Termination or dismissal for cause is considered the “capital punishment” of employment law. As a result, employers are required to meet a high evidentiary threshold before depriving an employee of notice or pay in lieu of notice. That threshold becomes even more exacting where an employer relies on misconduct discovered after termination, rather than misconduct known at the time of dismissal.

In the recent case of Sobolewski v. Advanced Completions Technology Services Ltd., the Alberta Court of King’s Bench addressed both of these issues in a detailed and highly fact-driven decision. The case provides essential guidance on after-acquired cause, dishonesty, proportionality, and the heightened ethical obligations that apply to senior executives in closely held companies.

A Dismissal Followed by a Troubling Discovery

The employee was the President of Advanced Completions Technology Services Ltd. (the employer), a small boutique oil and gas services company based in Calgary. He was invited into the company at its inception by two engineers who later became his co-shareholders and fellow directors. The employee had no written employment contract and no contractual termination provisions.

In April 2022, the employer dismissed the employee without notice. At the time of dismissal, the company was experiencing financial difficulty, and the termination occurred abruptly at a board meeting. The employer paid only the minimum statutory termination pay required under Alberta’s employment standards legislation.

Shortly after the dismissal, the employer discovered that the employee had submitted a falsified American Petroleum Institute (API) certificate as part of a major bid to a third-party company. The bid, if successful, would have generated approximately $1.7 million in revenue and was critical to the employer’s financial survival.

The falsified document created immediate concerns about dishonesty, regulatory exposure, and reputational risk. The employer took the position that even if it did not know about the misconduct at the time of dismissal, it had after-acquired cause justifying termination for cause.

The employee sued for wrongful dismissal, unpaid bonuses, mileage reimbursement, and punitive damages. The employer counterclaimed for reputational harm.

After-Acquired Cause in Alberta Employment Law

Under Alberta law, an employer may rely on after-acquired cause if it can establish that serious misconduct occurred during employment and that, had the employer known of it at the time, dismissal for cause would have been justified.

However, the burden of proof remains squarely on the employer. The employer must demonstrate that the misconduct was sufficiently serious to undermine the employment relationship and that termination was a proportionate response.

The Court reaffirmed that even where misconduct is admitted, dismissal is not automatic. The analysis is contextual and must assess whether the relationship could reasonably continue in light of the conduct.

Was the Employer Aware of the Misconduct at the Time of Dismissal?

A central issue in the case was whether the employer knew about the falsified certificate before terminating the employee. If the employer was aware and condoned the conduct, it could not later rely on it as cause.

The employer claimed that his co-directors were present when the certificate was fabricated and actively participated in the decision to submit it. The company’s principals denied this and asserted that they learned of the falsification only after the termination.

The Court undertook an extensive credibility analysis, examining testimony, documentary evidence, email records, metadata from computer files, and the timing of events. In doing so, the Court emphasized that credibility findings must align with objective evidence and the preponderance of probabilities.

Ultimately, the Court rejected the employee’s account. His testimony was found to be inconsistent and evolving, and it contradicted documentary evidence showing that the falsified certificate was created while he was alone and after he had already left the office. The Court concluded that the employer did not know of the misconduct at the time of dismissal and did not condone it.

Dishonesty and Proportionality: Was Dismissal for Cause Justified?

Having found that the employer acquired knowledge of the misconduct after dismissal, the Court turned to the critical question: was termination for cause a proportionate response?

The Court reiterated that dishonesty alone does not automatically justify dismissal. Instead, the analysis must weigh all relevant contextual factors, including the nature of the misconduct, the employee’s role, length of service, prior record, and the impact on the employment relationship.

Factors Weighing Against Summary Dismissal

The Court acknowledged several considerations that could have supported a lesser disciplinary response. The employee had worked for the company since its inception and had no prior disciplinary history. The misconduct occurred during a period of financial distress, and the bid was intended to benefit the company rather than generate personal gain.

The falsified document was not concealed after submission, and the bid ultimately failed for reasons unrelated to the certificate. The termination itself was abrupt and carried out publicly at a board meeting, which the Court recognized as provocative and potentially humiliating.

These factors underscore why dismissal for cause must never be treated as automatic, even where dishonesty is proven.

Factors Supporting Termination for Cause

Despite the mitigating factors, the Court found that the seriousness of the misconduct outweighed them. Several considerations were decisive.

First, the misconduct was intentional, planned, and sophisticated. The falsified certificate required multiple deliberate alterations and was designed to deceive a third party into believing that the employer held a certification it did not possess.

Second, the employee was not a junior employee. As President, shareholder, and director, he was the outward face of the company and occupied a position of exceptional trust. His role demanded the highest ethical standards, particularly in dealings that could expose the company and its investors to regulatory or reputational risk.

Third, the Court found that the employee minimized the seriousness of his actions, describing the falsification as merely “checking boxes.” This attitude suggested a troubling disregard for ethical boundaries and undermined confidence that the misconduct would not recur.

Finally, the employer was a closely held business built on trust between its principals. The Court emphasized that in such environments, a single act of serious dishonesty can irreparably fracture the employment relationship.

Why Lesser Discipline Was Not Reasonable

The Court carefully considered whether alternatives such as warnings, reprimands, or ethics training could have addressed the misconduct. It concluded they could not.

The misconduct went to the core of trust and fiduciary responsibility. Ethical training would not cure deliberate dishonesty by a senior executive who already understood the implications of his actions. Retaining the employee would also have placed the employer in an ethical dilemma, forcing it either to disclose the misconduct or tacitly accept it.

In these circumstances, the Court found that dismissal was not only proportionate but the only reasonable response available to the employer.

Bonus and Mileage Claims: Discretion and Waiver Matter

In addition to wrongful dismissal damages, the employee sought payment of a field bonus and reimbursement for mileage.

The Court rejected both claims. The field bonus was governed by a discretionary policy that required specific eligibility conditions, customer approval, and proper documentation. The employee failed to establish that these requirements were met, and the employer did not act unreasonably in declining payment.

The mileage claim failed for different reasons. Evidence showed that the employee had not submitted mileage claims for several years and had done so only after dismissal. The Court accepted that he had consciously waived his right to reimbursement to support the company during financial hardship and could not revive that claim after termination.

No Reputational Damages for the Employer

Although the employer counterclaimed for reputational harm, the Court dismissed the claim. There was no evidence that the falsified certificate resulted in lost business, regulatory sanctions, or external reputational damage. The company mitigated potential harm by limiting disclosure, and speculative harm was insufficient to ground damages.

Lessons for Alberta Employers & Employees

This decision underscores several vital principles in Alberta employment law. 

Firstly, after-acquired cause remains available to employers, but it is not an easy escape hatch. Employers must still prove serious misconduct and demonstrate that termination was proportionate.

For employees (particularly executives), the case serves as a reminder that senior roles carry heightened ethical and fiduciary obligations. Conduct that might attract discipline at lower levels may justify dismissal when trust is central to the position.

For closely held businesses, the judgment confirms that courts recognize the fragility of trust-based relationships and will uphold termination for cause where dishonesty irreparably damages that trust.

Getz Collins and Associates: Calgary Employment Lawyers Advising on Complex Employee Terminations

If you are an employer or executive facing a termination dispute involving alleged misconduct, dishonesty, or after-acquired cause, the stakes are high. Termination for cause can expose both parties to significant legal and financial risk if mishandled. At Getz Collins and Associates, our employment law team provides strategic, straightforward advice to help clients navigate complex dismissal issues, protect their interests, and resolve disputes efficiently. To discuss your employment matter with our firm, please contact us online or call (587) 391-5600.