Hiebert v Zimco Instrumentation Inc., 2025 ABCJ 133 (Argento) comprehensively deals with several common issues in employment law. This includes the burden an employer must meet to establish: (1) a just cause termination, (2) failure by an employee to mitigate their losses, and (3) personal liability against the employee for lost of sales or business.
The Court found that the defendant had failed to justify the plaintiff’s for-cause termination on the grounds of incompetence/poor performance, dishonesty, and insubordination/wilful disobedience, and had failed to prove that the plaintiff had failed to mitigate his losses.
The Court also dismissed the defendant’s claim against the plaintiff for the lost sales and business it had allegedly suffered as a result of his actions.
This case is important as it serves as a reminder of the high burden courts will place on employers seeking to justify a for-cause termination. It is also important for clarifying what an employer must prove in a damages claim against an employee where the employer says the employee’s conduct cost them sales or business.
Facts
The following were some of the pertinent facts summarized by the ACJ:
- The plaintiff employee Richard Hiebert worked for the Defendant employer, Zimco Instrumentation Inc. for over 11 years.
- The plaintiff worked for Zimco’s internal sales team. His work required him to answer customer inquiries, build quotes, and return them to the customers. If the quote was accepted, the customer would send a purchase order back.
- There was relatively little evidence relating to the plaintiff’s work performance before 2021. The plaintiff had been issued a notice of disciplinary action in June of 2017 which alleged poor performance, but the defendant disclosed no other evaluations issued prior to the events in question in 2021.
- On March 12, 2021, the plaintiff had a performance review with his superior (the March Performance Review).
- The March Performance Review summarized several areas of concern but did not identify any specific quote or purchase order target the plaintiff was to meet, and did not warn the plaintiff that he would be terminated if his performance did not improve.
- The defendant never warned the plaintiff his employment was at risk at any point during the relevant time period.
- The plaintiff admitted that he had made several errors throughout the course of 2021, including by failing to respond to client inquiries.
- The plaintiff’s employment was terminated, purportedly for cause, on October 22, 2021. At the time of his termination, he was 39 years old.
- The Termination Letter cited the plaintiff’s alleged poor performance, poor attitude, issues with coworkers, and dishonesty as grounds for termination. The Termination Letter also expressly reminded the plaintiff of his obligations under the Confidential Information and Restrictive Covenant Agreement (the Restrictive Covenant) he had executed.
- Notwithstanding the fact that the plaintiff was not terminated until October 22, the defendant had come to the decision to terminate his employment on or around August 12, 2021.
- After his termination, the plaintiff moved into a new line of work, selling financial products.
Analysis / Conclusion
The issues in this case were as follows:
- Had the defendant met its burden of establishing just cause for dismissal on the basis of either (1) incompetence or poor performance, (2) dishonesty, or (3) insubordination or wilful disobedience?
- If the plaintiff was wrongfully dismissed, what were his damages for termination without notice (severance pay)?
- If wrongfully dismissed, did the plaintiff fail to mitigate his damages?
- Has the defendant proven its counterclaim that the plaintiff’s substandard performance caused significant business losses?
Incompetence / Poor Work Performance?
With regard to the defendant’s allegation that it had just cause to terminate the plaintiff’s employment on the grounds of incompetence and poor performance, the Court set out the tests for specific incompetence and incompetence as a cumulative cause:
[60] The law with respect to termination for incompetence or inability to perform was summarized in McDonald v Sproule Management GP Limited, 2023 ABKB 587 (McDonald). At para 72, the Court stated that an employer alleging cause for incompetence must demonstrate:
- The required level of job performance was communicated to the employee;
- The employee was given suitable instruction to meet the standard of performance;
- The employee did not meet or was incapable of meeting the standard;
- The employee had been warned that failure to meet the standard would lead to dismissal.
[61] The Court in McDonald also summarized the circumstances in which an employer could allege cumulative cause where specific instances of incompetence were otherwise insufficient on their own to justify cause. The criteria needed to demonstrate cumulative cause, as set out in Lowery v. Calgary (City of), 2002 ABCA 237 at para 3 (Lowery), are:
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The employee was given express and clear warnings about his performance;
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The employee was given a reasonable opportunity to improve his performance after the warning was issued;
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Notwithstanding the foregoing, the employee failed to improve his performance; and
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The cumulative failings “would prejudice the proper conduct of the employer’s business”.
The Court emphasized the fact that under both tests, the employee must have been given an express and clear warning about their performance, and an opportunity to improve.
With regard to the adequacy of the plaintiff’s performance, the Court noted that the defendant failed to provide any documentary evidence relating to the plaintiff’s sales performance, despite admitting that such documentation existed.
The Court found that there were some performance issues with the plaintiff, which were identified in the March Performance Review, and that the plaintiff had admitted he made errors due to being overwhelmed. The defendant witnesses testified that the plaintiff was the lowest performer on the inside sales team, but there was no documentation setting out performance numbers or those of the other team members by comparison.
With regard to whether the plaintiff had been expressly warned that he would be terminated if his performance did not improve, the plaintiff testified that he could not recall receiving such a warning, and three of the defendant’s four witnesses admitted that they have never given him such warnings.
The Defendant’s witness Mr. Geddes testified that he expressly warned the plaintiff on August 10, 2021 that his job was in jeopardy. However, the Court found that this warning was not given because: (1) it was not corroborated by two other managers he claimed to have discussed it with, (2) the alleged warning had not been included in the detailed quarterly report where a manager listed the issues with the plaintiff, (3) it was not highlighted in the detailed Termination Letter, and one would expect that a clear warning would have been, and (4) the Plaintiff was concerned about his job around the relevant time because of COVID’s potential impact on his employer, but had not recalled any warning.
The defendant also argued that, even had the plaintiff not been clearly warned that his job was at risk, he ought to have been able to discern this, as was the case in Lowery. The Court rejected this finding on the grounds that the plaintiff had only received a single written warning in 2017 that his job was in jeopardy.
The Court determined that the Plaintiff had not been given a reasonable opportunity to improve his performance before he was terminated. The Court noted that even if the plaintiff had been given a clear warning on August 10, Mr. Geddes admitted that the decision to terminate had been made on August 12:
[95] […] A warning without an opportunity to improve is effectively not a warning at all. Whether the Plaintiff would have improved after being warned of possible termination is not determinative as he was not afforded the opportunity […]
Dishonesty?
The Court began by summarizing the test for when dishonesty provides just cause for dismissal, as outlined by the Supreme Court of Canada in McKinley v BC Tel, 2001 SCC 38:
[99] The decision of the Supreme Court of Canada in McKinley addresses when employee dishonesty provides cause for dismissal (paras 48-57). The relevant principles may be summarized as follows:
a) The context of the alleged misconduct must be assessed;
b) Just cause 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 employees’ obligations”;
c) Proportionality underlies this contextual approach and “[A]n effective balance must be struck between the severity of an employee’s misconduct and the sanction imposed”;
d) The nature and seriousness of the dishonesty must be considered “in order to assess whether it is reconcilable with sustaining the employment relationship”; and
e) Dismissal for just cause may be available for “dishonesty going to the core of the employment relationship”.
The defendant specified a single incident of dishonesty, where the plaintiff falsely informed his employer that he had been on the phone with a client “all throughout the day” when in fact he had only spoken with the client once.
The Court found that this single incident of misconduct was not irreconcilable with the continued employment relationship. In making this finding, the Court emphasized the fact that the defendant did not terminate the plaintiff until nearly four months after the incident in question:
[109] The Plaintiff’s email was not irreconcilable with the continued employment relationship and was certainly not treated as such by the Defendant at the time. The Defendant did not terminate the Plaintiff immediately after this incident and allowed him to keep working for almost four more months. While this incident was noted in the Termination Letter, the main reason for his termination was not his June 29 email to Paul Geddes, but his ongoing performance issues.
Insubordination / Willful Disobedience?
The Court began its analysis by summarizing the legal tests for insubordination and wilful disobedience as just cause:
[112] Willful disobedience and insubordination as just cause are discussed by the Court in McDonald at paras 74-77:
a) Wilful disobedience involves (1) wilful defiance of a lawful, reasonable and clear order or instruction or refusal to carry out well-know and necessary policies and procedures (2) where this conduct effectively repudiates the essential condition of following an employer’s instructions;
b) Insubordination has been described as any refusal to follow instructions and conduct challenging an employer or its policies; and
c) All relevant circumstances must be assessed to determine whether summary dismissal is justified as a result of wilful disobedience or insubordination.
In support of its argument that it had just cause to terminate the plaintiff on the grounds of insubordination and wilful disobedience, the defendant relied on two incidents that took place in early October 2021, shortly before the plaintiff’s termination.
The defendant alleged that the first incident took place on October 1, 2021, where the plaintiff went to work while unvaccinated for COVID-19, in violation of the defendant’s vaccination policy.
On the morning of October 1, the plaintiff had sent an email to his employer with questions about the scope of the policy. He attended at the office later that day (prior to receiving a response to his email) but left immediately upon being informed that he was not permitted to work from the office while unvaccinated.
The Court found that while the plaintiff breached the defendant’s policy, it was not a basis for summary dismissal because: (1) it was a single instance of poor judgment and not wilful defiance, and (2) it was not referenced in the termination letter, suggesting the defendant did not consider it fundamental misconduct.
The defendant alleged that the second incident occurred on or around October 14, when the plaintiff had products couriered to his home, in violation of express instructions from his superior.
In finding that this incident did not constitute just cause, the Court noted the following:
- the defendant’s instructions to the plaintiff to not courier products to his home had not been documented
- in any event, the incident took place after the decision to terminate had been made, and
- in any event, the incident was not serious enough to justify for-cause termination.
Reasonable Notice Award
Having regard to the plaintiff’s age, his length of service, the character of his employment, and the availability of similar employment, the Court awarded damages based on a 10-month notice period.
Mitigation
The Court considered whether the plaintiff had failed in his duty to mitigate his damages in not looking hard enough for work and pivoting careers.
The Court applied the test recently stated in Plotnikoff v. Associated Engineering Alberta Ltd., 2023 ABCJ 200 (Plotnikoff ABCJ) aff’d 2024 ABKB 706 (Plotnikoff ABKB). In order to demonstrate a failure to mitigate, the employer must prove:
- the employee failed to take reasonable steps to find alternate employment; and
- had the employee taken those steps, the employee probably would have found new employment.
The defendant argued it was unreasonable for the plaintiff to a new career selling financial services. The Court rejected that argument, pointing to the Restrictive Covenant which would have restricted him from doing similar work.
The defendant highlighted that the plaintiff could have asked to be released from the Restrictive Covenant but had not done so. The Court downplayed this point, finding that the argument was too speculative (i.e. too much assumption; not enough evidence) and flew in the face of the fact that the Termination Letter expressly referenced the plaintiff’s obligations under the Restrictive Covenant.
The Court also made note of the fact that the defendant failed to provide any documentation regarding that state of the job market at the time of termination:
[151] The Defendant did not provide any third party, independent information on the job market faced by the Plaintiff in October 2021. For example, the Defendant did not submit any labor market surveys or job advertisements in its evidence. There were no documents whatsoever in support of its mitigation argument. The Defendant’s evidence was limited to its witnesses positing that the Plaintiff would have found another sales position. That is insufficient given the legal test that must be met.
[152] As further noted in Plotnikoff ABKB (para 138), evidence of a vibrant labor market may be sufficient, but that was not provided in this case. Furthermore, the Court takes judicial notice of the ongoing COVID-19 pandemic at the time of the Plaintiff’s termination. This reinforces the finding that the Defendant had to lead actual evidence of the positions available to the Plaintiff in October 2021 before it would be possible to infer that the Plaintiff would have probably found alternate employment.
Counterclaim: Damaged Business Relationships
The defendant argued that the plaintiff breached the implied terms of his employment contract on several occasions, thereby damaging the Defendant’s business relationships.
In support of its argument, the defendant cited Petrone v Marmot Concrete Services Ltd., 1996 CanLII 10344, a 1996 decision of the Alberta Court of Queen’s Bench. In Petrone, the defendant was successful in its counterclaim against a plaintiff who supervised the pouring of a deficient sidewalk, which had to be replaced at the defendant’s expense. Petrone cited no Alberta case law, instead applying British Columbia case law to find the plaintiff liable based on an implied term in his employment contract to supervise the work properly.
The plaintiff relied on the more recent cases of Breen v. Foremost Industries Ltd., 2023 ABKB 552 and PR Construction Ltd v Colony Management Inc., 2025 ABKB 293, which held that an employee will generally not be liable to their employer in negligence absent intentional or reckless conduct.
The Court found the case law cited by the plaintiff to be the current state of the law in Alberta, reasoning as follows:
[162] Petrone was cited by this Court in 864475 Alberta Ltd. v. Hilton, 2007 ABPC 297, but the employer’s claim against its former used car sales employee for damaging vehicles was dismissed. There are no other reported Alberta decisions that have followed Petrone to support a finding of employee liability to an employer. The Court finds that the decisions in Breen and PR Construction represent the current state of the law in this area in Alberta. As such, employees will generally not be liable to their employers in negligence or contract absent wilful or reckless misconduct.
The Court concluded that while the plaintiff had in fact failed to respond to several clients of the defendant, this behaviour was not wilful or reckless misconduct such that he would be personally liable.
Finally, the Court noted that the defendant had failed to prove damages or causation. The defendant had not called witnesses from the clients in question or otherwise submitted evidence as to why they did not give the defendant their business, and thus failed to prove that the plaintiff was the cause of the alleged loss.
My Take
This was an interesting case, dealing with many different issues.
Firstly, this case demonstrates once again that employers face a high bar when seeking to establish a just-cause termination.
A recurring theme throughout this case was the defendant’s failure to provide documentation in support of its claims. Among other things, the defendant failed to provide any documentary evidencing that the plaintiff’s performance was inadequate, that the plaintiff had been warned that he would be terminated if his performance did not improve, and that the plaintiff would have been likely to find new employment, had he made reasonable efforts.
Instead, the defendant attempted to provide this evidence by way of witness testimony. However, without any corroborating evidence, the Court placed little weight on the witness testimony.
This case also emphasizes the important principle that in order to justify a for-cause termination on the grounds of incompetence, an employer must provide the employee with a meaningful opportunity to improve. An employer is not allowed to simply issue a warning, wait a bit, and terminate the employee – they must provide the employee with a genuine opportunity to improve, and must remain open to the possibility of the employee doing do.
Another important takeaway from this case is that an employer is not necessarily entitled to raise incidents taking place months prior to the plaintiff’s dismissal as grounds for their for-cause termination. The longer an employee is permitted to keep working after an incident, the weaker an employer’s argument is that this incident was incompatible with a continued working relationship.
This case also highlights the importance of careful drafting of termination letters. At several points, the Court noted the absence of detail in the Termination Letter when considering whether certain allegations of fact were substantiated and whether several of the grounds for termination advanced at trial were considered by the defendant at the time of termination.
Finally, this case makes it clear that employers seeking to make a counterclaim against their employees for loss of sales/business face a high burden. In most cases, the court will treat damage caused by employees as a cost of doing business and will not usually impose liability on employees absent intentional or reckless conduct. As such, employers should think very carefully about the seriousness of the defendant’s misconduct before advancing a counterclaim.
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