Appeal Dismissed: Employment Insurance Misconduct Ruling Upheld

Citation: X  v  Canada Employment Insurance Commission and BL , 2026  SST  69 Social Security Tribunal of Canada Appeal Division Decision Appellant: [redacted] Representative: [NAME]. Respondent: [redacted] Representative: [NAME] Party: [NAME]. Representative: [NAME] Decision under appeal: General Division decision dated October 15, 2025 (GE-25-2602) Tribunal member: [NAME] of hearing: Teleconference Hearing date: January 13, 2026 Hearing participants: Appellant Appellant’s representative Respondent’s representative Added party Added party’s representative Decision date: February 2, 2026 File number: AD-25-717 On this page Decision Overview Issues Analysis Conclusion Decision [ 1 ] X’s appeal is dismissed. [ 2 ] The parties agree the General Division made an important factual error. I accept that. I fixed that error by making the decision the General Division should have made. My decision doesn’t change the outcome. [ 3 ] [NAME]. didn’t lose her job for misconduct. This means she isn’t disqualified from getting Employment Insurance ( [NAME] ) benefits. Footnote 1 Overview [ 4 ] In this decision, I will call X the Employer [NAME]. the Claimant the Commission, the Employer, and the Claimant the parties the Employer’s June 4, 2024 document the June 4 Document Footnote 2 [ 5 ] The Commission initially denied the Claimant [NAME] benefits. It found she lost her job for misconduct under the [NAME]  Act. Her Employer dismissed her because she gave a free service to a family member on her day off. The Employer called this theft. And said she breached company policy and her employment contract. Footnote 3 [ 6 ] On reconsideration the Commission reversed its decision and granted her benefits. Her Employer appealed to the General Division. The General Division decided her conduct wasn’t misconduct. She didn’t know—and ought not to have known—her employer would dismiss her for giving the free hair service. [ 7 ] The parties now agree the General Division based its decision on a factual error. It misunderstood the Employer’s June 4 Document changed the Claimant’s employment contract. The parties also agree I should fix that error by making the decision. That’s what I have done. [ 8 ] For the reasons that follow, I find the Employer hasn’t proven the Claimant lost her job for misconduct. So, she’s not disqualified from getting [NAME] regular benefits. Issues [ 9 ] I will decide three issues. Did the General Division make an important factual error when it found the Employer’s June 4 Document changed the Claimant’s employment contract? If I find that error, should I fix it by making the decision the General Division should have made? Has the employer proven it’s more likely than not the Claimant knew or should have known giving the free hair service was theft or breached company policy, and knew or should have known she could lose her job for that? Analysis The parties agree the General Division made an important factual error, and I accept that [ 10 ] The leave to appeal decision identified an arguable case the General Division made an important factual error. Footnote 4 The General Division misunderstood that the June 4 Document about undercharging clients for services changed the “family and friends” term of the Claimant’s employment contract (see paragraphs 46, 47, and 48 of the Decision). Footnote 5 This was important because the General Division said the policy shift brought about by the June 4 Document allowed free hair services gave the manager permission to approve a free hair service made suspension—not termination—the penalty for giving a free hair service [ 11 ] The General Division based its decision on these factual findings. It found the Claimant didn’t know and ought not to have known she could be let go because the June 4 Document changed her employment contract (paragraphs 41, 47, 48, 50, 54, 59, 60). [ 12 ] The Employer, Commission, and Claimant all said this was an important factual error, in their written submissions and at the hearing. I agree. [ 13 ] The General Division’s interpretation of the June 4 Document and employment contract isn’t supported by a plain reading of those texts. The June 4 Document doesn’t refer to the Claimant’s employment contract, which sets out the friends and family benefit. The June 4 document is narrowly focused. It’s a warning about undercharging customers for salon services. The title shows this (“Subject: Warning Regarding Undercharging for Services”). The Employer calls it a “policy” in the text. But overall, the text shows me the Employer issued the warning to draw attention to undercharging and prevent it from occurring in the future. It wasn’t about the friends and family employment benefit. [ 14 ] More importantly, there is no evidence to support the General Division’s finding the June 4 Document changed the employment contract. When I listened to the hearing, I didn’t hear any evidence the owner intended to modify the employment contract. The Claimant didn’t refer to the June 4 Document in her testimony. The manager said she didn’t sign the June 4 Document. [ 15 ] The General Division seems to base its finding on the Claimant’s legal argument, made by her lawyer. But there was no evidence to support that legal argument. [ 16 ] The General Division’s error counts as an important factual error. Because the General Division relied on its flawed finding to decide the Claimant’s conduct wasn’t misconduct under the [NAME]  Act. [ 17 ] Since I have found an error, the law gives me the power to remedy (fix) that error. Footnote 6 The Claimant didn’t lose her job for misconduct, so she’s not disqualified from getting [NAME] benefits [ 18 ] The parties agreed if I found an error I should use my power to substitute the General Division decision with my decision. I agree. The parties had a full and fair opportunity to present their cases at the General Division. I have to decide one issue, and I’m adopting a finding of fact [ 19 ] The General Division is the primary trier of fact. This means I should adopt a General Division factual finding when a party hasn’t successfully challenged it. No party challenged the finding the Claimant lost her job because she gave a family member a free hair service (paragraphs 12 and 16). [ 20 ] At the hearing the Employer argued the General Division’s misconduct analysis was undermined by the important factual error I found above. I agree. The General Division’s findings about misconduct each flow from that factual error (paragraphs 41, 47, 48, 50, 54, 59, 60). [ 21 ] So, I have to decide whether the reason the Claimant lost her job counts as misconduct under the [NAME]  Act. In an employer appeal, the employer has to prove it’s more likely than not the Claimant lost her job for misconduct. For the reasons that follow, I find the Employer hasn’t done that. The Employer hasn’t shown the Claimant knew or should have known her conduct breached employer policy, and she might lose her job Footnote 7 [ 22 ] I have considered the Employer’s argument the Claimant knew or should have known she could not give a 100% free service to a relative. And could lose her job for doing that. In other words, the Claimant lost her job for misconduct under the [NAME]  Act. [ 23 ] The Employer says she signed her employment contract, which sets out the friends and family discount (an employment benefit). She attended a staff meeting, then initialled the June 4 Document, which doesn’t change her contract. There is a difference between giving a discount or a free hair service while charging for others versus theft. The Employer argues the Claimant had faced a potential suspension for undercharging. Her manager didn’t have the authority to approve a free hair service. And she can’t use peer behaviour—her evidence other stylists gave free hair services—to authorize something the Employer prohibited. [ 24 ] There is a fundamental problem with the Employer’s argument. It isn’t supported by the evidence. To be successful, the Employer had to show despite getting approval from her manager, the Claimant knew or should have known she was breaching policy (or stealing) and could lose her job for that. [ 25 ] The Employer hasn’t shown the Claimant knew or should have known the manager had no authority to approve the free hair service. I find the manager was the Employer’s agent in the salon. The Claimant’s employment contract says she reports to the salon manager. Footnote 8 The June 4 Document affirms the manager’s authority. Footnote 9 She was an experienced manager, with a number of years’ service working for the Employer. The Employer promoted her from stylist to manager at another salon location before it transferred her to manage the location where she and the Claimant worked. Footnote 10 [ 26 ] I listened to the hearing. I accept the Claimant’s testimony. Footnote 11 She said it was the first time she brought in a family member for a free service. She asked the manager and the manager approved it. I have no reason to doubt what she said. That’s what she said to the Commission and at the hearing. I didn’t find any evidence the Claimant did this for a dishonest purpose. There’s no evidence she sought her manager’s approval to get around her employment contract, the Employer’s June 4 Document, or the salon pricing structure. [ 27 ] At the hearing the Employer had the chance to cross-examine the Claimant and the manager. It could have asked questions based on its position the Claimant knew or should have known she wasn’t allowed to give free hair services to anyone ever. And knew she could lose her job if she did. It could have asked about her understanding of the friends and family discount and maybe challenged her on that. It could have asked her why she believed the manager could approve a 100% free hair service. But the Employer didn’t ask the Claimant or the manager any questions. It didn’t test the Claimant’s evidence by questioning the truthfulness or reasonableness of what she said she knew and how she knew it. [ 28 ] The Commission says this is, in part, a case where the Employer knew stylists gave free hair services but did nothing about it. Footnote 12 In law, this is an example of the Employer “condoning” the alleged misconduct. The Commission relies on the [NAME] decision. Footnote 13 I don’t need to consider this argument. Because I found the Employer (through its agent, the manager) approved the Claimant’s conduct in advance. So, this case involves actual approval by management, not implied approval. Conclusion [ 29 ] The appeal is dismissed. The Employer hasn’t shown the Claimant lost her job due to misconduct under the [NAME]  Act. This means she isn’t disqualified from getting benefits. [ 30 ] To get regular benefits, the Claimant might still need to show she meets other eligibility rules under the [NAME]  Act. When the claimant is successful in this type of appeal, a Commission (Service Canada) agent usually contacts the claimant to get more information. If the Claimant hasn’t heard from Service Canada in two weeks, she might to follow up with Service Canada. Footnotes Footnote 1 Sections 30(1) and (2) of the Employment Insurance Act ( [NAME]  Act) say a person who loses their job for misconduct can’t get benefits for each week in their benefit period following the one week waiting period. Return to footnote 1 referrer Footnote 2 See GD2-26 to GD2-27. Return to footnote 2 referrer Footnote 3 See the Claimant’s employment contract at GD3-32 to GD3-34. Return to footnote 3 referrer Footnote 4 See paragraphs 12 to 18 of the Leave to Appeal Decision (November 18, 2025). An important factual error is a ground of appeal under section 58(1)(c) of the Department of Employment and Social Development Act ( DESD  Act). Return to footnote 4 referrer Footnote 5 Paragraph 47 says: “Given the above evidence, I find it’s more likely than not that on June 4, 2024, the Employer communicated to employees a shift in their policy about changing the price of hair services. I think the inclusion of the phrase “effective immediately, please be advised of the following policy” was specifically meant to signal that a change in policy had occurred by distinguishing between the past (when one version of the policy was in place) and the present and future (when another version of the policy would start, “effective immediately”). If the Employer hadn’t intended to change their policy, I think it’s reasonable to believe that they would have avoided any language (like the phrase that I’ve just discussed) that could potentially give employees such an impression. And I think it’s reasonable to believe that the Claimant did interpret the June 4, 2024 document as a policy change too, given the fact that she later asked her manager for approval to give her family member a free hair cut.” Return to footnote 5 referrer Footnote 6 See section 58(1) and 59(1) of the DESD  Act. Return to footnote 6 referrer Footnote 7 This is a plain language statement of legal test for misconduct, including the burden of proof. I have based this on: Minister of Employment and Immigration  v  [NAME] , A-369-88 (Federal Court of Appeal); Canada (Attorney General)  v  Brissette (CA) , [1994] 1  FC  684; ( [NAME]  v  Canada (Attorney General) , 2007  FCA  36. Return to footnote 7 referrer Footnote 8 See GD2-22. Return to footnote 8 referrer Footnote 9 See the June 4 Document at GD2-26: “If you have any questions or concerns regarding this policy or need clarification on the pricing menu, please do not hesitate to contact your manager,” Return to footnote 9 referrer Footnote 10 Listen the manager’s testimony, General Division hearing recording starting at 1:05:30. Return to footnote 10 referrer Footnote 11 Listen the General Division hearing recording starting at 1:17:48. Return to footnote 11 referrer Footnote 12 See AD4-5. Return to footnote 12 referrer Footnote 13 See Canada (Attorney General)  v  [NAME] , 2010  FCA  237. Return to footnote 13 referrer