Casual Legal: After-acquired cause

By Mitchell R. Hayward
Reynolds Mirth Richards Farmer LLP
Alberta Municipalities Casual Legal Service Provider

In Alberta, employment relationships are governed by statute and common law principles. One common law principle as it relates to employment law is the doctrine of after-acquired cause. This arises where an employer dismisses an employee—either with or without cause—but later discovers information that, had it been known at the time, would have justified a dismissal for cause. In other words, the employer may not have had a legal cause to terminate the employee at the time of dismissal but later uncovers serious misconduct that retroactively supports a cause-based termination.

Courts in Alberta recognize that there is a high bar to establish after-acquired cause. To establish it, an employer must prove that:

• At the time of dismissal, the employer did not know of the earlier misconduct
• Had the misconduct been known, it would have warranted terminating the employee with cause.

Examples of after-acquired cause include:

• Learning an employee engaged in fraud or theft while employed
• Learning an employee violated workplace policies in a serious way, that was unknown at the time of dismissal
• Discovering an employee falsified their credentials.

If after-acquired cause is proven, the employer may be relieved from paying any notice or severance to the employee.

The corollary to this principle is that an after-acquired cause claim can be dismissed if the employer was aware of, condoned, or failed to take action regarding the misconduct. Often, employees will attempt to refute an allegation of after-acquired cause on the basis a municipality (or other employer) condoned the behaviour. In Foerderer v Nova Chemicals Corporation, 2007 ABQB 349, condonation was described as follows:

Condonation may be inferred from the circumstances of the case and the omissions or commissions of the employer. Most often, courts look for evidence that the employer was aware or ought reasonably to have been aware of the misconduct and intended to forgive it. Where there has been condonation, it would be “most unjust” to penalize the employee for having relied on that forgiveness. The employee’s subjective view as to the seriousness of the misconduct or the forgiveness or condonation of the misconduct is not determinative, however. [emphasis added]

When considering after-acquired cause, employers must be cautious about condoning employee misconduct—whether expressly or through inaction—before dismissal. If the employer knew of or implicitly forgave the behaviour by failing to address it promptly, any later claim of after-acquired cause may be defeated.