IN THE MATTER OF AN ARBITRATION  
BETWEEN:  
UNITED FOOD AND COMMERCIAL WORKERS, LOCAL 175  
(the “Union”)  
AND  
METRO ONTARIO INC.  
(the “Employer”)  
Grievance of Karen Smith dated February 5, 2021  
Arbitrator: Diane L. Gee  
Appearances:  
On behalf of the Employer  
Dirk Van de Kamer, Counsel  
Neetu Banait, Manager Human Resources  
Mathew Healey, Labour Relations Manager  
Iyaz Rahiman, District Manager  
Jason Mainwaring, Human Resources Director  
On behalf of the Union  
Kendall Yamagishi, Counsel  
Mike Windley, Union Representative  
Susan Viera, Union Steward  
Karen Smith, Grievor  
Dates of Hearing: August 27, 2021, January 28, February 4 and 11, March 2, May 11,  
and June 14, 2022.  
Date of Award: July 4, 2022  
[1] This matter is a grievance filed by the United Food and Commercial Workers, Local  
175 (the “Union”) on behalf of Karen Smith. Ms. Smith was discharged from her  
position as Meat Manager with Food Basics Store 883 (the “Employer”) on February 4,  
2021. The Discipline Report Form filed by the Employer states the reason for discharge  
to be: “Breach of Company Policies/Procedures, including, but not limited to, Breach of  
the Company’s Purchase Policy.”  
[2] It is alleged by the Employer that Ms. Smith violated the policies when she kept  
chicken, that had come into the store as a mispick, on a shelf in the backroom rather  
than putting the chicken out for customers to buy; wrapped two packages of chicken  
together; priced the packages below retail value; and purchased the chicken herself.  
The Union submits Ms. Smith was not made aware of the policies, or that the penalty for  
a violation of the policy was discharge. The Union submits the policies were not  
enforced consistently. The Union further submits Ms. Smith was following the practice  
in the store and what she had been trained she was permitted to do. She had no  
subjective intent to violate the policies.  
The Policies  
[3] Entered into evidence by the Employer is an Employee Purchase Policy dated  
August 2008 which provides, in relevant part, as follows:  
5. All employee purchases must be at regular retail, except those items that are  
normally “Reduced for Quick Sale” and available to all customers. Employees are  
not entitled to discounts. Further, employees are prohibited in all cases from  
helping themselves to, or purchasing product, which is or may be destined for the  
garbage; or which is otherwise not sellable or available to all customers. For  
clarity, this includes products, which may appear to be of little or no value.  
6. All purchases from all departments must remain as individual items. There can  
be no grouping of dissimilar priced items in one package with the individual prices  
listed on one package. Every purchase must be packaged as it would be for a  
regular customer.  
7. Under no circumstances may an employee weigh, price and package his/her  
own selections, nor is an employee permitted to check out any member of his/her  
family or relatives. Meat department employees will not cut or prepare their own  
meat requirements.  
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9.  
Violation of the foregoing could lead to disciplinary action, up to and  
including dismissal.  
[4] The Employee Theft Policy entered into evidence, dated August 29, 2008, reads as  
follows:  
Employee theft, unfortunately, is a reality in the retail business. As a company,  
we would rather deter employee theft, as opposed to having to make decisions  
on whether to terminate employment and have police charges laid.  
When you were hired you are given a copy of the Employee Purchase Policy.  
This policy is designed to protect both the employee and the Company's assets.  
It clearly outlines how product is to be purchased and removed from our stores by  
employees. All too often employees, especially new ones, do not understand the  
serious consequences of either removing product from the store without  
payment, or consuming product on the premises without payment, even though it  
has been made clear that breach of trust will lead to termination.  
The outcome of both of the above can result in the employee being terminated  
and, where it is deemed appropriate, charged by the police. In the past year,  
employees have had their employment terminated for taking product of nominal  
value (i.e. $1.00 or less). Further, employees have also faced serious  
employment consequences, (including termination of employment) for helping  
themselves to, or purchasing products, which may be destined for the garbage,  
or are otherwise not sellable or available to all customers. We do not want a  
revolving door effect in the Company, whereby we have to hire new employees to  
replace those terminated. We would obviously prefer to deter employees from  
stealing.  
People steal for many reasons. Among these are: peer pressure; no one will  
notice; other people are stealing; the Company won't miss a couple of dollars. As  
you imagine the repercussions of losing your job in this fashion, especially your  
first job, can be devastating.  
The purpose of this policy is not to insult or embarrass the vast majority of our  
employees who would never consider engaging in these activities, but rather, to  
re-educate the few who might, as well as inform those employees who are new to  
the organization.  
In this regard, we sincerely hope that by reading this policy, those of you in the  
latter group have been convinced that theft is a very serious matter, and not  
worth jeopardizing your job. We trust that you will think very carefully before  
doing anything of this nature which could affect your employment and the assets  
of the Company.  
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The Evidence  
[5] The basic facts of what occurred are not in dispute. On January 21, 2021, eight  
trays of organic chicken were delivered to Food Basics Store 883 in error. Each of the  
trays contained two chicken breasts. All trays had a best before date of January 31,  
2021. Food Basics does not sell organic chicken breasts. When an item that the store  
does not sell is delivered to the store in error, the item received is known as a “mispick.”  
[6] The mispick was received by an employee by the name of Robin who took it to  
another employee by the name of Michele Weir. Both Robin and Ms. Weir work part-  
time in the meat department. Ms. Weir told Robin to leave the chicken in the meat  
cooler for Ms. Smith to deal with the next day. Ms. Weir testified she gave Robin the  
instruction to leave the chicken for Ms. Smith to deal with as “part-time employees can’t  
price meat.”  
[7] On January 22, 2021, when Ms. Smith was next at work, she cellophane wrapped  
the trays of chicken breasts into four bundles of two trays each. On January 23, 2021,  
Ms. Smith priced two of the bundles of the chicken. Ms. Smith put a sticker with a  
scannable bar code, written description, and price of $5.00, on each side of each  
bundle. There is a dispute as to how Ms. Smith came to price the chicken breasts that  
is reviewed in the summary of the evidence below. When Ms. Smith paid for the  
chicken, she went through a cash register with a cashier. She was only charged $5.00  
for each bundle. There is no evidence as to when Ms. Smith realized she was charged  
only once for each bundle.  
[8] On January 24, Ms. Weir found the remaining two bundles on the shelf in the meat  
cooler behind a box and took photos. She left the chicken on the shelf out in plain sight.  
Ms. Weir sent the photos to Greg Smith, the Store Manager, and asked him to call her  
the next morning. To avoid confusion between Ms. Smith, the grievor, and Mr. Smith,  
the store manager, I refer to Mr. Smith as Greg. When Ms. Weir spoke to Greg, she  
told him where she had found the packages of chicken. Greg called Loss Prevention.  
[9] Robin was going to purchase the remaining two bundles of chicken but told Ms.  
Smith she was no longer interested, and that Ms. Smith could have them. As with the  
first two bundles, Ms. Smith put a sticker with the scannable bar code, written  
description, and price of $5.00, on each side of each bundle. On January 26, 2021, Ms.  
Smith purchased the remaining two bundles. Again, she went through a cash register  
with a cashier and was charged only $5.00 for each bundle. There is no evidence as to  
when Ms. Smith realized she was charged only once for each bundle.  
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[10] On February 1, 2021, Ms. Smith was called to a meeting with Loss Prevention. In  
attendance at the meeting was Mr. Falba from Loss Prevention, Greg, and Amber  
Cherrey a Union Steward. Following the meeting Ms. Smith was dismissed.  
[11] The evidence in respect of facts that are in dispute is as follows. Ms. Weir testified  
employees did leave items they wanted to purchase on the shelf in the meat cooler and  
she had seen packages wrapped up with cellophane. Ms. Weir was suspicious when  
she saw the bundles of chicken because they appeared hidden behind a box and were  
wrapped in cellophane. She did not bring the chicken to Ms. Smith’s attention but rather  
told Greg about it. Ms. Weir testified that after Ms. Smith was terminated, the practice of  
allowing employees to store purchases on the shelf for later purchase was no longer  
allowed. Ms. Weir acknowledged, she had filed complaints concerning Ms. Smith’s  
treatment of her with Greg on two occasions in the past year, but stated, as at the time  
of the incident, they were getting along. Ms. Weir worked part-time in the meat  
department but also worked some hours in the grocery department due to her conflict  
with Ms. Smith. After Ms. Smith was dismissed Ms. Weir started working 40 hours a  
week in the meat department.  
[12] Mr. Falba conducted an investigation. It was determined Ms. Smith had priced the  
four bundles of chicken as $5.00 each and then purchased them. The sales receipt  
retrieved by Mr. Falba from the system shows the product to be “MLEAF PRIME  
CHICKEN BREAST $5.00.” His investigation also showed that a tray of two chicken  
breasts, sold at the same time to another customer, were sold for $15.66. Mr. Falba  
considered the chicken breasts sold to the other customer for $15.66 to be comparable  
to one tray of the chicken breasts purchased by Ms. Smith except they were not  
organic. Mr. Falba testified the ones purchased by Ms. Smith could have been sold at a  
higher price.  
[13] At the February 1, 2021, investigation meeting Mr. Falba asked the questions and  
was the only one to take notes. As is usual when the person doing the questioning is  
also the note taker, the notes are not written in complete sentences, and do not capture  
everything that was said at the meeting. Neither Ms. Smith nor Ms. Cherrey were given  
advance notice as to what the meeting was about. At the time of this meeting, Ms.  
Smith did not know Ms. Weir had taken photos of the chicken and the Employer knew  
the best before date. Mr. Falba agreed Ms. Smith seemed nervous during the meeting.  
[14] The notes taken by Mr. Falba indicate that he asked Ms. Smith: “can you take me  
through the process of pricing items that come in unlabeled in the meat department?”  
Ms. Smith responded: “Yep we would look in the store to see what it's priced at put a  
code if there is one available.” She was then asked what she would do if there was no  
item to compare it to, and she said she would look for a similar item and try to price  
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match it. Ms. Smith was then asked: “what would be the price of prime organic chicken  
breast?” and she responded, “we went with like the 5$ prime chicken.” The notes do  
not indicate how but it is apparent the questioning had moved from a hypothetical  
situation involving “unpriced items” to the situation involving the organic chicken  
breasts. Mr. Falba suggested to Ms. Smith that $5.00 sounded low, and Ms. Smith  
responded the trays were not family packs; they had a few breasts; and they were short  
code dates. She said, after pricing the chicken: “we put some out and I put some in the  
back.” When asked why she left it in the back she responded: “I thought to buy it later  
that day.” Ms. Smith was asked if she is allowed to put items in the back for herself and  
she responded: “no we are not allowed to.” When asked why she did it she responded:  
“I don't know.” Ms. Smith said she did not price them by weight “for inventory purposes”  
and when asked why the chicken would be sold at much lower than retail Ms. Smith  
said: “they were short code date.” When asked “why did you price them and then buy  
them for yourself?” Ms. Smith responded: “I don't know I guess I wanted it I didn't know  
why I did it I didn't do the right thing.” When asked: “You didn't put them out because  
you didn't want anyone else to get them at that price?” Ms. Smith responded: “I should  
have put them out and waited for them to sell.” Finally, Miss Smith was asked: “is it OK  
to do that?” and she answered: “no it's not you are right.”  
[15] Lee Zwolman is Director of Retail Execution for meat and produce with Metro and  
has 10 field specialists reporting to him. He testified the chicken breasts were delivered  
directly to the store by Maple Leaf Meats. When there is a mispick the store manager is  
to contact a field specialist and get direction on how to proceed with the product. He  
expected, but could not say, if that process was followed at store 883. He testified he  
believed one tray with two Maple Leaf chicken breasts would be priced at around  
$15.00. Because the chicken in question was organic it would cost more. Because  
Food Basics is a discount banner it does not sell organic meat. The best before date  
on the chicken was January 31. Mr. Zwolman testified Food Basics would not sell the  
chicken on that date or after. A day or two prior to the best before date the product  
would be considered for a price reduction. A “short code” is something that is applied to  
a product coming close to the best before date. Mr. Zwolman testified that is done  
through a field specialist or at the direction of head office. Mr. Zwolman testified the  
chicken breasts in issue would not have been short coded before they were purchased  
by Ms. Smith.  
[16] Greg Smith has been with Metro for 20 years and was the store manager of store  
883 for 18 months from late 2019 to the beginning of 2021. When Ms. Smith was  
terminated, Greg had been the store manager for approximately one year. He was not  
at the store when Ms. Smith became meat manager and did not know what training she  
had received. He does not know if she received any training on how to handle  
mispicks. Greg testified that he was present at the February 1, 2021, meeting and Ms.  
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Smith said, on two occasions, that the chicken was short coded. He testified Ms. Smith  
seemed nervous and did not deny buying the chicken. When asked if he remembered if  
Ms. Smith said anything about the chicken being a mispick item Greg responded: “I  
believe it came up yes.” Later in his testimony Greg was asked if Ms. Smith had said  
during the meeting that she had reduced the price because it was a mispick and Greg  
responded: “a mispick and short coded.”  
[17] Greg testified that the pricing of mispicks had to be approved by the manger or  
assistant manager. He never knew of Ms. Smith pricing mispicks without his  
authorization. He testified employees were not to reduce product and then set it aside to  
purchase it later; reduced product was to be made available for purchase by customers.  
Mispicks would only be made available to employees, and not the public, if the product  
was not saleable. For example, a product that was not to be sold individually as it was  
lacking the necessary labeling could not be sold to the public. These items would be  
offered to employees to purchase and not to the public. Greg was not aware of a  
discount bin and denied mispicks, other than those that were not saleable, were offered  
to employees first. He testified the same policies were in place before Ms. Smith’s  
termination as after. He has never heard of taking two packages of chicken and  
wrapping them together. He has never heard of putting a price label on both the top  
and the bottom of a package.  
[18] According to Greg, the Theft Policy and the Employee Purchase Policy were posted  
in the lunchroom and in the hallway of the management offices. Later he testified that  
he is not sure if they were posted in both locations or only one or the other and then: “I  
don’t remember where they were, but they are there now.” After more questioning  
probing his knowledge of whether the policies were posted, Greg stated that they must  
have been posted as they are part of the loss prevention audit. When asked where in  
the lunchroom the policies would have been posted, Greg testified they were posted on  
the wall. When told the Union’s evidence was, after Ms. Smith’s termination, they were  
posted on the fridge, Greg testified that they got a new fridge after Ms. Smith was  
terminated and, it is common practice to post it on the fridge, so it would have been  
posted on the new fridge. When asked if it was posted on the old fridge, Greg testified “I  
can’t say it was on the old fridge, but I posted it on the new fridge.”  
[19] Ms. Smith either does not recall or denies she made most of the statements in Mr.  
Falba’s notes. She has no recollection of saying she was familiar with the company’s  
policies. Ms. Smith does not recall saying she knows she did not do the right thing, that  
she should have put the chicken out for the public to purchase or what she did was not  
okay. She does not recall saying the chicken had short code dates or saying that she  
put some of the chicken out for the public to purchase. She does recall making mention  
that the chicken breasts were mispicks. Ms. Smith testified she was flustered, shocked,  
7
and surprised during the interview and was unable to explain herself well. Ms. Smith  
said that she was asked a lot of things very quickly and she felt like “in a head spin.”  
[20] Ms. Smith testified the only training she received as to her role as meat manager  
was provided by the prior meat manager, Shelley. Ms. Smith identified a mispick as an  
item that was not intended for the store. According to Ms. Smith, a mispick is an item  
that does not show up on the supplier’s invoice and the store is not charged for it.  
When the mispick is an item the store does not sell, there is no code in the store’s  
system for pricing the item.  
[21] Ms. Smith testified she has never been shown a policy on how to handle mispicks  
and only knows what she was taught by Shelley. According to Ms. Smith, Shelley told  
her to price it cheaply and then see if any of the employees were interested in  
purchasing it. Shelley told her: “Just price it to get them out of the store.” According to  
what she learned while working with Shelley, she was allowed to put a mispick aside for  
herself. Ms. Smith testified that mispicks did not got out on the floor to sell to customers,  
they are left in the backroom for the staff to purchase and that has been the way  
mispicks are handled for as long as she can remember. No one, including the Store  
Manager, ever told her to do it any differently.  
[22] Ms. Smith testified she had not seen the Employee Purchase Policy before this  
proceeding. When she was hired in 2004, she signed a document entitled “Associate  
Summary of Sign Up Documents & Acknowledgement Form.” It states that she  
acknowledges receiving and recognizes it is her responsibility to read, understand and  
abide by a list of 12 policies. On the list is the Employee Purchase Policy and the Theft  
Policy. According to Ms. Smith she did not receive any of the policies listed. The copy  
of the policy put into evidence is dated 2008.  
[23] Ms. Smith testified she had seen other employees purchase mispicks that had been  
left in the back for employees to purchase. Mispicks that were meat, were left on the  
shelf where Ms. Weir found the bundles of chicken breasts that Ms. Smith priced and  
purchased.  
[24] When pricing the chicken, Ms. Smith testified she used the code “5883” which was  
the code for similar chicken breasts that had been sold in the store during a sale. By  
putting in the code 5883, the scale produces a sticker to be placed on the item with a  
scannable bar code, a written description of the product and the price of $5.00. Ms.  
Smith testified, as the trays did not have a scannable bar code on them when they  
arrived at the store, it was not possible to simply put a discount sticker on them. They  
had to bear a scannable code. Ms. Smith testified she did not price them by weight as  
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the sale would register in the inventory system and would result in an inaccurate  
inventory count.  
[25] Ms. Smith did not speak to the manager as this was not something she was taught  
she needed to speak to the manager about. According to her training from Shelley she  
was to price it and leave it for the staff to purchase. According to Ms. Smith, she had  
priced mispicks and the staff purchased them in the past and the store managers at the  
time were aware. Mispicks are not put on the floor to sell to the public. The store  
managers in question were Dan Poole, Murray McKone, John Kennedy and Greg  
Smith. None of the store managers told her she was not to do this.  
[26] Amber Cherrey has been a Union steward since 2013. Ms. Cherrey identified a  
mispick as something the store does not carry. She testified that, when dealing with a  
mispick, you are to find an equivalent product, discount the price by no more than half,  
and let employees buy it. Ms. Cherrey testified the store has trays of two chicken  
breasts on sale two or three times a year for $5.00 and that was a comparable item.  
When there is a mispick, staff get first pick and, what is left over, goes out in a cart  
marked “reduced” for the public to purchase. According to Ms. Cherry, after Ms. Smith  
was terminated, an Employee Purchase Policy was posted on the fridge in the  
breakroom that had never been displayed anywhere before. That was the first time Ms.  
Cherrey had seen the policy. After Ms. Smith was terminated, Ms. Cherrey wrote a letter  
of support in which she indicates that the same thing had happened many times in the  
past and nothing was done until it happened to Ms. Smith.  
[27] Ms. Cherrey testified that Shelley, the prior Meat Manager, would reduce meat that  
was close to the best before date, keep it in the cooler and then buy it at the end of her  
shift. Ms. Cherrey testified that she saw meat that employees had set aside to  
purchase later sitting on the shelf in the meat cooler where Ms. Weir found the chicken.  
[28] Ms. Cherrey testified that the Produce Manger once received individual salad  
dressing packages in error as the store does not have a fresh salad bar. The Produce  
Manager marked them all twenty-five cents and left them for employees to purchase.  
None of the packages were sold to the public. Ms. Cherrey also saw the Produce  
Manager take flowers and write “free” on them and leave them for the employees to  
take. Once, shampoo the store did not carry, was delivered to the store and Dan Poole,  
the store manager at the time, said to her and other employees: “if you want it set it  
aside and then set it up front in the reduced cart.” Ms. Cherrey testified the same thing  
happened with another store manager, Murray McKone, with shampoos, diapers and a  
bunch of grocery items. She also testified the same thing happened with a manager by  
the name of John Kennedy. In the past, the previous Scan Coordinator would tell  
employees as mispicks came in so employees could go to the back and pick out what  
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they wanted to purchase. No one was disciplined. Prior to Ms. Smith’s termination, Ms.  
Cherrey was under the impression that employees were allowed to do this, and it  
happened frequently.  
[29] Ms. Cherrey was in attendance at the meeting held on February 1, 2021 and was  
shocked that Ms. Smith was being terminated for pricing and purchasing the mispick.  
Ms. Cherrey recalls Ms. Smith saying at the meeting that she based the price on a  
$5.00 tray of chicken breast that had been sold in the store. Ms. Cherrey recalls Ms.  
Smith saying the chicken was a mispick and Mr. Falba then asking her what a mispick  
is. Ms. Cherrey disputes that Ms. Smith said she had reduced the chicken because it  
was short coded; Ms. Cherrey testified Ms. Smith said it was a mispick.  
[30] Sylvia Noble has worked in store 883 since 2004 in different departments including  
the meat department. She testified that, in the bakery department, when product came  
in that was damaged, she would often slap a reduced sticker on it. Ms. Noble testified  
that the store once received bagels that were not packaged but the store does not have  
bins for selling bagels separately. Greg told Ms. Noble to package them up and put free  
on them and let the employees have them. He said: “make them disappear fast.” Ms.  
Noble said she bagged the bagels and let Greg do the rest. After Ms. Smith was fired,  
an employee in the meat department offered Ms. Noble the chance to buy a roast with a  
$5.00 sticker on it; she did not buy it, but another employee did. According to Ms.  
Noble, prior to Ms. Smith’s termination, it was the practice to wrap mispicks up, put a  
reduced price on them and sell them to workers and never to the public. Ms. Noble  
worked in the meat department in 2012 and she said, when mispick items came in, you  
would wrap them up, price them below what you think they would regularly sell for and  
ask the other employees if they would like to purchase it. It never hit the floor.  
[31] At the time Ms. Noble was being trained by Shelley, Shelley would often grab stuff  
up, put a price on it, put it in a meat cart and then let the workers know there a good  
price on meat for whoever wants it. Ms. Noble testified that employees would place  
meat items that they wanted to purchase on the shelf in the meat cooler where Ms. Weir  
found the chicken. Ms. Noble testified she believed this was allowed and everyone did  
it. No one ever told her it was not allowed. After Ms. Smith was terminated the  
employees were told they were no longer allowed to store things for later purchase in  
the back of the store.  
[32] Ms. Noble disputes that reductions were always done by the manager. She  
testified that she herself had made reductions without management direction. She  
testified that, in roughly 2012, when Dan Poole was the manager, when there was a  
large quantity of meat coming close to the short code date, he would tell her to use her  
own judgment, reduce it and then offer it to employees. She usually reduced it by half.  
10  
Shelly had trained her to wrap a couple of packages together with saran and put a price  
on it. They do that in other departments as well. In produce, they wrap two or three  
salads together and put a price on it. She testified that she has priced mispick items on  
her own; Mr. Poole told her to use her own judgment, she didn’t need to keep running to  
him. She did not inform Mr. Poole when a mispick came into meat.  
[33] Mr. Poole was the store manager at store 883 from December 2011 to April 2013.  
He testified that while he was the manager the policy was that all reductions had to go  
through the manager, and it had to be put on the floor. He testified, Ms. Smith was in  
charge of frozen at that time and she had the authority to reduce mispicks as long as he  
knew about it. She would tell him she got the wrong case of product and ask if she  
could reduce it to get rid of it. He testified it was not permissible for employees to  
reduce product without management approval and set it aside in the back for  
themselves if it could be sold to the public. Mr. Poole testified that he generally  
authorized reductions of 30 50 % for meat coming close to the expiry date. Mr. Poole  
denied telling Shelley or any other employee, they could reduce items without  
management approval, keep items in the back to purchase later, make discounted items  
available to employees first, or not put discounted items out on the floor for public  
purchase. He has never heard of employees taking saran wrap and wrapping two items  
together.  
[34] Ms. Smith was not a department manager when Mr. Poole was the store manager.  
He cannot recall having a conversation with Ms. Smith about mispicks and does not  
recall ever saying to her that she could not discount a mispick without going to the  
manager first. He does not recall telling Ms. Smith that she could not purchase a  
mispick herself if it had not already been offered to customers. Mr. Poole testified “I  
would have said reduce it blow it out. I would have given her permission if she asked  
me.” Mr. Poole does not recall telling Ms. Noble not to come to him every time and to  
use her judgment on reductions, and it did not sound like something he would say.  
[35] When Mr. Poole was asked about Ms. Cherrey’s evidence that mispick shampoos  
were offered to employees before going out on the floor, Mr. Poole explained that during  
a reline, “we’re blowing stuff out and pretty much everyone has a clear gun in their  
hand”. He then testified, “I don’t remember and I don’t know if I said here yeah go  
ahead just hide it.” When it was put to Mr. Poole that Shelly would price mispicks and  
buy them herself, Mr. Poole’s response included the comment “I’m sure she bought it  
herself the way she was, but it was supposed to hit the floor first.”  
[36] Mr. Poole testified that the Employee Purchase Policy is updated every year. The  
one hanging up now would be dated 2022. Mr. Poole testified the Policy was hanging  
up in the store, but he could not recall where. When Mr. Poole was told that Ms. Smith  
11  
testified she had not seen it hanging up anywhere in the store, Mr. Poole stated it is part  
of the loss prevention audit. Mr. Poole does not specifically recall putting the policy up  
when he was the store manager at store 883.  
[37] Murry McKone was the store manager at store 883 on three separate occasions;  
2004-2011; 2014-2019 and 2021 to the present. He testified that he would be told about  
a mispick and would then discuss putting a price on it to move it out. Employees were  
not to decide on a price without speaking to management. When asked if he was aware  
of a practice whereby employees would put mispicks in the back to purchase later, Mr.  
McKone testified “it was to go out on the floor but I can’t be everywhere.” He did not  
give permission for employees to reduce items without his authorization or to set them  
aside in the back for purchase later. Mispicks were only sold to employees and not the  
public if they were not saleable to a consumer for reasons such as not having the  
correct labelling on them. Mr. McKone used the example of the bulk bagels that were  
put into bags and a price was put on them to move them out.  
[38] Mr. McKone was the store manage when Ms. Smith was trained as the meat  
manager. Mr. McKone never told Ms. Smith that she could not price a mispick herself  
or that she could not purchase a mispick herself before putting them out for customers.  
Mr. McKone then stated that mispicks are to be brought to the attention of management  
and we would discuss a price to put on it. Mr. McKone testified there was no cart in the  
back room for reduced items and there was no shelf in the meat cooler where  
employees left meat items to purchase later. Mr. McKone does not recall telling  
employees they could purchase shampoo that came in as a mispick before putting them  
out for customers to purchase and said he would never do that.  
[39] Mr. McKone testified that the Employee Purchase Policy and the Theft Policy are  
on the wall upstairs in the lunchroom and down in the hallway around the punch clock.  
Mr. McKone also testified the policies are part of the training employees receive when  
they are hired.  
Employer’s Submissions  
[40] The Employer submits the employees of Food Basics work largely unsupervised  
surrounded by products they consume or use every day. There is typically only one or  
two management employees at the store, and, at times, there is no management  
presence. The Employer clearly conveys to employees the importance of honesty and  
has done so for decades using the same policies that were in place at Food Basics  
Store 883 at the time of Ms. Smith’s termination. The Employee Theft policy makes it  
very clear that, when an employee is hired, they are given a copy of the Employee  
Purchase Policy which sets out the conditions and the rules for purchasing product. The  
12  
message delivered to employees by way of the Employee Theft policy is helping  
yourself to product, purchasing product at discounted rates, and otherwise behaving  
dishonestly, are going to cause you to lose your job. The Employee Purchase Policy  
makes it clear that all employee purchases must be at regular retail price, employees  
are not entitled to discounts and are not entitled to help themselves to product that may  
not be sellable to the public. Further, purchases from all departments must remain as  
individual items; there can be no grouping of dissimilar priced items in one package and  
every purchase must be packaged as it would be for a regular customer. The policy  
goes on to indicate that, in no circumstances may an employee weigh, price and  
package his or her own selections. Meat department employees are not permitted to  
cut or prepare their own meat requirements.  
[41] The Employer submits that, despite her testimony of never having seen these  
policies, Ms. Smith signed off as having received, and acknowledged her responsibility  
to read, understand and abide by, a series of policies, two of which are the Employee  
Purchase Policy and Employee Theft Policy when she was hired in 2004. The  
Employer submits the evidence of the store managers is consistent that these policies  
have always been posted in the store and that having them posted is part of the annual  
loss prevention audit process. The Employer argues that, given the low management  
presence, there is nothing else that can be done other than to enforce and  
communicate these policies.  
[42] When it comes to dishonesty, which can take many different forms in an  
unsupervised grocery store, there is strong and almost universal recognition in the  
jurisprudence that dishonesty of this nature fundamentally undermines the employment  
relationship. Further, it is evident that arbitrators recognize and accept the importance of  
deterrence in an industry that is vulnerable to employee theft. Cases in the retail sector  
consistently find that theft and other similar forms of dishonesty warranted termination  
unless there are significant mitigating factors. The most important mitigating factor  
recognized in the case law is a prompt admission of wrongdoing by the grievor which  
has led arbitrators to conclude that there is a real potential for the restoration of trust; in  
the absence of such an admission discharge is routinely upheld.  
[43] The Employer submits, Ms. Smith’s actions cannot be characterized as spur the  
moment but rather were planned and deliberate. They took course over the span of  
several days. The Employer submits it could not possibly be expected to trust Ms.  
Smith in the future. Ms. Smith purchased improperly discounted chicken on January 23  
and did it again on January 26. In the interview with Loss Prevention on February 1,  
2021, Ms. Smith stated she reduced the chicken because it was short dated. The  
Employer argues Ms. Smith said the chicken was short dated because she thought it  
was a safe position to take as the chicken was long gone along with the best before  
13  
date sticker. What Ms. Smith did not know was that Ms. Weir had taken pictures that  
established the best before date was January 31, 2021. The Employer submits if, as  
Ms. Smith, Ms. Noble and Ms. Cherrey testified, it was normal to do what Ms. Smith did,  
why did Ms. Weir consider it odd, worthy of taking pictures and report it to management.  
[44] When it became evident to Ms. Smith that the existence of the photos meant that  
the short code angle was not going to work, she shifted her story. In the Union's  
opening statement, it was said that Ms. Smith went out to the floor and compared this  
mispick product with similar small packs to arrive at a price. But now, through the  
evidence of Ms. Smith, it is apparent she never went out and compared anything.  
When the evidence was adduced, the Union’s case moved yet again with Ms. Smith  
asserting there was a practice whereby store managers allowed employees to purchase  
mispicks at whatever price they chose and to never bother telling management about it.  
This alleged practice, according to the Union, dated back to Shelly, a member of the  
bargaining unit who did not testify in this proceeding, who had no authority to permit  
employees to steal. The Employer submits, even if Shelley had testified, and had  
supported Ms. Smith’s version of events, it would not amount to a defense for Ms.  
Smith’s actions. The Employer submits an adverse inference must be drawn from the  
Union’s failure to call Shelley.  
[45] In contrast, the store managers who have run store 883 for most of time since 2004  
were very consistent, it was never a practice at this store whereby employees were  
entitled to put mispicks aside, price them as they pleased, and then not even put them  
up for customers but rather take them for themselves. If, the Employer argues, it is  
accepted that Ms. Smith did not say she priced the chicken low because it was short  
dated and the managers who testified are not believed, when you consider Ms. Smith’s  
actions there's no conceivable honest explanation for why she double wrapped the  
chicken packages together and then applied a highly reduced $5.00 label on both the  
top and the bottom of the double packs. According to the Employer, Ms. Smith’s  
dishonesty is further highlighted the fact that she goes to the cash with two double  
packs of chicken, with a $5.00 price on the top and a $5.00 price on the bottom and she  
allows the cashier to only charge her for one of them. It is the Employer’s submission,  
there can be no argument that this is not obviously dishonest behavior. The Employer  
argues such activity alone has got many people terminated over the years. This, the  
Employer submits, is a case of planned and deliberate dishonesty and a grievor who  
has refused to admit before you that what she did was wrong and dishonest. The  
Employer submits there is no basis to interfere with the decision to terminate  
[46] The Employer’s summary of the evidence is as follows. Eric Falba established that  
Ms. Smith purchased the drastically reduced chicken on January 23, and again on  
January 26, 2021. Mr. Falba found it odd that prime organic chicken was priced so low  
14  
and that each package weighed precisely one kilogram. At the investigation meeting he  
was the only person taking notes and those notes reflect that Ms. Smith outlined to him  
the process for mispicks and explained that you would go out to the counter to find a  
comparable product. Mr. Falba challenged the $5.00 as very low and, in answer, Ms.  
Smith said they were short code dates. According to the Employer this evidence is  
critical, and the evidence of Mr. Falba is to be preferred over that of Ms. Smith.  
According to Mr. Falba’s notes, Ms. Smith referenced short code dates on two  
occasions during the meeting. Greg confirmed she referred to short coded. Ms. Smith  
was clearly lying at the February 1, 2021 meeting and she lied when giving her  
testimony.  
[47] Ms. Smith also told Mr. Falba that she put some of this chicken out onto the floor  
and that was also a lie. That is important as it goes to the grievor’s credibility and  
establishes she knew the chicken should have been sold to the public. Ms. Smith said in  
her interview with Loss Prevention that it was not okay to leave product in the back of  
the store to purchase later. When she was asked why she did it, she answered “I don’t  
know.” This is critical as she did not say that she did it because that is how she had  
been trained by Shelley. The Employer asserts that Ms. Smith even had a second story  
for the price she put on the chicken at the investigation meeting; she referenced  
switching from blue label chicken to green label chicken. No one, including the grievor,  
knows what that means. Ms. Smith also couldn’t explain why she didn't price the  
chicken by weight and the uncontradicted evidence is that chicken is always priced by  
weight. When asked by Mr. Falba why she didn't do what would be normal with short  
code product, and apply a percentage reduced sticker, she responded “I don't know.”  
The very fact that Mr. Falba asked a follow-up question concerning the proper pricing  
procedure in respect of short code product substantiates the fact that the grievor said  
she had reduced the chicken because it was short coded. Again, her response, “I don’t  
know” was not the story she told at this hearing. She did not say it was because of the  
training she had received from Shelley.  
[48] Mr. Falba also obtained a comparably priced chicken product by looking through  
the journal tapes and found that a tray of lower brand chicken cost about $15. He also  
testified that two chicken breasts can weigh a kilogram as did the chicken he found that  
cost $15. Mr. Falba’s notes and recollection of what Ms. Smith said at this meeting are  
to be preferred over Ms. Smith’s evidence.  
[49] The fact that the Employer would not have discovered the theft if it wasn't for Ms.  
Wier, underscores the problem that Employers in this industry face. Ms. Weir testified to  
having seen the chicken double wrapped on a shelf with an expiration date of January  
31. She had to move other boxes on the shelf in order to find this chicken and she said  
this is not where chicken would normally be. She considered the situation so odd she  
15  
took photos of the chicken and she sent them to her store manager. She testified she  
did so because she knew there was something wrong. Ms. Weir testified employees are  
not entitled to put product aside for themselves and she was not aware of employees  
discounting product and putting them aside for themselves. Ms. Weir testified she had  
only seen product wrapped in the manner this chicken was wrapped when the original  
packaging had been damaged. It is telling that Ms. Weir found this worthy of going to  
her store manager about.  
[50] Mr. Zwolman testified employees are to go to their store manager or the field  
specialist when there is a mispick of meat. Looking at the photo of the chicken in issue  
Mr. Zwolman testified that the breasts were large, would be at least a kilogram each  
tray, and each tray would have been $15. Not taking into account that organic is more  
expensive. He testified that no one with meat experience would think $5 was a  
reasonable price for this much chicken.  
[51] It was not put to Ms. Weir that the practice described by Ms. Smith existed and the  
store managers who testified refuted the suggestion of any such practice.  
[52] When it was suggested to Ms. Smith that the reason she double wrapped the  
packaging was to get herself a better deal Ms. Smith would not agree yet there's no  
other possible explanation for double wrapping the chicken. It is even odder to  
understand why she double wrapped the chicken when you consider she then says it  
was her intention to pay $5 for the top one and $5 for the bottom one.  
[53] The only way to reconcile what the grievor said at the investigation meeting with  
what happened is Ms. Smith thought the short code date route was the best way to go  
thinking the Employer could never prove otherwise and when she found out about the  
photos of the best before date on the chicken she switched tracks to create a different  
defense.  
[54] The evidence of Ms. Cherrey and Ms. Noble misses the mark because this is not a  
case about a practice this is a case about the grievor trying to find an alternative  
explanation for her actions. Ms. Cherrey has never worked in the meat department and  
doesn't know anything about the rules including reduction rules in place in the meat  
department. When she challenged about mispicks being made available to staff first  
she could only speak specifically of a shipment of shampoo five years earlier. Mr. Poole,  
the manager at the time, had specifically okayed the process. She agreed she did not  
know when, how or why management had given approval for reductions in the past or  
what direction they may have given others.  
16  
[55] Ms. Noble Sylvia spent one year in the meat department 10 years ago and,  
according to her evidence, management would approve reductions.  
[56] The three store managers who together have covered most of the store’s operating  
time testified that all reductions must go through management. Two of them elaborated  
that mispicks had to be reported to management so that the correct credits could be  
done. None of the store managers were aware of employees pricing mispicks without  
management approval and they were consistent that mispicks had to go out to the floor.  
They highlighted the problem that they cannot be everywhere. The evidence given by  
the store managers jives with the evidence of Ms. Weir as well as with what Ms. Smith  
said at the investigation meeting.  
[57] The store managers were all consistent that the Employee Purchase Policy and the  
Employee Theft policies have been posted throughout the years at the store and that  
having them was a requirement of their annual loss prevention audits.  
[58] Each of them was clear that they had never heard of any employee taking fresh  
product, double wrapping it, applying an 80% discount and then putting labels on the  
top and the bottom and only paying one of the label prices. If they had, they testified,  
they would have called loss prevention.  
[59] Relying on F.H. v. McDougall, 2008 SCC 53, the Employer submits the task to be  
performed in reaching a decision in this matter is to determine whether it is more likely  
than not that the grievor acted dishonestly when taking the chicken at the highly  
reduced price on two occasions. The Employer submits the evidence is clear and, not  
only is it more likely than not, but there is also no other reasonable explanation.  
Quoting from paragraph 49 of McDougall, supra, the Employer submits the standard of  
proof is on a balance of probabilities.  
[60] The Employer refers to several cases that arise out of the grocery industry, not for  
their facts, as each case is factually different, but for the principles that are laid out and  
the consistent approach taken by arbitrators to employee theft. General Atlantic &  
Pacific Co. of Canada v. U.F.C.W., 2001 CarswellOnt 9873 (Stephens), is a case of an  
employee with 21 years’ service who, like Ms. Smith, was a meat department manager.  
He reduced the price on a roast and allowed his wife to purchase it. The Employer  
relies on the arbitrator’s reasons for finding the grievor not credible:  
43. …. I agree with the Employer counsel’s submission that the grievor’s actions  
during the interview are consistent with the actions of an individual trying to cover  
his misdeeds with the series concocted stories. If the grievor had been innocent, it  
would be reasonable to expect his story would have come out right away during  
17  
the investigative interview. If he was nervous, as he stated, that might explain the  
story coming out in a disjointed fashion. It does not explain why he lied, repeated  
his lies and then compounded his lies. His behavior during the interview supports  
the conclusion that he was not telling the truth about the entire story and that he  
continued to propagate a false version of events right up to and throughout the  
arbitration hearing.  
[61] The Employer submits, had Ms. Smith been of the belief there was an accepted  
practice in the store of setting aside mispicks for later purchase at a reduced price, she  
would have said so during the investigation meeting. Instead, she lied about the  
chicken being short code and never mentioned the practice she now states is open and  
well known in the store.  
[62] The Employer also relies on Great Atlantic and Pacific, supra, for the following  
comments concerning theft in the retail industry:  
Weighed against these mitigating factors is the fact that the employer has a  
legitimate and serious concern about the problem of employee theft. Concern over  
employee theft is not unique to the Kupuskasing store and, as the case law  
reflects, is not a new issue in the retail food industry. The cases also reflect the  
fact that arbitrators have specifically acknowledged the need for strong deterrence  
against employee theft in this industry. The grievor held the position of trust in the  
Kupuskasing store, and often worked alone. As meat department manager, he was  
called upon to supervise other employees. The grievor breached the trust of his  
employer by committing an act of theft, and reducing the price of the roast.  
Moreover, and what is almost as significant, in my opinion, he attempted to protect  
himself by implicating, however innocently, another member of the bargaining unit,  
an employee under his own supervision  
[63] The Employer submits the same can be said for Ms. Smith as she too was in a  
position of trust as the meat manager. The Employer refers to paragraph 53, wherein  
Arbitrator Stevens talks about how the element of trust has been irreparably damaged  
as a result and submits such comments are applicable to this case. Ms. Smith has not  
acknowledged her wrongdoing and tried two or three different stories to try to defend  
her actions and none of them hold water. There's no basis to believe that the Employer  
could trust Ms. Smith again.  
[64] In the case of Sobeys Inc. v. U.F.C.W., Local 175, 2001 CarswellOnt 5837 (Barrett)  
the value of the product stolen was $3.90 worth of cheese. Discharge was upheld. The  
Employer relies on this case as another instance of the arbitrator recognizing there are  
endless opportunities in the retail sector for employees to engage in dishonest behavior  
and the need for deterrence.  
18  
[65] Sav-A-Centre and CAW, Local 414 (Varty), 2006 CarswellOnt 10735 (Beck) is a  
case involving the termination of a meat department employee who consumed cherries  
in the store without paying for them. The Employer relies on the following excerpt as  
highlighting what makes this industry so vulnerable to employee theft:  
As noted, the cases on theft from grocery stores are legion and, for the most part,  
termination is upheld even when the theft is trivial in dollar terms. The vast majority  
of the cases focus on the principle of general deterrence and the need for store  
managers in a largely unsupervised situation to be able to trust their employees.  
And a penalty of termination has been upheld in many cases of long service up to  
30 years, and with a clean record. For a good discussion of the general principles  
involved, see the decision of Arbitrator Thorne in Re Great Atlantic & Pacific Co. of  
Canada Ltd. and Retail, Wholesale & Department Store Union, Local 414 (1991)  
1991 13383 (ON LA), 23 L.A.C. (4th) 269 (Thorne). After a review of the  
cases, Arbitrator Thorne commented as follows:  
It is well recognized that discharge is an appropriate penalty for theft  
from an employer. Underlying this recognition are two reasons: that theft  
is a breach of the relationship of trust between an employer and an  
employee, and, in the retail food industry at least, that the many  
opportunities for theft give rise to an interest in deterring theft by making  
it plain that the consequences will be severe.  
I would also refer to my own decision in Re New Dominion Stores and Retail,  
Wholesale Canada (U.S.W.A., Local 414) (1997) 1997 25014 (ON LA), 60  
L.A.C. (4th) 308 (Beck). I refer to that case because reference is made to the  
changing principles that are being applied in the grocery theft cases. In that case, I  
noted as follows:  
Does the fact of theft from the store automatically lead to a penalty of  
termination, as argued for by counsel for the Company? The rationale for  
discharge in cases of theft in the retail food business is that the  
employees work in a large, open area that is largely unsupervised, and  
management must be able to rely on their integrity and honesty.  
Numerous cases have recognized that a facility like the Company’s  
Lloyd Manor store with some 160 employees, open seven days a week  
and with only two Managers, both of whom may be absent at certain  
times, is very vulnerable to theft, particularly of a minor character so-  
called “pilfering”. Moreover, because supermarkets work on such a slim  
mark-up of approximately 1%, even a small amount of pilfering can  
quickly represent a significant loss of profit to the store when one  
considers the aggregate sales that are a need to realize the dollars lost  
through pilfering.  
19  
These cases always have a certain sense of the tragic about them, in that very often  
long serving employees with clean records engage in an act of theft, and often simply  
pilfering. Moreover, the employee is often a person of an age where similar  
employment, once theft is on his/her record, is not likely. Nonetheless, the undoubted  
problem in the grocery industry, and the necessity for deterrence, are very real. Are  
there any mitigating factors here? The fact is that there are none. Indeed, the admitted  
theft was exacerbated by the initial lie which was repeated at the subsequent  
management meeting. It was only after consultation with his Union, and some two  
months later, that Varty admitted the theft and sought a lesser penalty. In those  
circumstances, I am of the opinion that the penalty of termination is justified.  
Accordingly, the grievance is dismissed.  
[66] In Metro Ontario Inc. and Unifor, Local 414 (Chemm), 2016 CarswellOnt 14352  
(Baxter) an employee with 15 years of service was dismissed for grazing. She was  
eating grapes, meatballs, deli slices and french fries. The Employer relies on the  
following excerpt as providing an overview of the approach arbitrators take to  
dishonesty and theft in this industry:  
The case law makes it abundantly clear that arbitrators take a dim view and treat  
seriously acts of theft and dishonestly in the retail food industry. Further, Arbitrators  
invariably find that discharge is the appropriate penalty as the need for deterrence is  
necessary to send a message to other employees that this type of conduct is  
unacceptable and deserving of the highest penalty.  
Arbitrator Hope articulates those views in the following way at pages 7 and 8 of Re  
Canada Safeway, supra:  
However, accepting that each dismissal must be examined on its unique  
facts, and accepting that reinstatement is available for all acts of  
misconduct, however grave, it must be acknowledged that an act of theft  
or other dishonesty in the retail food environment places extreme strain on  
the relationship. An employee who admits dishonesty or is found to have  
acted dishonestly in that environment must, as stated, establish mitigating  
facts consistent with a maintenance or restoration of the essential element  
of trust…  
Those authorities acknowledge that dishonesty, by its very nature, usually  
results in an irreparable compromise of the employment relationship. In  
the retail food industry the opportunity and the temptation for employees to  
commit dishonest acts is great. Thus the relationship is generally  
acknowledged as having a fiduciary cast where all employees can be  
20  
taken to understand that theft or other acts of dishonesty will invite  
dismissal.  
The imposition of dismissal for acts of dishonesty in that employment  
setting responds to two assumptions. The first is that employees can be  
taken to know that their employment is seriously at risk if they engage in  
such conduct. Hence, the willingness of an employee to engage in that  
conduct places the suitability of that employee in extreme doubt. The  
second factor is the high degree of deterrence that employees in the  
industry are entitled to extract when offences in breach of the underlying  
trust relationship are committed. That is, the vulnerability of the employer  
makes reasonable to impose relatively exacting standards and to put a  
heavy price tag on departures from the standards so as to blunt the  
temptation of other employees who are in a position to commit similar acts  
of misconduct.  
Further, Arbitrator Hunter in Re Metro Ontario Inc., supra, on the question of  
deterrence, found the following comment at paragraph 19 from Arbitrator Foisy  
helpful:  
A comment made by Arbitrator Foisy in the 1991 Miracle Food Mart case  
(supra) is frequently quoted in these cases:  
... we are dealing with the retail industry which is plagued with  
important losses attributable to shoplifting. In that context, theft by  
employees is more difficult to tolerate than perhaps in other  
industries. It is important that employees working in that industry  
be sent a strong message as a deterrent. The company's policy in  
this regard is that employees that are caught stealing merchandise  
or money...are terminated.  
In Re Sav-A-Centre supra, Arbitrator Beck noted:  
As noted, the cases on theft from grocery stores are legion and, for the  
most part, termination is upheld even when the theft is trivial in dollar terms.  
The vast majority of the cases focus on the principle of general deterrence  
and the need for store managers in a largely unsupervised situation to be  
able to trust their employees. And a penalty of termination has been  
upheld in many cases of long service- up to 30 years, and with a clean  
record...  
Regardless of the amount stolen, arbitrators have found that theft is sufficient to  
uphold the penalty of discharge because internal theft is difficult to detect. (Re  
Save-On-Foods supra)  
21  
[67] The Employer submits that the case recognizes that the industry is so vulnerable to  
this kind of dishonest behavior that deterrence is key and, unless there are significant  
mitigating factors, discharge will be upheld. The Employer submits, the element of trust  
has been lost and the employment relationship cannot be restored: The Employer relies  
on the following excerpt from Metro Ontario (Chemm), supra:  
The element of trust goes to the very heart of the employment relationship in a retail  
store. That bond of trust was broken when the grievor stole, not once but on several  
occasions over a period of two months. Had she simply admitted her dishonest  
behavior and apologized, even on the witness stand it would have gone a long way  
to restoring the element of trust in her employment relationship and persuaded me  
to consider mitigating the penalty against her. Because she still does not consider  
her actions as amounting to wrongdoing and without such an admission on her part,  
I have concluded that the bond of trust between the grievor and the employer has  
been irrevocably broken.  
[68] The Employer argues that the same can be said in connection with the instant  
matter. Ms. Smith, to the extent she admitted anything in the investigation meeting, is  
now running away from it. She never made any form of apology because she asserts  
she never did anything wrong. As a result, there's nothing to build a future relationship  
of trust on.  
[69] The Employer refers to Metro Ontario Inc. and Unifor, Local 414 (Raimondo), 2017  
CarswellOnt 15474, a decision involving a 13-year employee who consumed a  
chocolate bar at work. The Employer relies on the following excerpt dealing with theft in  
the retail industry:  
I note, in the first place, that arbitrators have generally accepted that it is legitimate  
for an employer, in principle, to impose a harsh penalty on an employee so as to  
deter others from committing a similar offence. In particular, employers in this sector  
have been traditionally worried that any condonation of the theft of product by  
employees, even where the stolen product was of minimal value, might send the  
message to the workforce as a whole that this offence was not particularly serious,  
with the result that shrinkage due to theft, already a significant problem in this  
sector, would increase. Arbitrators have been sympathetic to this employer concern.  
In Re Canada Safeway Ltd. and United Food and Commercial Workers, Local 2000  
(1987), 1987 8731 (BC LA), 29 L.A.C. (3d) 176 (Hope), for example, the  
arbitrator stated the following (at page 187) (quoted by arbitrator Hamilton in  
MacDonald’s Consolidated, supra, at paragraph 100):  
22  
The imposition of dismissal for acts of dishonesty in that employment setting  
responds to two assumptions. The first is that employees can be taken to know that  
their employment is seriously at risk if they engage in such conduct. Hence, the  
willingness of an employee to engage in that con-duct places the suitability of that  
employee in extreme doubt. The second factor is the high degree of deterrence that  
employers in this industry are entitled to extract when offences in breach of the  
underlying trust relationship are committed. That is, the vulnerability of the employer  
makes it rea-sonable to impose relatively exacting standards and to put a heavy  
price tag on departures from the standard so as to blunt the temptation of other  
employees who are in a position to commit similar acts of misconduct.  
[70] The Employer submits that, in the retail food industry, the work force is largely  
unsupervised in buildings full of product we all use. Deterrence is thus critical.  
[71] In Metro Ontario Inc. and Unifor, Local 414, (Skelly), 2001 73238 (ON LA)  
(Bendel) the grievor went through an auto scan machine with some beer and chips but  
did not pay at the end of the transaction. The next day she spoke to a number of her  
coworkers and told them she had not been charged and thought there was a problem  
with the auto scan. In argument, it was suggested that her comments to her co-workers  
established the non-payment was not intentional. The Employer submits the arbitrator  
found the grievor committed the physical act of stealing the products. Similarly, the  
Employer argues, in the present case, Ms. Smith physically removed drastically reduced  
product from the store. In the Metro Ontario (Skelly) case, the arbitrator noted that he  
was asked to draw inferences from the evidence as to the grievor’s state of mind and  
whether she intended not to pay for the items. At page 17, the arbitrator talks about  
how the grievor spoke to her coworkers about the failed transaction the next day and  
concluded it was a smokescreen to cover up her misconduct. In respect of the penalty,  
the arbitrator stated:  
As for the penalty of discharge, the employer has referred me to a long line of cases  
where arbitrators have concluded that employers in this sector are justified in  
discharging employees who commit theft even if the value of the product stolen is  
minimal, because of the need to deter this activity. In this environment, it has been  
noted, the opportunity for theft by employees is great and the likelihood of  
apprehension is small, which makes it reasonable for an employer to make an  
example of employees who are caught.  
[72] In UFCW, Local 175 (Schirripa) and Metro Inc., unreported, October 18, 2021  
(Beresford) the grievor was dismissed for having reduced and purchased lemons,  
onions and zucchinis. At paragraphs 110 and 111 Arbitrator Beresford did not accept  
that the grievor acted innocently and found that it was more likely than not that she  
herself improperly reduced product. Looking at the context of the industry, and the  
23  
reliance the employer has to place on trust, he determined that there was no basis to  
interfere with the termination. Other than allowing the employee to resign, he dismissed  
the grievance.  
[73] The Employer relies on Schirriipa and Skelly as demonstrating the policies it relies  
on in the instant matter have been in effect for decades and while it is not automatic,  
where an employee is guilty of dishonesty in the absence of mitigating factors such as  
an immediate apology, there is no basis to believe trust can be restored and discharge  
is upheld.  
Union’s Submissions  
[74] The Union begins its submissions with a review of Metro Ontario Inc. and Unifor,  
Local 414 (Muscat) 2017 CarswellOnt 4024 (Luborsky) in which the grievor was  
discharged for engaging in “sweethearting” described as occurring when an employee  
improperly discounts the price of produce or merchandise for purchase by the employee  
or another person at a reduced amount. In Muscat, the grievor and a co-worker  
reduced the price of cupcakes for sale to a charity. Arbitrator Luborsky found there was  
no policy dealing with the situation. He found, however, that even in the absence of a  
policy, sweethearting was antithetical to the inherent duty of loyalty and fidelity implied  
in every employment contract requiring the employee to act in the best interests of the  
employer. The Union relies on the case for Arbitrator Luborsky’s comments beginning at  
paragraph 63:  
[63]  
The authorities filed by the parties also indicate there are two elements  
to the offence of “theft” or “fraudulent conduct” that is the essence of the  
sweethearting claimed by the Company in the present case, and that the onus is  
on the employer to prove both elements of the offence on a balance of probabilities  
standard in order to sustain discipline for that transgression.  
[64]  
In Canada Safeway Ltd., supra, where a grievor was dismissed for  
“breach of trust and violating the Company’s ‘Employee Honesty and Integrity  
Policy’” when the grievor instructed a junior cashier to discount the usual retail  
price of items in four separate transactions that clearly benefitted the grievor, but  
which the grievor claimed she had directed under a mistaken belief that the  
transactions were proper, Arbitrator Jones framed the “primary issue” at para. 3 as  
“the Grievor’s state of mind – namely, did she intend to benefit herself as a result  
of the improper pricing, or where all four incidents a mistake?” …  
[65]  
In another case of alleged sweethearting involving the same parties  
before me, Arbitrator Stout dismissed the claims of unjust suspension and  
dismissal in Re Metro Ontario Inc., supra, in the following factual circumstances:  
The grievor was a full-time Floral Department Manager (which is in the bargaining  
24  
unit) who during a vacation absence ordered a floral arrangement for a family  
wedding from her own store that a junior employee mistakenly underpriced by  
$2,500.00. On her return to the store the grievor took no steps to rectify that error  
nor did she pay the outstanding sum before the mistake was discovered by  
management leading to the grievor’s dismissal for “breach of trust”. While it was  
clear the grievor’s family benefitted financially in the matter and the employer  
experienced a corresponding detriment, the issue at arbitration was whether the  
grievor realized the honest mistake, which turned on the grievor’s credibility that  
the arbitrator held at para. 11 the employer had the onus to prove on the balance  
of probabilities (rather than any higher standard), relying on the Supreme Court of  
Canada’s decision in C. (R.) v. McDougall, 2008 SCC 53 (), [2008] S.C.J.  
No. 54 (S.C.C.) for the principle that as in all civil cases, even those involving  
serious malfeasance of a quasi-criminal nature, the decision-maker must  
determine whether the evidence is “sufficiently clear, convincing and cogent to  
satisfy the balance of probabilities test”.  
[66]  
Applying that standard and considering the principles of assessing  
credibility from the seminal case of Faryna v. Chorny, supra, standing for the  
proposition that the “real test of the truth of a witness in such a case must be its  
harmony with the preponderance of the probabilities which a practical and  
informed person would readily recognize as reasonable in that place and in those  
conditions” (per O’Halloran J.A. at para. 10 in that decision), Arbitrator Stout  
upheld the discharge having concluded at para. 91 that the grievor, “knew about  
the pricing error and did nothing to bring the error to the attention of management”,  
thereby committing a form of sweethearting that was tantamount to theft where the  
employer had “made it clear that they have a zero-tolerance policy and the penalty  
for theft in every situation is termination” (at para. 108) and notwithstanding the  
grievor’s more than 21 years of service. It is apparent that if the evidence  
demonstrated that the grievor didn’t realize the pricing error and thus had no  
intention to defraud or steal (at least that could be proven), the grievances would  
have succeeded as proof of a dishonest intention is a fundamental element in the  
offence of sweethearting that the employer must establish on a balance of  
probabilities.  
[67]  
The test to apply in determining dishonest intention was considered by  
the Supreme Court of Canada in the case of R. v. Théroux, supra, which was  
submitted to me for its analogous value in the context of the instant labour law  
dispute. The accused in Théroux was the directing mind of a residential  
construction company who made representations to prospective home buyers that  
their deposits were insured, when in fact he knew that was not true. Even though  
the accused sincerely believed the residences would be built and the buyers’  
deposits were secure, he was convicted at trial on several counts of committing  
fraud in violation of section 380(1)(a) of the Criminal Code, R.S.C. 1985, c. C-46[2]  
when his company became bankrupt and most of the deposits were lost, which  
was upheld on appeal to the Supreme Court of Canada. This case was offered by  
25  
the Company to support the notion that the Grievors’ motives in committing what  
amounts to a form of theft or fraud which is the essence of a sweethearting  
arrangement are irrelevant; and thus the fact that the Grievors in the instant case  
did not benefit personally when they processed the charitable donation for the  
Thistledown School could not be a factor in my consideration of their grievance.  
[68]  
However, the Théroux case more significantly describes the elements of  
the offence of fraud, which requires a dishonest or deceitful act by one and  
corresponding deprivation (or potential for deprivation) of another (referred to as  
the “Actus Reus”) coupled with a “guilty mind” or “wrongful intention” in connection  
with that act (referred to as the “Mens Rea”). The Supreme Court of Canada  
confirmed at para. 14 that a deceitful act for purposes of satisfying the actus reus  
element of the offence is adjudged on the objective facts. But that is not enough to  
establish criminal liability without proving the actor intended the consequences of  
that act. On the question of whether the intention of the person must be assessed  
from an objective or subjective perspective, McLachlin J. (as she was before her  
elevation to Chief Justice) wrote the following on behalf of the majority at para. 18:  
18. This brings me to the question of whether the test for mens rea  
is subjective or objective. Most scholars and jurists agree that,  
leaving aside offences where the actus reus is negligence or  
inadvertence and offences of absolute liability, the test for mens  
rea is subjective. The test is not whether a reasonable person  
would have foreseen the consequences of the prohibited act,  
but whether the accused subjectively appreciated those  
consequences at least as a possibility. In applying the subjective  
test, the court looks to the accused’s intention and the facts as the  
accused believed them to be: G. Williams, Textbook of Criminal  
Law (2nd ed. 1983, at pp. 727-28.  
[emphasis added]  
[69]  
And in adopting a subjective test of intention, McLachlin J. went on to  
explain at para. 21 the nature of the intent that must be proven in order to satisfy the  
elements of the offence of fraud, which in my opinion applies in the labour law  
context presented by the circumstances of the case before me:  
21. Having ventured these general comments on mens rea, I return to  
the offence of fraud. The prohibited act is deceit, falsehood, or some  
other dishonest act. The prohibited consequence is depriving another of  
what is or should be his, which may, as we have seen, consist in merely  
placing another’s property at risk. The mens rea would then consist  
in the subjective awareness that one was undertaking a prohibited  
act (the deceit, falsehood or other dishonest act) which could  
cause deprivation in the sense of depriving another of property or  
26  
putting that property at risk. If this is shown, the crime is complete.  
[emphasis added]  
(b) Applying the General Principles to the Facts  
[70]  
Thus applying the foregoing principles in the context of a labour law  
dispute on whether the Company has established the offence of sweethearting, I  
conclude that the Company must prove both an act of dishonesty on an objective  
evaluation of the facts and an intention to act in that manner as assessed from the  
subjective perspective of the accused employee. There is no question that the  
Grievors’ conduct resulted in a deprivation to the Company in the sense of its loss of  
some $205 in anticipated profit on the transaction from the usual retail price for the  
cupcakes that can objectively support the dishonest act of sweethearting. The fact  
that the Company may not have actually lost any money (as opposed to profits)  
where the wholesale price of the cupcakes was charged with a markup to cover the  
icing, decorations and labour is largely irrelevant, as is the absence of any personal  
gain by the Grievors on the transaction.  
[71]  
But that is not sufficient to satisfy the Company’s onus. Rather, it must  
show on a balance of probabilities that the Grievors intended to act dishonestly as  
an essential element of the offence of sweethearting (as distinguished from being  
under a mistaken belief or reasonable misunderstanding as to their obligations),  
which is a subjective test that very much relies upon an assessment of the Grievors’  
credibility. It is my opinion that the Company has failed on that aspect of satisfying  
its onus in this case.  
[72]  
As indicated by the seminal decision in Re KVP Co. and Lumber and  
Sawmill Workers’ Union, Loc. 2537 (1965), 1965 1009 (ON LA), 16 L.A.C. 73  
(Robinson), the Company has the right to unilaterally impose rules of conduct for  
employees provided they are: (1) not inconsistent with any collective agreement; (2)  
not unreasonable; (3) clear and unequivocal; (4) brought to the attention of the  
employee affected before acted on; (5) that warn the employee of the possible  
consequences of discharge from a breach of the rules; and (6) are consistently  
enforced. But these requirements were not followed by the Company in the case of  
charitable donations.  
[75] The Union submits that the onus is on the Employer in this case to establish, on a  
balance of probabilities, that Ms. Smith intended to act dishonestly. The Union states  
that there is no dispute that Ms. Smith put the chicken aside, priced it and purchased it.  
She admitted that to Loss Prevention. However, that is not enough, it must be  
established that Ms. Smith intended to act dishonestly and that has not been proven on  
a balance of probabilities. The test is not whether a reasonable person would have  
seen it as dishonest but rather whether Ms. Smith saw it as dishonest. The test is  
27  
subjective not objective. The testimony of Ms. Smith is she did not believe she was  
doing anything wrong.  
[76] The Union further relies on Faryna and Chorny, [1952] 2 D.L.R. 354, the seminal  
decision on the assessment of credibility. Beginning at paragraph 11, the O’Halloran  
J.A. states:  
11.  
The credibility of interested witnesses, particularly in cases of conflict  
of evidence, cannot be gauged solely by the test of whether the personal  
demeanour of the particular witness carried conviction of the truth. The test must  
reasonably subject his story to an examination of its consistency with the  
probabilities that surround the currently existing conditions. In short, the real test  
of the truth of the story of a witness is such a case must be its harmony with the  
preponderance of the probabilities which a practical and informed person would  
readily recognize as reasonable in that place and in those conditions….  
[77] The Union submits that when one looks at what was actually happening in the  
store one sees why and how Ms. Smith did not think what she was doing was  
dishonest. Ms. Smith explained that she put the chicken on the shelf to purchase  
later and that doing that was a typical practice amongst employees in the store. Her  
evidence is corroborated by all of the other bargaining unit employees who testified.  
Ms. Smith acknowledges that she wrapped two trays of chicken into a single  
package and explained she purchased two bundles and that the other two bundles  
were for a co-worker to purchase. Ms. Smith produced a text message to her co-  
worker establishing that such was the original plan. Only when the co-worker didn’t  
want the second package did Ms. Smith purchase it as well.  
[78] Ms. Smith wasn't acting secretly, she put the chicken on the same shelf that the  
other employees used to store food to be purchased after their shifts, she spoke to  
another co-worker about the chicken, and she went through a regular checkout, not  
once but twice, when she purchased the chicken. There is no evidence that she spoke  
to a cashier and asked that cashier to run a secret transaction for her; it was out in the  
open and part of a regular grocery purchase.  
[79] In response to the Employer’s assertion that Ms. Smith initially tried to justify her  
actions by saying in the investigation meeting that the chicken was short coded the  
Union submits that the evidence given by Ms. Smith and Ms. Cherrey, that Ms. Smith  
also said the chicken was a mispick, was corroborated by Greg, who also testified Ms.  
Smith referred to the chicken as being a mispick during the investigation meeting.  
28  
[80] The Union contests the weight the Employer seeks to put on the investigation  
meeting and submits that Ms. Smith was flustered, shocked, and surprised during the  
interview and was unable to explain herself well. Ms. Smith testified she was asked a  
lot of questions very quickly and, to use her words, she described it as being like in a  
head spin. The loss prevention officer acknowledged that she seemed flustered at  
points and Greg testified she seemed nervous. When Ms. Cherrey was asked in cross-  
examination why they didn't bring up the store practice, she explained that she and Ms.  
Smith were shocked. In fact, Ms. Cherrey was so shocked, the Loss Prevention officer  
commented on the colour of her face.  
[81] The only evidence of the Employer making Ms. Smith aware of the policies is a  
document from 2004, 17 years ago, that says Ms. Smith acknowledges she was given a  
copy of the policies and has read them. Ms. Smith has testified that she was not given  
the policies in 2004 and has never seen them. It is her testimony, and that of the other  
bargaining unit employees, that the policies were not posted in the store. Ms. Cherrey  
testified that she did not see the policies posted in the store until after Ms. Smith was  
terminated and at that time it was posted on the refrigerator in the lunchroom.  
According to Ms. Noble, when she returned to work following a leave after Ms. Smith  
had been terminated there were new rules in place. According to Ms. Weir, employees  
used to leave items on a shelf for later purchase but, since Ms. Smith’s discharge, they  
are no longer permitted to do so.  
[82] Mr. Poole could not recall where the polices were posted in the store and testified  
the posting of the policies is part of the annual loss prevention audit. He had no  
recollection of posting the policies when he was store manager. Mr. McKone testified  
the policies were posted in the lunchroom and by the punch clock. Only Greg claimed  
to have a direct memory of the policies being posted but he was unable to identify  
specifics. When it was first put to him that the policies were not posted until after Ms.  
Smith was terminated, he responded that the policies were posted in the lunchroom or  
the hallway of the management office. When clarification was sought, his response was:  
“It was either one or the other. Right now, they are in the hallway. I don't remember  
where they were then.” Greg was then asked, if it was fair to say that he did not  
remember where they were, and he repeated that they were in the lunchroom or in the  
hallway. When he was asked if that was an assumption or if he knew where they were  
posted his response became that he was 100% sure. Greg’s response that he was  
100% sure is suspicious in light of his earlier response that he did not remember where  
they were posted at the time of Ms. Smith’s dismissal.  
[83] Messrs. Poole and McKone testified that discount pricing chicken for oneself would  
not be acceptable behavior because it went against store policy, however, all of the  
managers acknowledged that they could be in trouble if they did not enforce the store  
29  
policies and this factor should affect the weight given to the evidence that they provided.  
It is reasonable to assume that, even if the managers were not enforcing the store  
policies and practice, they would not promote this fact in front of the upper management  
observing their examination and cross-examinations  
[84] The Union submits, it is not just to terminate an employee for breach of a rule she  
simply did not know existed.  
[85] The Union relies on Loblaws and UFCW, Local 175 (Willfang), unreported March  
29, 2021 (Brownlee) in which the grievor was terminated for consuming bakery  
products. The grievor had 29 years of service; the last seven years spent working in the  
bakery department. In February 2018 a new bakery manager came to the store. One  
day, the new bakery manager noticed a popcorn bag in the garbage. This discovery led  
to a discussion with the Assistant Store Manager who told the bakery manager to print  
off the Colleague Purchase Policy (“CPP”), review the expectations set out in the CPP  
with everyone, and ask everyone to sign it. The bakery manager did not review the  
expectations set out in the CPP with the bakery employees; rather, he left copies of the  
CPP for the bakery employees to read and sign. The grievor signed the CPP but  
testified he did not read it. The CPP was also posted in the break room. After the  
grievor had signed the CPP, the employer reviewed surveillance videos of the bakery  
department and saw the grievor eating products from the bakery. He was terminated  
for theft.  
[86] The grievor’s response was that he thought he was allowed to eat bakery products  
while at work and no one had told him it was not allowed. The evidence established  
that, when scratch baking was done in the bakery department, bakers were encouraged  
to test the products to ensure quality. Also, some sampling of new products was  
permitted so employees could describe them to customers. The grievor took from this  
that he was permitted to eat bakery products while working.  
[87] The Union relies on the following excerpt, where Arbitrator Brownlee discusses the  
grievor’s knowledge of the CPP:  
There is no doubt that the grievor’s consumption is a violation of the Colleague  
Purchase Policy. The grievor appears to have given very little thought to the  
Colleague Purchase Policy and its application in the bakery. However, in fairness  
to the grievor, the evidence establishes that in all of the time that he worked in  
the Fergus store, there was never a review of the policy, no manager ever had a  
discussion with him about the types of consumption that are permitted and not  
permitted in the bakery, and no one was ever disciplined for consuming in the  
30  
bakery. The fact that he consumed in the bakery everyday created his belief that  
it was okay to do so.  
The grievor is a long service employee with an excellent work record. I believe  
that the grievor would have immediately stopped his consumption if he had been  
warned. I also believe that the employer fully intended to be fair to the grievor by  
properly reviewing the policy with him and warning him of the repercussions of  
violating it. Since this warning was never given, and the grievor never had the  
opportunity to change his behavior, and opportunity employer intended to  
provide, I find the employer did not have just cause to discharge the griever. The  
griever deserves the chance to show that he now understands and will comply  
with the employer’s policy.  
[88] In the submission of the Union, in the instant matter, as in the Willfang case, there  
is no evidence that the Employer reviewed the policies with Ms. Smith and explained  
them to her or gave her any training on the policies. She was given no warning that  
what she did was not allowed and no warning that the penalty of discharge would be  
applied. The only evidence adduced by the Employer as to Ms. Smith’s knowledge of  
the policies, is a document that says she was given a copy of the policies 17 years ago.  
[89] The Union further submits that the first paragraph of the Employee Purchase Policy  
provides:  
When scheduled to work when the store is open for business employees, may order  
select and make purchases on their own time, meaning prior to the commencement  
or at the completion of their scheduled shifts.  
[90] The evidence of even the Employer’s own witness, Ms. Weir, is that employees did  
put aside items in the cooler during their shifts to purchase for themselves at the end of  
the shift. Ms. Weir testified that employees set items aside for later purchase before Ms.  
Smith was terminated but were no longer permitted to do so after her termination. Ms.  
Weir, when asked why the change was made answered: “Apparently it wasn't supposed  
to be done in the first place” indicating that she was not aware of the strictures of the  
policy prior to Ms. Smith’s termination.  
[91] Paragraph 5 of the Employee Purchase Policy states: “All employee purchases  
must be at regular retail, except those items that are normally “Reduced for Quick Sale”  
and available to all customers.” In practice this was not the case. All of the Union’s  
witnesses testified that employees regularly purchased items at a discounted price and  
that this was a longstanding practice. Ms. Noble, who was a long-term employee, gave  
evidence that items were reduced either with the discount sticker or simply by creating a  
price with price gun and these same items were then purchased by staff. Ms. Cherrey’s  
31  
evidence was that mispick items were usually placed in a cart and then employees were  
given “first dibs.” Ms. Noble, without being questioned about it, also brought up the  
“cart” that Ms. Cherrey referred to in her testimony.  
[92] Paragraph 5 also states: “Further, employees are prohibited in all cases from …  
purchasing product… no sellable or available to all.” All of the Employer witnesses  
acknowledged that mispicks that cannot be made available to the customers are made  
available to the staff to purchase. The witnesses testified that this was done with  
management approval, establishing that purchases prohibited by the policy, were  
knowingly allowed.  
[93] Paragraph 6 of the Employee Purchase Policy states: “All purchases from all  
departments must remain as individual items there can be no grouping of dissimilar  
priced items in one package with the individual prices listed on one package.” Even Ms.  
Weir testified that employees would wrap up items for themselves although this was not  
something that she had done herself. Ms. Weir also clarified: “but that's no longer.” Ms.  
Noble stated that she would wrap up items for herself and that she had been told that  
she was allowed to do this by Shelly the previous meat manager. When asked: “When  
Shelly trained you, did she train you about how to package mispicks?” her response  
was “we’d wrap them up in the Saran wrap from produce.” When asked why, she  
responded: “That's just what she said to do. Sometimes she'd take two or three  
packages of the same thing and put a reduced price on it.”  
[94] The Union submits that it is not only the practices of the store that didn't align with  
the written policies, the training Ms. Smith received also did not align with the written  
policies. Ms. Smith’s testimony was that when a mispick came into the store, she was  
taught to discount the item to “get it out of the store” and then offer it to the other  
employees. Ms. Smith stated that she did not think there was anything wrong with this  
because it was so commonplace. She testified she had purchased discount items for  
herself in the past and had not been told that it was against the rule.  
[95] It is important to note that it is not just Ms. Smith who had been taught this. Ms.  
Noble stated that she had been taught to discount mispick items and offer them to  
employees. Ms. Noble would go to Shelly, who was the meat manager at the time, or  
Mr. Poole who was the manager at the time. It was Ms. Noble’s evidence that Mr.  
Poole told her that, when it came to pricing mispick items she was to: “use her own for  
judgment.”  
[96] The Union argues, it is possible that Greg, who was a relatively new manager at the  
time, did not know what had been communicated to the employees in the past. When  
asked if he was often in the meat department he responded “not overly so” which, the  
32  
Union submits, means that he was occasionally in the meat department. Further Greg  
testified that he was not around when Ms. Smith was trained as the meat manager, and  
he did not know what training she received. He testified he did not retrain her when he  
took over as manager.  
[97] Relying on KVP Co. Ltd, supra, the Union submits that, as the case provides, an  
employer is allowed to introduce a unilateral policy but there are limits. The policy must  
be brought to the attention of the employees before it can be acted upon, and it must be  
consistently enforced. In the instant matter, at best, Ms. Smith was given a copy of the  
policy 17 years ago and, over the years leading up to her termination, the policy was not  
consistently enforced. All three of the Union’s witnesses gave evidence that  
employees, including those in the meat department, believed they were allowed to  
reduce the price of mispick items and purchase them for themselves. It was their belief  
that management was aware of this and, according to Ms. Noble, she was told by Mr.  
Poole to use her own judgment when it came to pricing mispick items, employees would  
wrap up mispick meat or produce items for themselves, discount them, put them in the  
back cooler, and then purchase them after work.  
[98] Ms. Smith, Ms. Cherrey and Ms. Noble were all surprised that Ms. Smith was  
terminated for pricing and purchasing the mispick items. The Employer was not able to  
point to a single incident where an employee had ever been disciplined for this kind of  
behaviour.  
[99] Ms. Smith had no history of deceitful behavior at Food Basics. She was at the  
store for approximately 17 years without a disciplinary record until this incident.  
[100] Ms. Smith had no intention to act in a dishonest way. She was unaware of the  
policy; it was not previously enforced and therefore the decision to terminate Ms. Smith  
was without just cause. The Union asks that Ms. Smith be reinstated with  
compensation for her losses and for the discipline to be removed from her record.  
Employer Submissions in Reply  
[101] In reply, the Employer submits that the facts underlying Arbitrator Luborsky’s  
decision in Metro Ontario Inc., supra, are clearly different. Two employees got  
themselves in trouble for providing cupcakes to a charitable organization when they had  
been doing it for years. It was ultimately found that what they did was for no gain at all  
for themselves personally; but they didn't charge the appropriate price for cupcakes  
because they were going to a charity. Part of the Award focuses on the fact that there  
was no specific policy dealing with how to charge for charitable donations, but the  
bottom line was that Arbitrator Luborsky found the employees did absolutely nothing  
33  
wrong; they did exactly what they had done before and there has never been a policy  
that provides otherwise. It is a very different case from the facts of this matter. Further,  
at paragraphs 79 and 81 of the decision, it's very clear that what the employees were  
doing with the cupcakes was out in the open, there was no sneakiness, and the grievors  
gained nothing personally. The Arbitrator found what happened in the instance that led  
to the grievor’s dismissal was entirely in line with the way they had handled charitable  
donations in the past. At paragraph 82, the Arbitrator notes that the case might have  
been different if the price that had been applied had been wholly inadequate in relation  
to the actual cost of the product. The Employer submits that the evidence in this matter  
establishes the grievor gave herself more than an 80 percent discount on the chicken  
that she purchased and obviously stood to gain directly.  
[102] The decision reached by Arbitrator Luborsky, that the employees did absolutely  
nothing wrong, is not reasonably available on the facts of this matter when you look at  
the grievor’s conduct throughout. Her first defense was that she took a discount  
because it was short code, when she realized the Employer knew they were not, she  
switched to trying to create mud about other practices that have nothing to do with what  
she actually did that day. There is no evidence from anyone else of employees taking  
perfectly good, expensive meat packages, doubling them up, and then giving  
themselves 80 plus percent discounts and then put a price on the top and a price on the  
bottom and then check out and don't insist that the cashier charge them both the $5.00  
on top and $5.00 on bottom. As such, the Metro Ontario case is not of assistance.  
[103] Concerning the issue of the grievor’s credibility, it is obvious, in this case, the  
grievor openly lied repeatedly in the loss prevention interview, she's openly and quite  
obviously decided to change the defense, and, if the defense she's now relying on was  
legitimate, she or her union steward would have raised the defense in the investigation  
meeting.  
[104] As to whether the grievor spoke of the product being off code or not, the fact that  
both Ms. Smith and Ms. Cherrey recall her referencing a mispick is not at all surprising  
as this was a mispick. What is disputed is whether she twice referenced as her  
rationale that this was off code product and in the Employer’s submission there is no  
basis to come to any conclusion other than that what Mr. Falba wrote in his notes and  
what he and Greg testified Ms. Smith said.  
[105] Concerning Ms. Smith’s knowledge of the policy, the Employer submits, this  
Employer and every other retailer, is in deep trouble if it is insufficient to put out a policy  
in clear language and have people sign off acknowledging that they received it and that  
it's their obligation to understand and abide by it; that is a conventional and normal way  
of doing business when you've got large workforces. The Employer argues the notion  
34  
that you could come along and say that was a while ago and the employee never  
bothered to read it and have an arbitrator accept that as a defense is quite remarkable.  
In this case, the Employer submits, the policies were posted. It was unchallenged every  
year there's a loss prevention audit, and one of the pieces of the audit is the policies  
have to be posted. The Employer submits it is just too convenient for employees to say  
they didn't look or don't remember it being there. The fact is the policies have always  
been there. When you look through the cases relied upon by the Employer more than  
half of them quote directly from these very same policies.  
[106] The Loblaws case relied upon by the Union is a truly remarkable case and a bit of  
an outlier. There was a very long service employee, who worked in the bakery and  
openly sampled food as he was baking product. The arbitrator found that he was  
openly doing this with management presence right there and he didn't do it when he  
was alone. It involved no sneakiness. There is nothing in the Loblaws case that  
involved an employee sneaking around hiding product, double wrapping, and double  
pricing it, paying only one of the prices.  
Analysis and Decision  
[107] What Ms. Smith did is not in dispute. The Union submits, as established in Metro  
Ontario Inc. (Muscat), supra, the onus is on the Employer to prove both: (1) an act of  
dishonesty on an objective evaluation of the facts; and (2) an intention to act dishonestly  
as assessed from the subjective perspective of Ms. Smith. The Union argues the  
Employer has failed to prove an intention to act dishonestly. Further, in the alternative,  
the Union argues the rules the Employer seeks to rely upon, as set out in the Theft  
Policy and Employee Purchase Policy, do not meet the requirements established in  
KVP Co. Ltd., supra.  
[108] As argued by the Union, the Employer bears the onus of establishing Ms. Smith  
had the subjective intention to act dishonestly. In most instances of theft, subjective  
intention to act dishonestly is established by the Employer showing the employee was  
aware of a policy that prohibited the conduct on the basis that it was dishonest and  
employee conduct that violated the policy notwithstanding such knowledge. In the  
instant matter, however, Ms. Smith denies seeing the policies at any time prior to her  
termination. Hence, I begin with an evaluation of the evidence and make findings of fact  
on the question as to whether Ms. Smith was aware of the contents of the policies.  
[109] Ms. Smith started working at Food Basics in 2004 when the store opened. At that  
time, she signed a one-page acknowledgment of having read 12 policies listed therein.  
The Employer relies on this signed acknowledgment to establish Ms. Smith was aware  
of the provisions of the policies. Ms. Smith disputes she received a copy of the policies  
35  
when she signed the acknowledgment and states she simply signed the  
acknowledgment as one of several documents to be signed at the time of hire. It is not  
disputed that, in the 17 years since her hiring, Ms. Smith was never given an updated  
copy of the policy, asked to sign the policy, received training on the policy, or spoken to  
by management about the policy. She received no training on the policy when she  
became the manager of the meat department. Given Ms. Smith’s testimony that she  
was not provided a copy of the policies at the time of hire and the lack of rigor given to  
the communication of the policies at this store, I find it probable Ms. Smith was not  
given the actual policy to read when she was hired. I do not find the signing of an  
acknowledgment, that refers to, but does not attach, the policies, to be sufficient to  
establish Ms. Smith read the policies in 2004.  
[110] There is also a dispute as to whether the policies were posted in the store before  
Ms. Smith was dismissed. Ms. Smith, Ms. Cherrey and Ms. Noble all testified the  
policies are not posted in the store. Each of them testified they had never seen the  
policies prior to Ms. Smith’s termination. Mr. Poole could not recall where the polices  
were posted in the store and had no recollection of posting the policies when he was  
store manager. He testified the posting of the policies is part of the annual loss  
prevention audit. Mr. McKone testified the policies were posted in the lunchroom and by  
the punch clock. Greg testified the policies were posted in either the lunchroom or the  
hallway of the management office. He then stated: “It was either one or the other. Right  
now, they are in the hallway. I don't remember where they were then.” Further, when  
asked about the posting of the policy on the refrigerator after Ms. Smith’s termination,  
Greg gave confusing evidence to the effect that, it was posted on the new fridge  
because that is where the policy is commonly posted, but he didn’t know if it was posted  
on the old fridge. Greg also testified the posting of the policies were part of the annual  
Loss Prevention audit.  
[111] In assessing the credibility of the witnesses, I note that the Union’s witnesses are  
non-managerial employees who are still (except for Ms. Smith) employed at the store.  
They gave evidence contrary to that given by their own store manager. An employee’s  
tug of self-interest is usually to side with management fearing, if they do not, they will be  
subjected to some form of retribution or, hoping, if they do, it will lead to some favorable  
treatment. As is discussed below, aspects of Ms. Cherrey and Ms. Noble’s testimony  
amounted to an admission that they participated in some of the same conduct that got  
Ms. Smith fired. It is difficult to conceive of why they would do so unless they believed  
what they were saying to be true. The store managers who testified are still employed  
by the Employer. Their responsibility and obligation is to enforce polices and all of them  
acknowledged that admitting in this proceeding that they did not do so could potentially  
get them into trouble.  
36  
[112] For the reasons set out above I prefer the evidence of the Union witnesses. I do  
not find the fact that the annual loss prevention audit enquires about the posting of the  
policies to be persuasive evidence that the policies were in fact posted. I find the  
policies were not posted in the store.  
[113] The Employer submits there are aspects of the evidence that suggest Ms. Smith  
was aware what she was doing was not allowed. The Employer argues Ms. Smith tried  
to hide what she was doing by wrapping the trays of chicken together and placing them  
on a shelf where they were not likely to be seen. The Employer asks, why would Ms.  
Weir take photos and report the matter to Greg unless she was of the view something  
untoward was afoot. The Employer also relies on the fact that, at the investigation  
meeting, Ms. Smith lied about the chicken being short coded on two occasions; agreed  
she was not allowed to put meat in the back to purchase later; agreed she was not to  
price the chicken and buy it herself; and agreed she should have put the chicken out for  
the public to purchase.  
[114] The facts do not support a finding Ms. Smith tried to hide her actions. Ms. Smith  
would have known an employee saw the chicken when it was delivered to the store.  
After Ms. Weir found the chicken on the shelf, she moved it and left it out in the open.  
Ms. Smith would have known whoever moved the chicken had also seen it. Robin, who  
was initially going to buy some of the chicken was aware Ms. Smith was buying it.  
Finally, Ms. Smith purchased the chicken openly at a cash register operated by a  
cashier. Concerning Ms. Weir taking photographs, and reporting the matter to Greg,  
Ms. Weir’s thoughts and actions do not establish Ms. Smith’s state of mind.  
[115] Concerning the comments Ms. Smith made at the investigation meeting, Ms.  
Smith testified that she was nervous and flustered and not thinking straight. She does  
not recall making the comments in question. Greg and Mr. Falba stated she seemed  
nervous. Ms. Cherrey testified she and Ms. Smith were shocked. They had not been  
given any advance notice of a meeting or what the meeting was about. Ms. Cherrey  
was so shocked, Mr. Falba commented on the colour of her face. Mr. Falba’s notes do  
not mention the fact that Ms. Smith told Mr. Falba that one of the reasons for the  
reduced price was the fact that the chicken was a mispick, a somewhat significant  
omission. I do not find Mr. Falba’s notes to be sufficient to establish Ms. Smith acted  
with dishonest intent.  
[116] The Employer also argues that the Employee Purchase Policy has been in effect  
for decades and is well known by many. I do not find such to be sufficient to establish  
the policies had been brought to the attention of Ms. Smith.  
37  
[117] I find the policies were not posted in the workplace or otherwise made known to  
Ms. Smith.  
[118] In many cases, a finding that the employee had no notice of the rule would be the  
end of the matter. Especially, as in this case, where it is through the policy that  
employees are also put on notice that a breach of the policy could result in their  
dismissal, a requirement set out in KVP Co. Ltd., supra. However, the Employer argues  
that Ms. Smith’s conduct was so outrageous that she had to have been operating with  
dishonest intent. I turn then to consider facts in dispute that are relevant to the  
characterization of Ms. Smith’s conduct.  
[119] There is a dispute on the evidence as to whether Food Basics paid the supplier for  
the chicken. Ms. Smith testified that Food Basics was not charged by the supplier for  
the chicken breasts, and she knew that because the chicken breasts did not show up on  
the supplier’s invoice. She was not challenged on this point. The Employer’s evidence  
on this point is unclear. The Employer witnesses referred to two different types of  
mispicks, items that were sent instead of an item that was supposed to be delivered and  
items that were simply added to the order in error. These witnesses referred to the  
filing of a claim without identifying if a claim would be filed in both instances or, only the  
first. In any event, the filing of a claim suggests, if the store was charged, it would be  
reimbursed or get a credit. I find Ms. Smith’s belief that there was no cost to the store  
for the chicken breasts to be reasonably held.  
[120] The next area of dispute concerns whether mispicks are to be priced according to  
their retail value or reduced. The Employer argues they are to be priced according to  
their true retail value. The Union’s witnesses testified mispicks are always given a  
reduced price, below retail value. Mr. Zwolman testified the store is to contact a field  
specialist to price mispicks, but he did not know if the procedure was followed in store  
883. None of the store managers testified the practice described by Mr. Zwolman was  
followed. The language used by all witnesses suggests that the goal when pricing  
mispicks was to move them out of the store quickly. Ms. Smith testified she was trained  
by Shelley to price mispicks “to get them out of the store.” Ms. Noble testified that,  
when bagels that were a mispick came into the store, Greg told her to “make them  
disappear fast.” Mr. Poole testified, when he was manager, a mispick came into the  
store and he was asked if it could be reduced to “get rid of it.” When asked what he  
would have done about a mispick Mr. Poole responded: “I would have said reduce it,  
blow it out.” When describing how mispicks were handled when he was store manager,  
Mr. McKone testified he would be told about a mispick and then would discuss “putting  
a price on it to move it out.” Given the consistency of the language used by the  
witnesses, I find mispicks were priced below their retail value with a view to moving  
them out of the store.  
38  
[121] The price Ms. Smith assigned to the chicken breasts was challenged by the  
Employer as egregiously below their retail value estimated by Employer witnesses to be  
$15 per tray. Ms. Smith steadfastly disagreed that two chicken breasts would sell for  
$15 and testified that the chicken breasts in question were similar to ones in the meat  
case selling for $6.00 - $8.00 dollars. In terms of how Ms. Smith came to price the  
chicken breasts for $5.00 she testified that, as I have found above, mispicks are always  
priced below retail value. Ms. Smith testified she took into consideration the fact that, a  
couple of times a year, Food Basics puts small trays of two chicken breasts on sale for  
$5.00. The code for this sale is 5883. Ms. Smith decided to apply that code to the  
chicken breasts. She entered code 5883 into the scale producing a scannable bar code  
that was the same as the one used during the sales. She assigned that price to the  
trays of chicken. Ms. Smith was not challenged on the code she used, and no  
Employer witness contested the existence of the code, or that it produced the sticker in  
question. The explanation given by Ms. Smith as to how she came to price the trays of  
chicken breasts $5.00 at the hearing is the same explanation she gave at the  
investigation meeting. Ms. Cherrey confirmed that Food Basics had trays of chicken  
breasts on sale for $5.00 in the past. I find Ms. Smith’s explanation as to how she came  
to price the chicken breasts to be credible and further find she arrived at the price in a  
rational manner based on the past practice as to how mispicks were priced as she knew  
it.  
[122] There was much evidence on the issue as to whether Ms. Smith had the authority  
to reduce prices. Ms. Smith testified that she was trained by Shelley who regularly  
reduced the prices on meat. Ms. Smith was trained that she had the authority to reduce  
prices. Ms. Noble corroborated Ms. Smith’s evidence as to Shelley’s practice and  
training. Ms. Weir testified she told Robin to leave the chicken for Ms. Smith to deal with  
as “part-time employees can’t price meat” suggesting that Ms. Smith herself did have  
such authority. The store managers testified that only the manager or assistant  
manager could authorize reductions and they were not aware of any instance where a  
bargaining unit member did so without their authority. Neither the Theft Policy nor the  
Employee Purchase Policy prohibit a bargaining unit employee from pricing mispicks or  
reducing prices. None of the store managers testified that they spoke to Ms. Smith to  
inform her she could not price mispicks. None of the store managers were aware of  
what training Ms. Smith had received concerning the pricing of mispicks. I find Ms.  
Smith’s evidence to the effect that she understood that she had the authority to price  
mispicks to be credible.  
[123] The final area of dispute is whether the rules the Employer asserts Ms. Smith  
broke; namely, reducing a product, setting it aside and not making it available to  
customers, and then purchasing the product, were consistently enforced by the  
39  
Employer in the past. Ms. Smith testified Shelley told her she was to assign a reduced  
price to mispicks and that she was permitted to put the mispick aside and purchase it  
later. Ms. Smith’s testimony is corroborated by Ms. Noble who was also trained by  
Shelley and saw Shelley behave as Ms. Smith testified she had been trained. Mr. Poole  
testified he believed Shelley bought the mispicks herself “the way she was but it was  
supposed to hit the floor first”. Ms. Weir testified that, prior to Ms. Smith’s dismissal,  
employees were permitted to set items aside for later purchase and that only stopped  
after Ms. Smith was discharged.  
[124] The evidence of Ms. Smith, Ms. Cherrey and Ms. Noble all contain references to  
instances where mispicks were drastically reduced and employees were permitted to  
purchase them without them going out on the floor. The examples include bagels,  
shampoo, and salad dressing. There was also an example of employees being  
permitted to take flowers for free. Mr. Poole, when asked if mispick shampoos were  
offered to employees before going out on the floor, testified: “I don’t remember, and I  
don’t know if I said here yeah go ahead just hide it.”  
[125] The Employer’s evidence adduced by way of the testimony of the store managers  
is that mispicks that were not saleable were made available to employees for purchase  
and not the public.  
[126] The Union’s witnesses, as discussed above, are currently employed in the store.  
The evidence they gave implicates them in conduct that the Employer asserts is in  
violation of the policies. Considering the control an employer has over the livelihood  
and working conditions of its employees, it is highly unlikely Ms. Cherrey and Ms. Noble  
would come forward and give such testimony unless it was true. Ms. Noble and Ms.  
Smith have been working consistently in the store since it opened in 2004. The store  
managers who testified have either spent short periods of time at store 883 or worked in  
the store intermittently. They could easily have confused store 883 with another store  
but Ms. Noble and Ms. Smith, having worked at store 883 for 17 straight years, would  
not. Further the evidence of the Employer’s witnesses supports a finding that  
employees were permitted to place items in the back for later purchase and were  
permitted to purchase mispick items not made available to customers, both of which are  
a violation of the policy. On the Employer’s own evidence, the policy is not entirely  
enforced. I find the evidence given by the Union’s witnesses to be preferable. I find  
that the policies are not consistently enforced at store 883.  
[127] To summarize, I find the store was not charged by the supplier for the chicken  
breasts; mispicks are usually priced below retail value to move them out of the store;  
Ms. Smith believed she had the authority to price mispicks; the reasoning she applied to  
40  
the pricing of the chicken breasts was reasonable; and there was a practice in the store  
of employees purchasing mispicks they themselves had reduced and not made  
available to customers. Considering these findings, it cannot be said that Ms. Smith’s  
conduct was so outrageous as to evidence dishonest intent.  
[128] For the foregoing reasons, I find the Employer has not proven an intention on Ms.  
Smith’s part to act dishonestly.  
[129] The Union’s alternative argument, that the Employer has not established that the  
requirements as established in KVP Co. Ltd., supra, have been met, also succeeds as  
the Employer has not established the policies were brought to the attention of Ms. Smith  
or that Ms. Smith was notified that a breach of the policies could result in discharge.  
Further, the Union has established that the policies were not consistently enforced.  
Disposition  
[130] For the foregoing reasons I conclude that the Employer violated the Collective  
Agreement when it terminated Ms. Smith’s employment and her grievance is  
consequently allowed. The dismissal is to be removed from Ms. Smith’s record. Ms.  
Smith is to be forthwith reinstated to the position of meat manager at Food Basics store  
883 and to be made whole for any losses occasioned because of her unjust dismissal.  
[131] I remain seized in connection with any dispute respecting the interpretation or  
implementation of the terms of this award including, without limitation, the calculation of  
the appropriate compensation to Ms. Smith, should the parties be unable to resolve  
such matter themselves.  
Diane L. Gee  
41  

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