchase (unlike those who pay by credit card), making it
easier for a customer service agent to subsequently recall the transaction after the customer has
completed his or her purchase in order to direct the unclaimed AM points onto their own
personal AM cards in an undetected manner.
Mr. Tranton immediately initiated an investigation. Over the course of the next several weeks,
his investigation revealed that Ms. Sheptytsky had appropriated AM points on purchases made
by LCBO customers on over 240 occasions between 15 March and 23 September 2006. As well,
the investigation established that Ms. Sheptytsky had, on four occasions between 11 and 15
September 2006, swiped her own AM card on the ?Buy to Fly? Air Miles contest card. (As the
precise fee paid by the LCBO to loyalty Management is protected by the confidential agreement,
Mr. Tranton was unable to place a dollar value on the AM points accumulated by Ms. Sheptytsky
and their cost to the Employer. As well, the Employer led no evidence as to the number of AM
points accumulated by Ms. Sheptytsky as a result of her acquisition of these AM points.) All of
these actions, Mr. Tranton stated, were in breach of LCBO policy, which had been brought to
Ms. Sheptytsky?s attention through the company acknowledgement forms that she had signed in
2003 and 2006.
After completing the investigation, Mr. Tranton sent Ms. Sheptytsky a letter by way of courier
dated 5 October 2006, informing her of the allegations, suspending her with pay, advising her of
her collective agreement rights, and requesting her to submit a written statement in response to
the allegations. After several delays, a disciplinary meeting was subsequently held on 17
November. By letter dated 21 November 2006, Mr. Tranton terminated the employment of Ms.
Sheptytsky. The relevant parts of the letter state:
I am writing further to the LCBO?s letters of October 5, October 20 and November 9, 2006 and
the meeting held with you and your union representative, Dave Loney, on November 17, 2006.
As set out in the letter of October 5, 2006, you credited your own Air Miles card to customer
purchases that you processed under your operator number while on duty at Store 420 between
March 15, 2006 and September 23, 2006. The total number of transactions was 249 over 56
different days. Furthermore, on September 11, 12, and 15, 2006 you credited your own Air Miles
card with Air Miles from scratch cards dispensed as part of the ?Buy to Fly? contest.
The LCBO Air Miles Policy expressly prohibits employees from using the purchase by any
customer to issue Air Miles to the account of other employees or friends and states that failure to
comply with the Policy will subject employees to disciplinary action up to and including
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termination. Furthermore, you signed an acknowledgement that you read and understood the
Policy and therefore understood that your failure to comply with the Policy would subject you to
disciplinary action up to and including termination.
The ?Buy to Fly? contest circular expressly prohibited employees from participating in the
contest. That circular also set out a further reminder that crediting Air Miles in an unauthorized
manner is prohibited and that if it is determined that fraudulent activity has occurred appropriate
disciplinary action would be taken. You signed an acknowledgement that you read and
understood that circular.
At the meeting you claimed to be unaware that your conduct was wrong. When asked about the
Air Miles Policy and the ?Buy to Fly? contest circular you claimed that you ?didn?t know? what
you were signing, that you ?just signed it? and that you ?didn?t know that it was stealing?. In the
circumstances your claims are simply not credible.
Your actions as set out above constitute a serious breach of the trust that is fundamental to the
employment relationship in a retail setting and as such, you have irreparably damaged the
employment relationship. Therefore, your employment is terminated effective immediately for
just cause.
Mr. Tranton maintained that, at the discipline meeting on 17 November, Ms. Sheptytsky did not
apologize for her actions, and expressed no remorse.
On cross-examination, Mr. Tranton stated that theft at the LCBO was well-known as a dismissal
offense among its employees. It would be mitigated into a lesser penalty only in exceptional
circumstances. He treated Ms. Sheptytsky?s unauthorized accumulation of AM points as
tantamount to theft, because each point cost the LCBO a financial fee to the organization that
operated the Air Miles program, as per the corporate agreement.
When questioned by the Union representative, Mr. Patrick, about the 17 November 2006
discipline meeting, Mr. Tranton acknowledged that Ms. Sheptytsky stated at one point during the
meeting that: ?I didn?t know that it was stealing.? He pointed out that she also stated during the
meeting that: ?I didn?t know what I was signing, ? referring to the two acknowledgement forms.
Mr. Tranton added that he did not believe Ms. Sheptytsky when she stated that she did not know
that the accumulation of the AM points in this manner was improper and unauthorized.
Contemporaneous notes were taken at the 17 November 2006 meeting by an LCBO official, Ms.
Diane Morrison, who had accompanied Mr. Tranton to the meeting. These notes were entered
into evidence by the Union during cross-examination. The complete notes have Mr. Tranton
asking Ms. Sheptytsky a series of questions:
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Q. Would you like to give us your explanation?
A. I kinda realized what I did about 2 weeks ago when I received the letter and saw the sheet of
paper I signed. But I didn?t know what I was signing and just signed it.
Q. So that was [the] form you signed 3 years ago, what about the form you signed over a month
ago?
A. I didn?t know it was stealing.
Q. Didn?t your manager have a meeting with you to get you to sign it?
A. No, it?s not like we have a big meeting and he explains everything to you.
Q. Your excuse is, I didn?t know?
A. Yes.
Q. So how come you didn?t openly just take the Air Miles? You appear to have been very discreet
when you used your Air Miles.
A. Usually, I?m on cash, I am there alone so no one else can see me.
Ms. Sheptytsky testified on her own behalf. She stated that she met with Mr. Tranton and with
her union representative, Dale Long, on 17 November 2006 at a discipline meeting. According to
her, it was a short meeting, where she apologized for her actions, explained that she was not
aware of the Employer?s policy, acknowledged that she wasn?t supposed to be using AM points
arising from the transactions of customers, and had not realized that the LCBO considered this as
theft. Ms. Sheptytsky testified she did not know that the accumulation of AM points resulted in a
financial cost to the LCBO.
According to Ms. Sheptytsky, if she was able to regain her job, the LCBO would never hear from
her again. ?I love my job. I screwed up and I apologize.? Since her dismissal, she has not been
able to find a new job, despite ongoing efforts to obtain one.
On cross-examination, Ms. Sheptytsky acknowledged that what she did was contrary to store
policy and was wrong. She agreed that she had signed the 2003 and 2006 acknowledgement
forms, and knew that she could not participate in the AM programs at the LCBO because she
was an employee. However, Ms. Sheptytsky maintained that she had not closely read the
documents at the time, and had not realized, in particular, that accumulating the AM points could
result in dismissal. When asked if she thought at the time that she was doing something wrong,
8
Ms. Sheptytsky replied that: ?I didn?t realize that this was so serious. I didn?t know about the
dollar value behind it.?
According to Article 26.2 of the collective agreement, no discipline incurred by an employee
shall be used against that employee at a subsequent disciplinary proceeding if the prior incident
was more than three years old. The LCBO did not cite any disciplinary incidents on Ms.
Sheptytsky?s record over the three years prior to November 2006. The Union did not argue that
Ms. Sheptytsky?s entire nine year employment record was free of discipline.
×× ß®¹«³»²¬
(i)LCBO
For the Employer, Mr. Fitzgerald submitted that the prevailing arbitration law on retail theft and
misappropriation is clear and easily stated: theft is a fundamental breach of the employment
relationship, and discharge is the standard and appropriate employer response, with the onus
squarely on the union to demonstrate why this ultimate penalty should be tempered in any way.
Deterrence against theft in the retail business is a legitimate and well-accepted arbitral purpose
for shaping the severity of the appropriate penalty.
Turning to the facts of this case, Mr. Fitzgerald pointed out that Ms. Sheptytsky?s misconduct
consisted of repeated acts ? approximately 240 occasions on 57 days ? over a six month period
that were premeditated and deliberately concealed. She had twice signed acknowledgement
forms that were explicit both in their direction and their consequences. In light of this, Ms.
Sheptytsky?s claims of ignorance are not believable. Her present day apologies and remorse are
no more than a belated plea for an undeserved reinstatement.
All of these facts, taken together, point only in one direction, argued Mr. Fitzgerald: the
maintenance of the dismissal penalty. The repeated acts of theft ? for that is what her actions
were ? has irrevocably shattered the necessary trust that shapes the employer-employee
relationship. The Grievor and the Union have not satisfied the high threshold as to why the
penalty of dismissal ought to be altered in these circumstances.
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(ii)OPSEU
Mr. Patrick, for the Union, submitted that the penalty of dismissal was inappropriate in these
circumstances. He questioned whether the Employer?s directions in the 2003 and 2006
acknowledgement forms which Ms. Sheptytsky had signed were clear enough for her to plainly
understand the consequences of her actions: the prohibition in the forms stated that ?any
violations will be subject to disciplinary action up to and including termination;?
and
appropriate disciplinary action will be taken.? A reasonable reading of these prohibitions
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supports Ms. Sheptytsky?s statements that she was unaware that her actions would lead to
termination.
Ms. Sheptytsky has fully admitted that her actions were wrong, maintained Mr. Patrick. Contrary
to the Employer?s arguments that she has been unremorseful ? either at the discipline meeting on
17 November 2006, or at the arbitration hearing ? she has been upfront in stating that she
committed these actions, and that she has been and is truly apologetic, but she was unaware of
the true and serious nature of her acts. Ms. Sheptytsky knowingly breached an Employer policy,
but she did not think it was theft. Because of the absence of this necessary mens rea, this matter
is a violation of store policy, but it is not a case of employee theft. The LCBO has not
demonstrated that she was deliberately stealing from it.
Progressive discipline is at the heart of labour arbitration, Mr. Patrick argued, and it is also
contemplated by the wording of the acknowledgement forms. Judging by the depth of Ms.
Sheptytsky?s remorse, the necessary element of employment trust is capable of flourishing again,
and she should be able to serve once more as a productive and reliable employee. He requested
that she should be reinstated, albeit with a penalty for her admittedly improper actions.
××× Î«´·²¹ ¿²¼ λ¿±²
The appropriate starting point to assess whether, on the facts of this case, the Union?s grievance
should be upheld and Ms. Sheptytsky should be reinstated, albeit with some penalty
commensurate with her admitted wrongdoing, is to lay out the applicable arbitral principles on
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misappropriation and theft in the retail industry. The parties have submitted a number of cases on
this issue, and I have carefully read the rulings to extract the guiding principles that will shape
the reasons for my ruling on the Sheptytsky grievance.
The most significant principle is that employee theft or misappropriation in the Canadian retail
industry has been accepted as conduct meriting serious discipline: see generally Macdonalds
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Consolidated Ltd. and U.F.C.W., Loc. 401 (Jurgeleit) (Re) (2003), 120 L.A.C. (4) 101
(Moreau); Marriot Corp. of Canada Ltd. and C.U.P.E., Loc. 229 (Coyle) (Re) (1998), 75 L.A.C.
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(4) 1 (Brandt). The retail sector has been characterized by labour arbitrators as being especially
vulnerable to pilfering, because of employee accessibility to low-cost products in the stores and
warehouses where they are employed. Added to this is the undeniable fact that employees in the
retail industry often work with little or no direct supervision, given its spatial nature, its flattened
hierarchy and the heightened emphasis placed on closely managing tight cost margins.
Consequently, the fundamental elements of honesty and trust, integral to any productive
employment relationship, take on a special importance in this sector. Unsurprisingly, arbitrators
have accepted that deterrence, through the application of significant tools of punishment, is a
permissible strategy by retail employers to address the problems caused by a tiny percentage of
their employees.
Arbitrators have widely accepted this summary of the applicable principles but, in doing so, they
have taken two distinct approaches to the issue of the appropriate standard of industrial
punishment for proven cases of employee theft or misappropriation in the retail industry. One
arbitral school, from a more traditional vintage, has ruled that a retail employer?s decision to
dismiss an employee in the face of proven theft should be accepted as the default standard for the
appropriate discipline, subject only to some exceptional finding of mitigation. The monetary
worth of the product involved in inconsequential to the penalty. As Arbitrator MacIntyre stated
inRe Canada Safeway Ltd and U.F.C.W., Local 1518 (1997), 48 C.L.A.S. 111:
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not all of the cases cited justify a principle of ?theft always equals dismissal.? I agree with the
statement of Alan Hope in Re Canada Safeway and U.F.C.W., Local 2000 [(1987), 29 L.A.C.
(3d) 176] that theft or dishonesty in the retail food industry is not an offence that justifies
dismissal ipso facto; but that it ?does impose an extreme burden on an employee who occupies a
position of trust to establish that his reinstatement following an act of dishonesty is consistent
with a restoration of the essential elements of trust.? (p. 186). He goes on to require that the
employee ?establish mitigating facts consistent with a maintenance or restoration of the essential
elements of trust.? In that context, my statement in Canada Safeway, Holly Chatwin, supra, that
in this industry, the employers? ?strict rules including dismissal for the slightest proven theft, has
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been upheld in arbitrations many times? is the truth, but perhaps not the whole truth. Mr. Hope
characterizes the strict rule as applying ?usually?, or ?generally?, and I agree. An arbitrator in this
province [British Columbia] is not bound to dismiss, even if the employers? ?rule? so states.
This has been an approach accepted by the Grievance Settlement Board in some of its recent
caseload on employee theft. As Vice-Chair Watters laid out in OLBEU (Devlin) and LCBO
(2004) GSB 52/2002, at p. 20:
The jurisprudence of the Grievance Settlement Board also discloses that discharge is considered,
prima facie, to be an appropriate disciplinary response to an act of theft on the part of an
employee working for the LCBO. In the Hill [OLBEU (Hill) and LCBO (1987), GSB No.
0054/86 (Draper)] award, the Board commented as follows on this point:
Prima facie, dismissal is the appropriate employer response to theft of its property by an
employee. The reason said to underlie this view is that the loss of trust that inevitably follows such
an offence, particularly where there has been special reliance on the honesty of the employee,
irreparably damages the employment relationship. Suspension and reinstatement is an alternative
to be considered only if persuasive mitigating factors are present. (p. 5)
This approach was accepted by the panel in Reed [OLBEU (Reed) and LCBO (1992), GSB No.
1165/91 (Watters)]. The relevant part of that award reads:
It is apparent, from a reading of the awards provided to us, that each case is somewhat unique and
that the ultimate result depends on the specific facts and circumstances as found therein.
Nevertheless, given the seriousness of the offence of theft, we think that the penalty of discharge
is,prima facie, an acceptable Employer response to such conduct. This is not to suggest, however,
that it must be the automatic response in every case. In determining the appropriateness of the
response the Employer, and indeed this Board, must have regard to any mitigating circumstances
of a persuasive nature. This includes any evidence existing which would suggest that the employee
may be rehabilitated through other forms of corrective discipline less than discharge. (pp. 9-10)
Other arbitrators have applied a more nuanced and fact-centred approach to the issue of the
appropriate penalty. Rather than stating that dismissal, absent some compelling mitigation
factors, is the per se penalty to proven cases of employee theft or misappropriation in the retail
industry, this second approach would give greater weight to the various standard factors that
arbitrators commonly apply in other industries when deciding whether a dismissal penalty is
justified in the circumstances. These factors are laid out in the oft-cited ruling by Arbitrator
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Arthurs in Re Canadian Broadcasting Corporation and C.U.P.E. (1979), 23 L.A.C. (4) 227.
They include (at. p. 230):
1)bona fide confusion or mistake by the grievor as to whether he was entitled to do the act
complained of;
2) the grievor?s inability, due to drunkenness or emotional problems, to appreciate the
wrongfulness of his act;
3) the impulsive or non-premeditated nature of the act;
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4) the relatively trivial nature of the harm done;
5) the frank acknowledgement of his misconduct by the grievor;
6) the existence of a sympathetic, personal motive for dishonesty, such as family need, rather
than hardened criminality;
7) the past record of the grievor;
8) the economic impact of discharge in view of the grievor?s age, personal circumstances, etc;
and
9) the grievor?s future prospects for likely good behaviour.
InCBC, Arbitrator Arthurs stated that, at p. 230:
I have examined all authorities cited, and I believe that the following summary accurately reflects
their significance. The older cases generally (but not inevitably) treated theft or dishonesty as an
offence which warranted automatic discharge; more recent cases, especially those decided by
arbitrators subscribing to the theory of ?corrective discipline?, do not treat dishonesty as per se
grounds for discharge; and various mitigating factors have been identified as justifying the
substitution of a lesser penalty for discharge in such cases.
In recent years, this more-layered approach has been applied by some labour arbitrators when
adjudicating theft dismissal cases in the retail industry. Arbitrator Herlich in New Dominion
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Stores and C.A.W.-Canada, Loc. 414 (Sexton) (Re) (2002), 111 L.A.C. (4) 265, has stated the
following, at p. 274:
I begin by pointing out that (as the cases cited by the Employer amply demonstrate) the arbitral
authorities do suggest a particular inclination to frequently sanction the imposition of the most
serious of disciplinary penalties for even the most minor instances of theft in the context of the
retail food industry. This is explained largely by the particular need for employers in the industry
to implicitly reply on the integrity of employees. Such a need is especially acute in a context
where there is very little (indeed, at times, no) management supervision. And it is exacerbated by
the relatively easy and plentiful opportunities for employees to engage in dishonest conduct.
Deterrence of such conduct is thus a particularly legitimate and important employer interest.
Theft cannot be tolerated and employees must know that to be the case.
To suggest, however, that (apart, of course, for such cases where the collective agreement so
provides) there exists some kind of ?automatic arbitral penalty? of discharge for theft in the retail
food industry would be both misleading and wrong. Legitimate interests of deterrence must be
balanced against what is otherwise just and reasonable in relation to particular employees. And
while the recognized and pressing need for deterrence may tilt the balance in favour of the harsh
penalty in the vast majority of cases, such a result is not automatic and does not preclude or
relieve an arbitrator from the responsibility of reviewing and assessing the circumstances of each
particular case to determine what is just and reasonable. There will undoubtedly be some cases,
particularly ones which involve senior employees, where the need for deterrence may be
outweighed by other unique individual circumstances.
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A significant authority for moving towards this more nuanced approach comes from a 2001
employment law judgement by the Supreme Court of Canada in McKinley v. B.C. Tel, [2001] 2
S.C.R. 161. This is not a case involving workplace theft in the retail industry, but the ruling does
suggest that arbitrators should assess whether a distinct line on the issue of appropriate
punishment is still justifiable between this industry and other workplaces in Canada. (Indeed, the
following passage was cited in Canada Safeway and U.F.C.W., Loc. 401 (Schlekewy) (Re)
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(2003), 118 L.A.C. (4) 161 (Power), a case involving employee theft in the retail industry). At
paras. 48 and 53, the Supreme Court said:
[48] In light of the foregoing analysis, I am of the view that whether an employer is justified in
dismissing an employee on the grounds of dishonesty is a question that requires an assessment of
the context of the alleged misconduct. More specifically, the test is whether the employee?s
dishonesty gave rise to a breakdown in the employment relationship. This test can be expressed in
different ways. One could say, for example, that just case for dismissal exists where the
dishonesty violates an essential condition of the employment contract, breaches the faith inherent
to the work relationship, or is fundamentally or directly inconsistent with the employee?s
obligations to his of her employer.
[53] Underlying the approach I propose is the principle of proportionality. An effective balance
must be struck between the severity of an employee?s misconduct and the sanction imposed. The
importance of this balance is better understood by considering the sense of identity and self-worth
individuals frequently derive from their employment, a concept that was explored in Reference Re
Public Service Employee Relations Act (Alta.), [1987] 1 S.C.R. 313, where Dickson C.J. (writing
in dissent) stated at p. 368:
Work is one of the most fundamental aspects in a person?s life, providing the individual with a
means of financial support and, as importantly, a contributory role in society. A person?s
employment is an essential component of his or her sense of identity, self-worth, and emotional
well-being.
After reading the case law submitted by both counsel, I have come to the conclusion that the
approach articulated by, among others, Arbitrator Herlich in New Dominion Stores is the more
appropriate approach to apply. I say this because it is closer to the particular responsibilities
assumed by arbitrators to balance, in a sensitive and contextual manner, the competing industrial
relations factors in penalty determination between the employer?s productive mission and the
employee?s claim to the standards of corrective justice. This approach does not negate the special
challenges with regards to in-house pilfering faced by the retail industry, nor does it downplay
the foundational requirement for workplace trust and employee honesty. Rather, it states that
these factors should play a significant, but not necessarily a decisive, role in arbitral decision-
making when assessing whether the imposed punishment was appropriate in all of the
circumstances. The pertinent question to be asked is whether the dismissal penalty is just and
14
reasonable in all of the circumstances. Put another way, one would ask whether the employment
relationship has been irreparably broken, or whether there is a justified and reasonable basis for
believing that the requisite employment trust is capable of being restored as a prelude to re-
establishing a productive relationship?
With this discussion in mind, I will now turn to stating the established facts of this case, and then
apply the CBC mitigation factors to these facts.
In my view, the LCBO has established, on the prevailing balance of probabilities standard, that
the grievor engaged in a deliberate course of action over a six month period to direct unclaimed
Air Miles reward points to her own AM card, for her own personal use. The unchallenged
evidence is that this occurred on approximately 240 occasions. This conduct came to an end not
on Ms. Sheptytsky?s realization that it was wrong, but by the LCBO when its investigation
detected a pattern of irregular AM points accumulation, and suspended her. The Employer has a
clear, strict and unchallenged policy that prohibits employees from accumulating AM points on
customer purchases of LCBO product where the customer has not claimed the available AM
points. The Employer?s policy explicitly stated that a breach of this stricture would result in
discipline, up to and including dismissal. Ms. Sheptytsky had signed acknowledgement forms in
2003 and 2006 indicating that she knew and understood the policy.
Ms. Sheptytsky has stated that, while she knowingly breached the LCBO policy, she did not
think she was engaged in stealing, she did not know that there was a financial cost to the
Employer, and she did not realize that her conduct, if detected by the employer, would result in
termination. Technically, Ms. Sheptytsky may not have realized that the LCBO paid fees to the
Air Miles program for every AM reward point accumulated through the sale of LCBO
merchandise, and she may not have understood that this was ?stealing?, but I find that this does
not substantially aid her case. Given the signed acknowledgement forms from 2003 and 2006,
she must be taken to have known the Employer?s clearly-stated prohibition, and that significant
employment discipline, at the very least, would result from violating the policy. I find as a fact
that Ms. Sheptytsky accumulated the AM points by consciously concealing her actions,
indicating that she knew the seriousness of her conduct and that she knew she was acting
dishonestly.
15
The CBC Factors
1)Bona fide confusion or mistake by the grievor as to whether he was entitled to do the
act complained of;
2) The grievor?s inability, due to drunkenness or emotional problems, to appreciate the
wrongfulness of his act;
3) The impulsive or non-premeditated nature of the act;
This was not a case of Ms. Sheptytsky being confused or honestly mistaken with respect to the
Employer?s AM miles policy. Nor was there any evidence that she suffered from an illness, an
addiction or a temporary condition which would diminish her ability to appreciate the
wrongfulness of her actions. The uncontested evidence has established that her violation of the
LCBO policy was pre-meditated, surreptitious and repetitious, with no element of spur-of-the-
moment impulsiveness.
4) The relatively trivial nature of the harm done;
The LCBO stated in its evidence that the agreement it had entered into with Loyalty
Management governing the terms of the Air Miles rewards program contained confidentiality
provisions, which prohibited the release of its financial terms. As a result, the Employer led no
evidence either with respect to the number of AM reward points accumulated by Ms. Sheptytsky
through her unauthorized actions, or on the dollar value of these points. I do accept that
participation in the AM rewards program entails a financial cost to the LCBO for every point
accumulated, as this was stated by the Employer during its evidence and not challenged by the
Union. I can also find on the record that Ms. Sheptytsky?s misappropriation of the points
involved a repetitious practice on a number of occasions over a significant period of time.
5) The frank acknowledgement of the misconduct by the grievor;
At the 17 November 2006 discipline meeting, Ms. Sheptytsky offered only a partial
acknowledgement that she was engaged in a deliberate pattern of action to beach the LCBO
policy on the accumulation of AM reward points. I find that her comments were primarily
defensive and self-justifying, and fell short of a full and frank acknowledgement and apology. At
the arbitration hearing, Ms. Sheptytsky was somewhat more forthcoming and remorseful,
16
admitting that she had committed a serious workplace infraction and offering her apology to the
Employer. Nonetheless, I saw no substantial indication in her testimony that she understood that
her behaviour had been dishonest as opposed to a mistake or the exercise of poor judgement.
6) The existence of a sympathetic, personal motive for dishonesty, such as family need,
rather than hardened criminality;
No evidence was presented to me that would explain Ms. Sheptytsky?s misconduct as motivated
by a positive or offsetting mitigating factor, such as a pressing family debt, a well-intentioned
but misguided attempt to aid a friend or co-worker, or acting out of fear because of threats from a
third party.
7) The past record of the grievor;
The governing collective agreement contains a sunset clause ? Article 26.2 ? which provides that
any workplace discipline incurred by an employee shall not be used against him or her at a
subsequent disciplinary proceeding if the prior incident was more than three years old. On the
record before me, Ms. Sheptytsky?s employment record was clear of any disciplinary incidents
during the previous three years. The Union did not argue that her discipline record was clear
beyond this point.
8) The economic impact of discharge in view of the grievor?s age, personal
circumstances, etc.
Ms. Sheptytsky testified, without contradiction, that she has been unable to find a new job since
her dismissal. She stated that she loved her work, and that she would not cause the LCBO any
problems if she regained her position. She was not asked any questions as to her current financial
situation, or her training or educational credentials. Ms. Sheptytsky is a middle-aged woman and
an immigrant to Canada, all of which may pose subtle barriers to finding re-employment.
9) The grievor?s future prospects for likely good behaviour;
This is a predictive factor, which makes it a hazardous task to engage in with any certainty. Ms.
Sheptytsky is obviously keen and motivated to regain her job, given her inability to find new
17
work since her termination. A dismissal, particularly when accompanied by a lengthy period of
time without work, would be a sobering experience for most employees, and would heighten the
importance of employment honesty and fidelity. As well, Ms. Sheptytsky has nine years of
seniority and at least three years of an employment record free of discipline. However, she had
engaged in dishonest behaviour that was lengthy, surreptitious and repetitious: she appropriated
AM reward points on approximately 240 occasions during 55 working days over six months.
This was not a momentary lapse caused by thoughtlessness or stupidity, but rather indicates
something more calculating and hardened.
10) The particular nature of her employment: the retail industry.
Ms. Sheptytsky?s pattern of dishonest behaviour and repeated breach of well-known company
policy occurred in the retail industry. The particular nature of her work at the LCBO illustrates
the importance of workplace trust. Her position as a customer service agent in a liquor retail
store meant that she regularly worked at the cash register, with little direct or immediate
supervision of her work. In addition, Ms. Sheptytsky sometimes worked as a shift leader in the
absence of the store manager, meaning that she was entrusted with a considerable amount of
responsibility. While the LCBO has accounting and investigative safeguards in place to detect
unusual and potentially illicit patterns respecting the handling of cash, product and other assets,
these safeguards may take weeks or months to uncover employee theft or dishonesty. Certainly
the best defence that the Employer has against employee pilfering is the intrinsic honesty of, and
trust in, its employees, reinforced by reasonable working conditions and by the publication of a
fair, clear and consistently applied policy which reinforces this trust and penalizes dishonest and
fraudulent behaviour.
Taken together, these 10 mitigation factors weigh strongly against any lessening of the dismissal
penalty imposed on Ms. Sheptytsky by the LCBO. In terms of the fundamental questions before
me ? whether the penalty is just and reasonable in all the circumstances, and whether
18
employment trust is capable of being restored so that a productive relationship can be resumed ?
I cannot point to a sufficient number of persuasive factors to allow me to reach that conclusion.
But before drawing my final conclusion from these factors, I wish to assess and compare the
facts of our case with the findings and conclusion in Arbitrator Herlich?s ruling in New
Dominion Stores,supra. The Union placed some considerable reliance on this case, its factual
context is broadly similar to our case and, as I indicated above, I have been persuaded by
Arbitrator?s Herlich?s reasoning as to the appropriate arbitral approach to apply in retail
employee theft cases.
New Dominion Stores involved the misappropriation of Air Miles reward points by an employee
in a retail setting. The grievor worked as a part-time cashier at a supermarket food store, and
possessed at least 10 years of workplace seniority and a clear discipline record at the time of her
termination. Her employer describer her as a solid employee. The evidence established that the
grievor had, on four or five occasions over a two week period in March 2001, improperly
credited her personal Air Miles account with the points generated by customer purchases.
The Employer had issued a written policy regarding the Air Miles program to its employees prior
to the grievor?s misappropriation. The policy prohibited the transfer of unclaimed customer Air
Miles points to the employee?s own AM card. Violation of the policy would be subject ?to
discipline up to and including dismissal.? The grievor was aware of the policy when she
appropriated the AM points.
For the purposes of regulating the AM rewards program, the Employer regularly monitored the
acquisition of these points for unusual patterns. Following the receipt of an abuse report, the
Employer confronted the grievor in late May 2001, who, after an initial equivocation, fully
admitted that she had credited her AM rewards card with points unclaimed by the store?s
customers. The grievor acknowledged that her conduct was in breach of the workplace policy,
and offered no compelling excuse. The Employer did not present any evidence that she
improperly accumulated AM points outside of those two weeks in March, and she insisted that
her misconduct was limited to that time period, and that she had stopped on her own accord. At
the arbitration hearing, she testified that, while she knew at the time that her actions were wrong,
she was unaware that the accumulation of AM points imposed a financial cost to her employer.
19
The Employer?s policy did not contain any information about the cost to the employer for every
Air Miles awarded through the purchase of store products by a customer.
Arbitrator Herlich decided to reinstate the grievor, with a suspension of 14 months for the time
served between her dismissal and the release of the arbitration award. He was persuaded that the
grievor was capable of again becoming a productive and reliable employee, and that the requisite
quality of trust could be restored in the employment relationship. Arbitrator Herlich was
influenced by five factors: (i) The harm done was relatively trivial, because the grievor
accumulated the AM points on only a few occasions; (ii) After the four or five occasions when
the grievor misappropriated AM rewards points, she stopped the activity herself, and there was
no evidence that she was planning to resume it; (iii) Her long seniority, clear record and positive
evaluations; (iv) The grievor was candid and frank in her relatively prompt admission of her
wrongdoing, once confronted by the Employer; and (v) The grievor genuinely believed that her
accumulation of the AM points was not harming anyone, and the Employer had not expressly
stated in its published policy that its participation in the program came with a financial fee; thus,
the grievor misunderstood the seriousness of her conduct;
On the first three of these five influential factual issues, the evidentiary findings in our present
case are distinctly different. The grievor in New Dominion Stores misappropriated AM points on
only four or five occasions in a confined time period, and she stopped the practice herself two
months before the Employer caught up with her, whereas Ms. Sheptytsky acquired AM points
through the purchases of products by LCBO more than 240 times, and her conduct came to an
end only with the Employer?s discovery. The New Dominion Stores grievor and Ms. Sheptytsky
had approximately the same seniority, but Ms. Sheptytsky has not claimed that her entire
employment record is discipline clear, while the grievor could state that this was the only
blemish on an otherwise commendable workplace record. On the fourth point of comparison, I
would find that the New Dominion Stores grievor and Ms. Sheptytsky both acknowledged their
misconduct when confronted by their respective employers, although the grievor appeared to be
somewhat more forthcoming than Ms. Sheptytsky; I would find that this was a distinction in
kind, rather than in substance.
On the fifth and final point of comparison, both the grievor in New Dominion Stores and Ms.
Sheptytsky knew that their conduct was wrong, but both claimed that they underestimated the
20
serious consequences and they were unaware that the accumulation of Air Miles points resulted
in a cost to their employers. Arbitrator Herlich noted that the Employer?s policy mentioned
discipline and dismissal, but pointed out that it did not contain any express statement that the
employer paid for the AM points. Certainly, two earlier arbitration awards involving the
dismissal of employees for accumulating Air Miles reward points contained evidence that the
employer had specifically stated in its prohibition policy that there was a cost to the employer for
every air mile awarded through store purchases: Re Canada Safeway Ltd. and U.F.C.W., Local
1518 (2001), 64 C.L.A.S. (Sanderson); and Re Canada Safeway Ltd. and U.F.C.W., Local 175
(1994), 37 C.L.A.S. 91 (Bendel).
Viewed together, I find that the factual differences between New Dominion Stores and our case
are sufficiently distinct enough to minimize the comparative value of the two cases for the
purpose of penalty assessment. The pattern of misconduct by Ms. Sheptytsky regarding the
accumulation of AM rewards points took place over a much longer period of time, involved
approximately 45 to 50 times as many incidents, and imposed a correspondently higher cost to
the employer. Unlike the facts in New Dominion Stores, Ms. Sheptytsky did not cease her pattern
of misappropriation by herself. The seniority and employment records of the two employees are
not of equal weight, as Ms. Sheptytsky can only rely upon her previous three years as being free
of discipline. Regarding the absence of an explicit warning in the employer?s policy that the
awarding of AM points was a direct cost to the employer, I have taken this issue into account as
a matter of consideration, but I have also balanced it against the fact that both of the
acknowledgement forms signed by Ms. Sheptytsky warned of potential disciplinary action, and
the 2003 form ? the more important document in our case, given the fact that the vast majority of
proven incidents of AM points misappropriation were in breach of this policy ? expressly stated
that dismissal was one of the potential consequences.
Thus, my reading of New Dominion Stores does not alter my tentative conclusion, stated earlier,
that I am unpersuaded that the requisite element of trust in the employment relationship between
the LCBO and Ms. Sheptytsky can be restored. For the reasons given, I am satisfied that the
imposed penalty is just and reasonable, and I would dismiss the grievance.
21
Both counsel are to be complimented for their measured pursuit of their respective clients?
positions. Their questioning and arguments were clear and well organized, and assisted greatly in
the drafting of this decision.
th
Dated this 7 Day of April, 2008, in the City of Toronto, Ontario
Vice?Chair Michael Lynk