British Columbia: When Outside Business Activities Can Be 'Just Cause' for Dismissal

​With the proliferation of remote work, employers are increasingly encountering situations where employees have taken on a distracting side hustle—or even a second full-time job. While employers have typically allowed or tolerated reasonable outside noncompetitive business activities that do not create a conflict of interest and are carried on outside of business hours, some employees appear to be willing to push the boundaries.

In a typical scenario, the issue of an employee's divided attention and loyalty comes to light after weeks or months of performance issues, usually coupled with a pattern of having difficulty reaching the employee during business hours. A recent case from the British Columbia Supreme Court addresses the issue of employees engaged in other businesses during work hours and provides welcome guidance for employers dealing with this problem.

In Dove v. Destiny Media Technologies Inc. (2023 BCSC 1032), the plaintiff was employed on a full-time basis with a technology company. She was terminated for "just cause" after her performance suffered as a result of her outside business activities. In the months leading up to the termination of her employment, the plaintiff spent at least three to four hours per week working on her side job during her employer's regular office hours. During this same time period, the plaintiff missed important deadlines, demonstrated excessive and unapproved absenteeism, neglected to comply with company policy and failed to respond to inquiries in a timely manner.

While the plaintiff did not have a written employment agreement, the employer had a code of conduct prohibiting actual or apparent conflicts of interest. Importantly, the employer in this case launched an investigation into the matter before terminating, which the court held, on the facts, served as a warning that the behavior could not continue. The employee, however, refused to participate in the investigation, which the court relied on in its analysis.

The court ultimately held that the employer had just cause for termination under the circumstances. In dismissing the plaintiff's wrongful dismissal action, the court emphasized that employees have a duty to provide full-time service to their employer, unless otherwise agreed.

This case confirms that moonlighting during regular business hours without the employer's authorization can be a basis for discipline, particularly when the employee's divided attention compromises their ability to effectively perform their duties and responsibilities: the rationale being that such conduct is inherently incompatible with the employee's obligation to devote their time and attention to their employer's affairs during normal working hours. While the outside distraction in this case was material, it did not approach a second, full-time commitment. This arguably increases the likelihood that an employer dealing with the second-job scenario would have grounds for a just cause dismissal, subject always to a detailed analysis of the facts and applicable policies and contractual terms, as well as the nature of any related investigation.

Employers are encouraged to ensure that they have well-crafted employment agreements and policies in place to clearly define expectations regarding side hustles and conflicts of interest. Requiring employees to disclose all outside activities as a term and condition of employment can help surface these issues; however, if an employee does disclose a commitment to another employer and that is not acted upon, then the outside activities will likely be considered to be condoned.

Steven Dickie and Carrington A. Hickey are attorneys with Osler in Toronto. Ben Kitching was a summer student at Osler in Toronto. © 2023 Osler. All rights reserved. Reposted with permission of Lexology.