Employee Terminated for Just Cause After Butt Dial to Employer Revealed He was Working for Himself on Company Time

Written on behalf of Peter McSherry

A senior IBM salesman was terminated for just cause when, as a result of two unintended butt-dials , it was revealed that he was regularly working for his own private corporation on what IBM considered to be “IBM time”.

What Happened?

The employee was hired by IBM Canada Inc. in August 2010 into a full time senior sales position, at a salary of $140,000 plus commissions for a total of approximately $193,000 annually, with benefits. Although the employee had access to IBM’s office space in Edmonton, he was a “mobile employee” and worked remotely for the most part. He was in regular telephone and email contact with his supervisor.

Before he was hired, the employee informed IBM that, since 2007, he had been the co-owner and President of Compartment Inc. (a privately held business that designed, made, sold, and installed custom residential storage components). The employee was responsible for the operation of the business while his wife paid the bills and performed similar duties.  The employee told IBM that, upon acceptance of the sales position, he would transfer his operational responsibilities at Compartment Inc. to his wife. At no time was the employee ever told by IBM that he had to sever his relationship with Compartment Inc.

Part of the IBM’s Business Conduct Guidelines stipulated:

5.1.4  Using IBM’s time and assets

You may not perform non-IBM work or solicit such business on IBM premises or while working on IBM time, including time you are given with pay to handle personal matters. Also, you are not permitted to use IBM assets, including equipment, telephones, materials, resources or proprietary information for any outside work.

The employee understood that a violation of the Business Conduct Guidelines (“Guidelines”) could result in disciplinary action up to and including termination. He was familiar with the Guidelines because he had previously been employed with IBM, and had gone through training related to the Guidelines twice.

In January 2011, the employee’s supervisor scheduled a telephone meeting. In anticipation of the meeting, the supervisor forwarded a document that he expected the employee to complete, return, and discuss during the meeting. Instead of completing the document, the employee cancelled the meeting, informing the supervisor that he was double-booked. The supervisor ended up calling the employee in any event, and the employee informed him that he was feeling “overwhelmed”.

At some point during the afternoon of January 21, 2011, the employee “butt-dialled” his supervisor, who then overheard two portions of a conversation the employee was having with a Compartment Inc. installer at the home of a Compartment Inc. customer. That same afternoon, the employee received two emails from IBM, which he did not respond to. He did, apparently, make another Compartment Inc. related phone call on his IBM phone.

On January 31, 2011, the employee’s supervisor sent him an email regarding the butt-dials, confirming that he had heard the content of the calls and reminding the employee of the “Personal Use of IBM Time” provisions in the Guidelines.

Within minutes of receiving the email, the employee replied to the supervisor, telling him that he had only spent “3 hours a week” “assisting with the company” and “tried to make sure that it is during the lunch hours so not to interfere with IBM work” per the corporate guidelines.

The employee was terminated for cause in February 2011, “due to [his] current continued active employment with [his] family company”, revealed through the “accidental calls”. Since this was a just cause termination, the employee was not given notice of termination or severance pay. IBM’s position is that the employee’s actions were a clear breach of the business conduct guidelines that he knew were at the core of the employment contract. As such, progressive discipline was not required, and the termination was a proportional response to the misconduct.

The employee sued for wrongful dismissal.

The Court

The employee maintained that the amount of time he spent on Compartment Inc. business was three hours a week. Evidence at trial clearly established that he solicited business and then performed work for that business during IBM time, and the Court stated:

There is a big difference, of course, between spending 3 hours a day on one’s own business and 3 hours a week on one’s own business; however, spending 3 hours a week on one’s own business when one is in full-time employment with an employer who expects, and has a right to, full-time commitment, is a significant breach of the employment relationship.

The employee’s admission that he spent 3-4 hours a week on Compartment Inc. business constituted a major breach of the Guidelines. Further, the court could not conclude that the employee had been working full time for IBM as he was required to do; instead, the evidence clearly established that he was working for personal gain on IBM time.

There were no circumstances which could mitigate the employee’s misconduct. Rather, the employee’s testimony suggested that he would be unlikely to change his attitude in the future, and that it would be difficult for IBM to monitor his future conduct, particularly since he worked remotely.

The Court additionally found that IBM was not required to give the employee warning about his conduct, nor was IBM required to provide him with an opportunity to improve his conduct. The employee’s “deceitful” conduct was a “major” and repeated breach of the Guidelines. Moreover, it was made “abundantly clear” to the employer that a breach of the Guidelines would lead to dismissal. The Guidelines themselves were clear, and the employee was a senior employee who should have understood the guidelines (or should have sought advice if he had any questions about how the Guidelines applied to him and his business interests). Lastly, because the employee worked remotely “the working relationship was imbedded in an honour system” and therefore, IBM’s conclusion that the employee’s breach of trust was irreparable was reasonable.

The Court concluded:

Viewed objectively by a reasonable employer, Mr. Ross’ misconduct evidenced a breakdown in the employment relationship: insofar as the nature of the workplace is concerned, as a mobile employee, Mr. Ross was working in an honour system. The employer, who has no effective means, and no wish, to micromanage the employee, must be able to rely on the assumption that the employee is devoting his full-time efforts to IBM’s interests. This was no longer reasonably possible for IBM.

IBM was justified in summarily dismissing the employee.

If you are an employee who has been terminated for just cause, contact Guelph employment lawyer Peter McSherry by phone at 519-821-5465 or by e-mail to schedule a consultation. You may be entitled to more than your employer initially offers, including severance pay or notice of termination.