Suing an employee successfully

Originally published in the Canadian HR Reporter, August 26, 2019

In extreme situations, an employer can do more than just fire an employee.

A Calgary company fired its employee after it discovered he had been accepting what they called secret payments from their suppliers for several years. Shutterstock

If an employee is negligent and costs their employer money, can the employer sue them after they’ve been fired? Most of the time, the answer is no.

But sometimes, if an employee deliberately costs their employer money, the answer to that question is yes.

Take the case of M-I Drilling Fluids Canada, Inc v Cottle, for example. M-I Drilling (MID) is a Calgary company that successfully sued a senior-level employee it had fired for accepting kickbacks from suppliers, arguing the payments cost them money because the company ended up paying more than it should for those supplies.

MID fired Bruce Cottle after it discovered he had been accepting what they called secret payments from their suppliers for several years. Cottle had signed a code of ethics when he began working for the company where he agreed he wouldn’t accept money from suppliers without first getting approval from MID.

MID discovered he had received a single payment from a supplier in 2012 and reprimanded Cottle, but he failed to disclose other payments and continued accepting kickbacks. Cottle argued he was entitled to the payments because they were sales commissions, but the court disagreed.

After he was reprimanded, Cottle went on a leave of absence for an unrelated medical condition. His replacement found unmarked white binders in a credenza that contained evidence of further kickbacks. It showed that Cottle was invoicing MID suppliers through his consulting company and collecting kickbacks to the tune of more than $88,000.

He was fired in September 2013.

But the story didn’t end there.