Federal Court of Appeal Upholds Decision on Employee Misconduct

Date: 20260511 Docket: A-192-25 Citation: 2026 FCA 89 CORAM: [NAME]. [NAME]. [NAME] J.A. BETWEEN: ATTORNEY GENERAL OF CANADA Applicant and [NAME] Respondent Heard at Toronto, Ontario , on April 20, 2026 . Judgment delivered at Ottawa, Ontario , on May 11, 2026 .

REASONS FOR

JUDGMENT BY: [NAME]. CONCURRED IN BY: [NAME]. [NAME] J.A. Date: 20260511 Docket: A-192-25 Citation: 2026 FCA 89 CORAM: [NAME]. [NAME]. [NAME] J.A. BETWEEN: ATTORNEY GENERAL OF CANADA Applicant and [NAME] Respondent

REASONS FOR

JUDGMENT [NAME]. [ 1 ] The Attorney General of Canada (representing the Canada Employment Insurance Commission) seeks judicial review of a decision of the Appeal Division of the Social Security Tribunal. The Appeal Division reversed a decision of the Tribunal’s General Division, which had found that [NAME] had lost his job due to his own misconduct. In allowing the appeal, the Appeal Division found that the General Division had made errors of fact and law in arriving at its decision, concluding that [NAME] was not disqualified from receiving benefits due to misconduct on his part. Background [ 2 ] [NAME] attended what he describes as a “venue” located close to his home on the evening of June 9, 2024. There, he says that he “ended up running into” his ex-partner and her friend. At this time, [NAME] was under a bail condition prohibiting him from being in contact with his ex-partner. This order arose out of a previous altercation between [NAME] and his ex-partner that had resulted in his incarceration in March of 2024. [ 3 ] What happened next is unclear. The only evidence as to what went on that evening came from [NAME] himself. He stated that the venue was close to his home and that he went there frequently. He also says that his ex-partner was living in another part of the city, and that he did not anticipate running into her there. [ 4 ] It is undisputed that the police were called on the night in question, and that [NAME] was subsequently arrested. However, the circumstances surrounding his arrest are also unclear. [NAME] advised the Appeal Division that he left the venue right after encountering his ex-partner and that he was arrested on his way home. No information was provided with respect to any charges that [NAME] may have faced as a result of the incident, but he acknowledges that he was held in detention from June 9, 2024, until June 26, 2024. At this point, he was released on bail on the condition that he not leave his house except in the company of a surety. This meant that [NAME] was unable to attend work, and his employer terminated his employment approximately two weeks later. The General Division’s Decision [ 5 ] The General Division concluded that [NAME] lost his job because he had missed more than three shifts of work because of his incarceration and subsequent house arrest. This resulted in him being unable to fulfill an essential condition of his employment contract and amounted to misconduct on his part, disentitling him to [NAME]. In coming to this conclusion, the General Division found that [NAME]’s actions in breaching his bail conditions—specifically, the prohibition from contacting his ex-partner—on June 9, 2024, were willful, conscious, deliberate and reckless, and that this conduct had led to his incarceration and the subsequent job loss. [ 6 ] In finding that [NAME]’s misconduct disentitled him to [NAME], the General Division noted that “[h]e decided to try his relationship with his ex-partner again without obtaining a variation in his bail conditions” . [ 7 ] [NAME] accepts that his employment was terminated because he missed three shifts, contrary to his employer’s attendance policy. He denies, however, that there had been any misconduct on his part, submitting that his arrest and subsequent incarceration were the result of him being in the “wrong place [at the] wrong time” . The Appeal Division’s Decision [ 8 ] In accordance with subsection 58(1) of the Department of Employment and Social Development Act , S.C. 2005, c. 34, the Appeal Division may only intervene in a decision of the General Division in one of three situations:

1) Where the General Division failed to observe a principle of natural justice or otherwise acted beyond or refused to exercise its jurisdiction;

2) Where it erred in law in making its decision; or 3) Where it based its decision on an erroneous finding of fact made in a perverse or capricious manner or without regard for the material before it. [ 9 ] In this case, the Appeal Division found that the General Division had committed errors of fact and law that justified the reversal of its decision. In the Appeal Division’s view, there was insufficient evidence to conclude that [NAME] had willfully breached his bail conditions on June 9, 2024. The only available evidence—[NAME]’s own testimony—suggested that he had encountered his ex-partner accidentally. The Appeal Division concluded that the General Division erred by drawing unfounded factual inferences from the evidence, and by failing to adequately justify the reasoning that led to its conclusions. [ 10 ] In particular, the Appeal Division found that the General Division had erred in focussing on the fact that [NAME] was aware of the potential consequences of breaching his bail conditions. According to the Appeal Division, this awareness was not particularly relevant to the question of whether his actions on the night in question were willful. The Appeal Division further found that the General Division had misunderstood the significance of the evidence on which it relied. [NAME] had mentioned his desire to reconcile with his ex-partner (the only thing that the General Division found suggested his conduct on the evening in question was willful), there was no evidence to suggest that his conduct on June 9, 2024, had anything to do with any discussion that the pair may have had at some point with respect to reconciling. [ 11 ] The Appeal Division further found that the General Division had failed to analyze what [NAME] had said about his intentions on the evening in question or to consider what inferences might be drawn from his actions. In particular, the General Division failed to grapple with [NAME]’s claim that his arrest on June 9, 2024, was the result of a chance encounter with his ex-partner and that he did not intend to breach the no-contact order. [ 12 ] The Appeal Division also rejected the Commission’s claim that [NAME] could be deemed to have acted willfully because he had been found in breach of his bail condition and was given house arrest. There was no evidence before the General Division that [NAME] had been found guilty of a breach of a bail condition. Moreover, the fact that he had been arrested on June 9, 2024, did not mean that there had been a judicial finding of intent on his part, and the burden remained on the Commission to demonstrate that [NAME]’s actions were willful. [ 13 ] Finally, the Appeal Division found that the General Division had failed to explain how it had come to the conclusion that [NAME]’s actions were willful, conscious, deliberate or reckless and it failed to point to evidence that would support that conclusion. [ 14 ] Making the decision that it believed the General Division should have made, the Appeal Division accepted that [NAME] lost his job because he failed to show up for work, and that he knew or should have known that there was a real possibility that he would lose his job if he was unable to go to work. That said, the Appeal Division did not accept that [NAME] acted willfully or so recklessly as to be almost willful on the night in question. [ 15 ] In coming to this conclusion, the Appeal Division found, amongst other things that: There was no evidence that [NAME] had been found to have intentionally breached his bail conditions; The uncontradicted evidence before the General Division was that [NAME] had not gone looking for his ex-partner on the night in question, nor had he intended to have contact with her; and There was no evidence that [NAME] spoke to his ex-partner on June 9, 2024, that she spoke to him or that he sought to engage with her in any way:the only evidence was that he spoke to his ex-partner’s friend. [ 16 ] The Appeal Division rejected the Commission’s argument that [NAME] acted willfully because he did not leave the venue immediately upon spotting his ex-partner there. The Appeal Division noted that the Commission was advancing a theory that the General Division had not considered, and that the Commission was seeking to substitute its reasoning for that of the General Division. [ 17 ] Consequently, the Appeal Division concluded that the Commission had not met its burden of showing that [NAME]’s actions on the night of June 9, 2024, amounted to misconduct. The Attorney General’s Position [ 18 ] Accepting that reasonableness is the standard of review to be applied to the decision under review, the Attorney General says that the Appeal Division’s decision was unreasonable as it erred in law by misapprehending the test for misconduct that has been established in the jurisprudence, and that it unreasonably concluded that the General Division’s reasons were insufficient. [ 19 ] The Attorney General notes that “misconduct” looks at whether an employee knew or ought to have known that their actions would impair their duties to their employer. This is an objective test, and it does not matter whether a claimant actually intended that their actions impair their duties to their employer. Citing a number of cases including this Court’s decision in [NAME] v. Canada (Attorney General) , 2025 FCA 41, the Attorney General submits that the Commission is not required to inquire into the mind of a claimant. It is enough, the Attorney General says, that the claimant be aware of the employer’s policy, and that they engage in behaviour that they knew or ought to have known would result in a breach of that policy. [ 20 ] The Attorney General submits that once it had been established that [NAME] was unable to get to his job because he had been incarcerated, that was sufficient to establish that the termination of his employment was the result of misconduct on his part. The Commission was not required to look behind the fact of an incarceration in order to determine whether the actions on the part of a claimant that led to the incarceration were willful, conscious, deliberate or reckless. [ 21 ] Citing this Court’s decision in Canada (Attorney General) v. [NAME] , 2010 FCA 314, the Attorney General says that someone with no intent to breach the duties owed to their employer, but who nevertheless acts knowing that their conduct could impair that duty or acts recklessly can be found to have committed misconduct. What does the Jurisprudence Say? [ 22 ] I cannot accept the Attorney General’s argument. A review of this Court’s jurisprudence dealing with the issue of employee misconduct demonstrates that a claimant’s inability to fulfill a condition of their employment is not, by itself, sufficient to disentitle them to [NAME]. [ 23 ] As this Court observed in Canada (Attorney General) v. [NAME] , 2003 FCA 485, there is a distinction between the effect of the misconduct in question and the cause of that misconduct: at para.

8. Indeed, the Court observed in [NAME] that if the argument that the Attorney General advances here were correct, “there [would be] misconduct every time a person is unable to fulfill a condition of his or her employment. This cannot be.” [ 24 ] [ADDRESS] found in [NAME] that an Umpire had erred by identifying the claimant’s inability to fulfill a condition of employment as constituting misconduct and that, in so doing, the Umpire had confused the effect of the misconduct with its cause. [ADDRESS] held that it was necessary to examine the reason why the claimant’s driver’s licence had been suspended (which is what had led to the loss of his job) in order to determine whether he committed an act that amounted to misconduct: at para. 12. [ 25 ] Numerous decisions of this Court have confirmed that the state of a claimant’s knowledge can be important in determining whether they have committed misconduct. For example, in Canada (A.G.) v. [NAME] , 1993 CanLII 3020 (FCA), [1994] 1 F.C. 684, this Court reaffirmed that the claimant’s conduct “must be wilful or deliberate or so reckless as to approach wilfulness” to constitute misconduct. [ 26 ] The claimant in [NAME] was a truck driver, and possession of a valid driver’s licence was an essential condition of his employment. He lost his licence as a result of being convicted of impaired driving, and he lost his job as a result. [ 27 ] The Commission advanced an argument similar to the one advanced by the Attorney General here, contending that [NAME] lost his employment because he lost his driver’s licence and this amounted to misconduct on his part. In the Court’s view, it was “too narrow an analysis and interpretation of the situation” to attribute the loss of employment to the loss of the driver’s licence rather than the licence-holder’s underlying conduct. “Clearly” , the Court said, “we must examine the cause of the failure to comply with the conditions of the employment” : at p. 690. [ 28 ] In finding that [NAME] was disentitled to benefits, not just because of the loss of his driver’s licence but because of his misconduct, the Court had regard to the deliberate nature of his actions. That is, this Court observed that “[t]he decision to drive is a deliberate act. The decision to drive after drinking alcohol is also deliberate. The decision to drive in these circumstances, knowing that, even without wishing to, one may be in violation of the provisions of the law […] is also deliberate or is so reckless as to approach wilfulness” : at pp. 688-689. Thus, it was the deliberate nature of his actions in drinking and driving that led the Court to conclude that [NAME] had lost his licence because of a wrongful act on his part, which amounted to misconduct. [ 29 ] [ADDRESS] has undertaken a similar analysis, finding misconduct in other cases involving the loss of a job as a result of the knowing and deliberate consumption of alcohol, even in cases where the individual was addicted to alcohol: see, for example, Canada (Attorney General) v. [NAME] , 2004 FCA 219 at para. 4: Canada (Attorney General) v. [NAME] , 2005 FCA 339. [ 30 ] Similarly, in cases where, like here, the proximate cause of the job loss was the failure to attend at work, the Court nevertheless went on to examine the underlying reason for the absenteeism in order to determine whether the employee’s behaviour amounted to misconduct: see, for example, [NAME] v. Canada (Attorney General) , 2007 FCA 36 at para. 24. [ 31 ] There are also cases such as this one where the proximate cause of the job loss was the failure to attend at work because of the claimant’s incarceration or the conditions of his release. [ 32 ] For example, in Attorney General of Canada v. [NAME] , 2003 FCA 255, the claimant accumulated a number of unpaid fines for violations under the Highway Safety Code which resulted in his incarceration and subsequent release on parole. One of his parole conditions prevented him from working in Ontario (where his employer was located), which resulted in him losing his job. [ADDRESS] found that [NAME] was himself the cause of his deprivation of liberty and subsequent loss of employment, and that he could not blame the loss of his job on the conditions of his parole because the conditions that were imposed were caused by his own actions: at para. 9. [ 33 ] Similarly, in Canada (Attorney General) v. [NAME] , 2013 CAF 213, the claimant had been incarcerated as a result of a complaint filed by his spouse alleging that he had uttered death threats against her, and he lost his job as a result. In assessing whether [NAME] had voluntarily left his employment, this Court looked at the facts underlying his incarceration, identifying the “real issue” as being “whether the claimant voluntarily committed the acts that led to his incarceration, and therefore whether he voluntarily placed himself in a situation that would prevent him from keeping his employment ” : at para. 10 [my emphasis]. [ADDRESS] concluded that the evidence established that [NAME]’s own conduct had led to his incarceration and to the loss of his employment, thereby disentitling him to [NAME]. [ 34 ] In Canada (Attorney General) v. Borden , 2004 FCA 176, this Court held that where a claimant loses their job because they are incarcerated, their employment is terminated by necessity. That said, the Court went on to observe that “if a reprehensible act is to be identified as the real cause of that sudden situation , it is misconduct” : at para. 3, citing [NAME] v. Canada (Attorney General) , 1997 CanLII 5451 (FCA), [1998] 1 FC 529, at para. 8, [my emphasis]. [ 35 ] The [NAME] case referred to earlier involved the loss of employment due to the claimant’s refusal to be vaccinated against Covid-19. There, this Court noted that the only question was “whether the employee knew or ought to have known of the policy, the consequences of non-compliance, and voluntarily chose not to comply ” : at para. 9, [my emphasis]. In finding that the claimant was disentitled to benefits as a result of his misconduct, the Appeal Division determined that the employee had notice of the employer’s policy, was aware of the consequences of non-compliance and made a conscious decision not to comply , with the result that the claimant’s loss of employment was voluntary and amounted to misconduct: at para. 10 [my emphasis]. [ 36 ] Finally, the [NAME] decision cited by the Attorney General confirms that “misconduct” in the context of eligibility for [NAME] requires that a claimant “knew or ought to have known that his or her conduct was such that it would result in dismissal” : at para.

11. Wrongful intent is not required: it is enough if the misconduct is “conscious, deliberate or intentional” : at para.

13. The question was thus whether the claimant could “normally foresee that [his conduct] would be likely to result in his or her dismissal:” at para.

15. The Application of the Case Law in this Case [ 37 ] From the above review of the jurisprudence, it is evident that the Commission cannot simply rely on the fact that a claimant’s job loss results from their incarceration to find that they are not entitled to [NAME] because of misconduct. Contrary to the Attorney General’s position, it is not enough to show that a claimant knew that they had to attend work on a regular basis and that they risked losing their job if they failed to do so. The facts giving rise to the incarceration must be examined in order to see whether the claimant’s conduct was in fact willful, conscious, deliberate or reckless so as to disentitle them to benefits. [ 38 ] Applying these principles to the facts of this case, it is clear that the Appeal Division reasonably concluded that [NAME] could not be deemed to have acted willfully on the night in question simply because he had been incarcerated following an alleged breach of a bail condition. There was no evidence before the General Division that would cast doubt on [NAME]’s assertion that he did not intend or expect to run into his ex-partner on the night in question, and that their encounter was accidental. Nor was it objectively unreasonable for him not to recognize the risk that he would encounter his ex-partner at the venue, given the size of the city of Toronto and the fact that they lived in different parts of the city. [ 39 ] There was also no evidence as to what charges, if any, led to [NAME]’s incarceration and subsequent house arrest following the events on the night of June 9, 2024. While a criminal conviction is not necessary to prove “misconduct” , it may assist in demonstrating that a claimant’s conduct was willful, conscious, deliberate or reckless so as to disentitle them to benefits. In some cases, it may also be possible to infer wilfulness from the burden of proof that attaches to certain conditions or orders in the criminal context (e.g., a recognizance order): [NAME] , above, at paras. 18-20. Here, however, there was no evidence of the conditions to which [NAME] was subject, nor of the nature of the breach that occurred on June 9, 2024, that led to his incarceration: Appeal Division decision at para. 32. [ 40 ] The Appeal Division’s finding that the General Division misconstrued the evidence regarding [NAME]’s desire to reconcile with his ex-partner was also reasonable. While it appears from the record before the General Division that the two may have discussed the possibility of getting back together at some point, there was nothing that would suggest that any such discussions occurred on the night in question or that [NAME]’s decision to go to the venue that night was motivated by his desire to reunite with his ex-partner. [ 41 ] The onus is on the Commission to establish “misconduct” on the part of a claimant as the term has been defined in the jurisprudence. The failure to do so will result in the claim of misconduct being rejected. This is what occurred in [NAME] , where a Commission application for judicial review was rejected by this Court because of the “total lack of evidence as to the cause and legality of the suspension of the claimant’s driving license” : above at para.

10. See also [NAME] v. Canada (Attorney General) , 2011 FCA 30 at para. 3. [ 42 ] As this Court observed in [NAME] , a conclusion such as that reached by the Appeal Division in this case “imposes no hardship on the Commission” . This is because subsection 48(2) of the Employment Insurance Act , S.C. 1996, c. 23 provides that a benefit period cannot be established unless the claimant provides the Commission with information as to “the circumstances pertaining to [any] interruption of earnings” and “such other information as the Commission may require” . As a result, the Commission can satisfy the burden imposed on it by making appropriate inquiries of the claimant: [redacted] Proposed Disposition [ 43 ] For these reasons, I would dismiss the Attorney General’s application for judicial review. "[NAME]" J.A. “I agree. [NAME] J.A.” “I agree. [NAME] J.A.” FEDERAL COURT OF APPEAL NAMES OF COUNSEL AND SOLICITORS OF RECORD DOCKET: A-192-25 STYLE OF CAUSE: ATTORNEY GENERAL OF CANADA v. [NAME] OF HEARING: Toronto, Ontario DATE OF HEARING: April 20, 2026

REASONS FOR

JUDGMENT BY: [NAME]. CONCURRED IN BY: [NAME]. [NAME] J.A. DATED: MAY 11, 2026 APPEARANCES : [NAME] For The Applicant [NAME] on his own behalf SOLICITORS OF RECORD : [NAME] of Canada For The Applicant