Otherwise known as
Michael’s soapbox

2018-11-12T09:13:19-05:00 November 12, 2018|Arbitration|

Reinstating an Employee in a Theft Case

An arbitrator would never reinstate a thief to his or her employment, right?  Most employers would answer that in the negative, however, the answer is “it depends”.  

The arbitral approach in discipline cases requires that the arbitrator, even in the most serious of cases, consider mitigating circumstances in deciding if the discipline selected by the employer was reasonable and appropriate and whether he or she should substitute a lesser penalty for the one selected by the employer.  As such, this discretion could result in the reinstatement of a discharged employee to his or her employment where it is determined that, in spite of the conduct, the employment relationship can, for example, be salvaged. 

A recent case is Lanxess Inc v Unifor, Local 914, 2015 CanLII 76237 (ON LA) where the arbitrator reinstated an employee in a case of admitted theft and, in so doing provided an excellent analysis of the considerations that go into this exercise of arbitral discretion.

This is the type of a result that causes employers to shake their heads but it is a result that is not without precedent and is consistent with the arbitral approach that requires a contextual analysis of the entire circumstances.


The Grievor was terminated for the admitted theft of two 36-inch empty wooden spools, used to wind wire cable.  At the time of his termination the Grievor had more than 45 years of service with a clear disciplinary record and was 64-years-old.  The Grievor began his employment with the Company as a 19-year-old in August of 1969.  The Grievor had a clear disciplinary record and his supervisors confirmed the general  view that the Grievor was a “conscientious”,  “reliable” and “good  worker”.

The issue in  Lanzess Inc. was whether the Grievor’s termination was a just penalty in all the circumstances and/or whether the arbitrator should exercise his discretion to reduce the discharge to some lesser sanction.

The arbitrator commented that:

… the Grievor’s conduct in transporting the two wooden spools inside a panel van to avoid detection and discarding them by the side of the road on his return to the Plant are conclusive of a guilty mind.  His actions demonstrate he knew he was not to have the wooden spools without express permission of the Company in the form of a valid Advice of Shipment, even if he also reasonably believed the wooden spools were of no value or use to the Company that were likely destined for the wood dumpster as scrap.

When he was confronted, he told his supervisors that he didn’t think the Company was issuing “No Value Slips” anymore, and he took the spools believing they were of no value or use to the Company and would be discarded as scrap.

The employer considered all the evidence, including a belief that anything less than a termination would send the wrong message to the workplace to the effect that “that employees with long service had “a license to steal””.  The employer concluded that it would never trust the grievor and his employment was terminated.

The grievor, upon being advised of his termination, was in shock.  He wrote a letter of apology.  

The union filed a grievance and, as noted above, the issue was whether the penalty of discharge was too severe in the circumstances and ought to be reduced.


The arbitrator made a number of important comments in the case:

Theft within the workplace is among the most serious of employment offences that often results in the ultimate employment sanction.  But the extent to which discharge has been seen as the automatic penalty for all acts of theft or dishonesty has been displaced by a contextual analytical approach.

The arbitrator referred, with partial agreement, with the following comments of arbitrator George T. Surdykowski in Messier-Dowty Inc. and International Association of Machinists and Aerospace Workers, Local Lodge 905 (Brouckxon Grievance) (2015) CanLII 56078 (ON LA):

62. Discharge is obviously the most severe form of workplace discipline which can be imposed – “workplace capital punishment” if you will. It may be that discharge was once thought to be the appropriate disciplinary response in every case of proved workplace theft, regardless of the circumstances. However, the cases cited (and the decisions referred to in them) demonstrate that that has long not been the case. It is clear that arbitrators have the same jurisdiction to substitute a lesser penalty in a case of discharge for theft as they do in any case of any other discipline for any other misconduct. Unless that jurisdiction (under s. 48 (17) of the Labour Relations Act, 1995) is specifically ousted by the collective agreement the arbitrator must exercise this jurisdiction if he is satisfied that it is just and reasonable to do so in the circumstances of the particular case. An arbitrator must therefore seriously consider whether it is just and reasonable in the circumstances of the particular circumstances of the particular case to substitute a lesser penalty, and cannot merely rubberstamp an employer’s decision to discharge an employee for proven theft.

63.  That said, workplace-related theft is universally considered to be a serious employment offence which merits a significant disciplinary response. Notwithstanding that discharge is not appropriate in every case, once theft is proved discharge remains a prima facie appropriate penaltyOnce theft is proved, the union bears the onus to demonstrate that a penalty less severe than discharge (or other penalty imposed by the employer) is just and reasonable in the particular case. [emplasis added]

While arbitrator Luborsky agreed with paragraph 62, he disagreed with the italicized portion of paragraph 63 and specifically that discharge remains a prima facie appropriate penalty in cases of proven theft.  He parsed it down even further as follows:

…. the situation in my opinion is more nuanced in that before shifting the burden onto the union to justify any reduction in penalty, the employer is still required to satisfy an initial onus to show that the discharge, or specific level of disciplinary sanction, is within the range of penalties that are proportionate to the offence committed in the context of all surrounding circumstances. That is because part of an employer’s burden in demonstrating “just cause” for the discipline issued to an employee under a collective agreement regime is the requirement that the “penalty must fit the crime”, subject to an express provision in the collective agreement otherwise mandating the specific punishment.

Accordingly, even in cases of proven theft, the employer must nonetheless “consider all of the surrounding circumstances in determining the range of proportionate disciplinary responses to the misconduct.”

In this case, the arbitrator found that the Company had “independently satisfied its initial onus of demonstrating that the Grievor’s specific misconduct in the context of all surrounding circumstances can support discharge as one of the proportionate disciplinary responses within the range of appropriate sanctions in this case, without considering the mitigating factors reviewed below.”

The issue then was whether the arbitrator ought to alter the penalty based on any mitigating factors.   This discretion “ought to exercise such discretion with extreme caution and restraint.”

Arbitrator Luborsky in Laxess Inc. again referred to Messier-Dowty Inc. with approval:

64.  In that respect, it is apparent from the cases cited that much depends on the arbitrator’s sense of the grievor and the circumstances. Although there is no limit to the factors that an arbitrator may consider in a particular case, the most commonly referred to factors include:

  • whether there was any confusion on the part of the employee personally or resulting from the employer’s rules or policies, or from the employer’s enforcement thereof, particularly regarding he goods in question;
  • whether theft is a problem in the workplace, and the employer’s response to other instances of theft in the workplace;
  • whether the theft was premeditated, or the result of confusion or an impulsive momentary aberration;
  • the nature and seriousness of the theft (including the value of the goods involved);
  • whether there was a single act of theft, or a pattern of theft-related or other dishonest conduct;
  • the grievor’s behavior and reaction when confronted with the allegation of theft, and subsequently;
  • the grievor’s character and reputation for honesty in the workplace and in the community generally;
  • the seniority and employment (not just disciplinary) record of the employee;
  • the   grievor’s   age   and   other   personal   circumstances   (including   any   compelling sympathetic personal motivation for the acts in question).

65.  Notwithstanding that they are relevant considerations, as a general matter an employee’s age or personal circumstances not significantly distinguishable from those of any other discharged employee seniority, and contrition at the hearing will not by themselves be compelling.  The most significant   factors   are   those   which   speak   to   the   employee’s   character  and  trust rehabilitation potential. These include whether the theft was premeditated, a single incident or pattern of behavior, and the employee’s reaction when confronted with the allegation, including whether and if so when the employee admitted the theft and took responsibility and expressed genuine remorse for the misconduct.  The timely willingness to take responsibility for and accept consequences for an act of theft, and the demonstration of sincere remorse for the misconduct as opposed to for the consequences are particularly important because they are a window to true character and offer clues to the extent to which the employee can truly be trusted again. Theft is a serious act of dishonesty which undermines mutual trust that is fundamental to the employment relationship.

Applying those factors to the case before him, the arbitrator reinstated the grievor to his employment. 

Had the grievor been more forthright when confronted and had he not made “clumsy efforts” to avoid discovery, the arbitrator would have assessed a three (3) months suspension as being reasonable.  

The arbitrator also appears to have considered the “negative impact that his reticence would reasonably have on the Company’s managerial personnel making the disciplinary decision”.  

In the circumstances, because of the time it took to get to a hearing and have a decision rendered, the arbitrator did not want to award the grievor by compensating him, and so substituted a 10 month suspension without pay or benefits for the discharge.

The arbitrator came to his decision based on the “trust rehabilitation potential” of the Grievor.  However, the arbitrator decided to impose additional conditions on the Grievor’s reinstatement as follows:

As a condition of his reinstatement, and notwithstanding anything in the collective agreement to the contrary for a period of 12 months from his date of reinstatement, the Company may require the Grievor to work only on the day shift where adequate supervision is available and, at the Company’s option, to refuse to schedule the Grievor for any overtime assignments requiring his attendance outside of those hours. The Company shall also have the right to refuse permission for the Grievor to drive any Company vehicle beyond the Company’s compound for the same 12 month period.

These restrictions would remain in place 12 months from the date of the Grievor’s reinstatement.  


This is yet another case where an arbitrator reinstates a grievor to employment even in circumstances of admitted theft where, based on the mitigating circumstances of the case, the arbitrator concludes that the trust inherent in the employment relationship can be rehabilitated.

These cases turn on their own facts, though employers should never assume that theft equals discharge as a matter of course.  The investigation and the questions asked of the employee are essential to building the case and foreclosing as many mitigating factors as possible.