During employment, an employee may be required to handle company property, including physical and digital assets. Even if the employee played a significant role in developing the digital asset, such as a website, this may be considered company property based on the employment contract terms. Typically, an employment contract includes terms that specify that anything created as part of the job will be company property, as well as terms that describe the consequences of destroying company property. Both employees and employers must carefully consider these terms in the employment contract, as it may relate to whether a termination was justified

In this post, we will discuss when digital assets may be considered company property and the possible consequences of deleting these assets. In particular, we will examine how it relates to just cause dismissals and provide an overview of the test as it relates to how an employee has dealt with digital assets created by the employee but owned by the company. For instance, in the case discussed below, Park v. Costco Wholesale Canada Ltd., 2023 ONSC 1013, the court found that an employee was validly dismissed for just cause after he deleted a website he created for his employer. As a result, the employee was not entitled to damages after being terminated. 

What digital assets are considered company property?

Company property can include both physical and digital assets. This can include property created by the employee during their employment for the employer. The terms for company property are typically defined in the employment contract, so both employees and employers need to understand at the outset what falls under this category according to the contract. For example, digital assets could include websites, software source code, or company data.

Overview of Just Cause Dismissals 

It is important to consider company property, as employment contracts typically set out the consequences for destroying company property, which may include dismissals for cause. In other words, if an employee deletes any digital assets that are considered company property, this may be a factor in determining whether the employer validly terminated them and whether they would be entitled to any damages due to the termination

If an employee’s dishonesty resulted in a breakdown of the employment relationship, there are grounds to dismiss the employee for just cause. In other words, cause for dismissal can arise where the employee’s dishonesty violated an essential part of the employment contract, breached the inherent faith in the employment relationship, or is fundamentally inconsistent with the employee’s obligations towards their employer. An employer is justified in terminating an employee if the misconduct is serious and affects the core of the employment relationship. 

This finding depends on the facts of the case, which considers the entire context of the misconduct, including the nature and circumstances of the misconduct. In particular, the court can also consider the employee’s age, employment history, seniority, role, and responsibilities to determine if the termination was justified. Also, the court can consider the employer’s type of business, any relevant policies or practices set out, the employee’s position in the organization, and the degree of trust in the employee. 

Lastly, the court will consider whether reconciling the employment relationship is possible if the misconduct is not severe. However, suppose the misconduct is serious, resulting in a breakdown in the employment relationship. In that case, an employee may be terminated for cause and may not receive damages from their termination. 

Wilful Misconduct Includes Deleting Company Property 

In the Park case, the employee made a claim for wrongful dismissal against his employer, including 24 months of reasonable notice, lost coverage for his health benefits, damages for bad faith and human rights violations, and aggravated damages. The employee had worked for the employer for 20 years. During this time, he created a website for his employer, which he completed during work hours. The purpose of the website was to assist staff with file sharing.

The employee’s supervisor was aware of the employee’s work on the website and suggested that it be sent to management. The employee then sent a link to the website to management and stated that he was eager to share the website with his department, different regions, and international sectors of the company. The employer did not respond with any feedback on the website, and the employee went on medical leave.

A few months later, management could no longer access the website. The employee’s supervisor emailed him to provide access to the website. In the email, the supervisor also asked for ownership of the website to be transferred to management. 

Shortly after, the employee deleted the website, as he was upset and believed management was acting spitefully towards him by seeking ownership of the website. He also emailed management, stating that he had not received any feedback about the website for several months after sending it, so he believed no one was interested in using it.  

The employer restored the website, and the supervisor informed the employee. Before he received notice that the website was restored, the employee deleted it a second time, including clearing it from his computer’s recycling bin as a final deletion. He claimed that he did not know that the website was restored, and when he saw the website was up again, he thought he had not properly deleted it. Overall, the employer admitted that he deliberately deleted the website twice and made a misleading statement in his employment insurance application that his employer hacked into his account. 

Employee Terminated for Just Cause for Deleting Company Website 

Shortly after, the employee was terminated for cause, as he had deleted the website.

The employment contract included a section outlining causes for termination, which included willful damage or destruction of company property, acts of insubordination, including refusing to comply with management instructions and contemptuous behaviour or remarks to a manager. The contract also stated that all creative work, business ideas, and products an employee designs and develops as an employee or related to the employer’s business are the employer’s sole property. In this case, it was not disputed that the website was the employer’s property. 

The court found that by deleting the website not once but twice, the employee had destroyed company property, which was grounds for termination for cause, as set out in the employment contract. The court also found insubordination, as the employee used disrespectful and inflammatory language when responding to the request to give management ownership of the website. This also contributed to a finding that the employee was terminated for cause. Ultimately, the employer was not required to pay any damages for terminating the employee. 

Contact Haynes Law Firm in Toronto for Advice on Termination and Wrongful Dismissal Claims

Employers and employees should carefully consider the termination clauses set out in the employment contract and any factors that may be relevant for cause termination. Our experienced employment law legal team at Haynes Law Firm in Toronto can assist you with issues that arise from termination. For employees, our goal is to ensure that they understand their rights and receive maximum compensation in wrongful dismissal cases. Haynes Law Firm also assists employers in avoiding liabilities that may arise from terminations that are not permitted by the legislation. We are dedicated to finding the best resolution for you.

To book a consultation, please contact us online or by phone at 416-593-2731.