Whether an employer is justified in dismissing an employee on the grounds of dishonesty is a question that requires an assessment of the context of the alleged misconduct. More specifically, the test is whether the employee's dishonesty gave rise to a breakdown in the employment relationship ... just cause for dismissal 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 employee's obligations to his or her employer.
The law in Canada asks whether the employee was proven dishonest and whether "that dishonesty was of a degree that was incompatible with the employment relationship." To dismiss for dishonesty, employers must assess the context of the dishonesty. Did the employee's dishonesty give rise to a breakdown in the employment relationship? This means that the employer must place the dishonesty in context of the whole job and forego firing the employee unless 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 employee's obligations to his or her employer."
When the dishonesty approaches a deliberate pattern of fraud, theft, secret commissions, sham, or misappropriation, most employers would reasonably conclude the dishonesty presents cause to fire the employee. Forging a manager's signature may be sufficient cause (Jewitt v. Prism, BCCA, 1981). In McPhillips, an employee billed unauthorized personal items ordered from one of his employer's suppliers to his employer. Upon discovering this, the employer terminated the employee for just cause and the British Columbia Court of Appeal upheld the firing.