Employment Lawyer Advising Employees on Termination for Cause |
In Ontario, a person’s employment may be terminated “for cause” whenever an employer believes the employee committed a wrongful act (misconduct) that was so serious that it justifies dismissing the employee “on the spot.” In that case, the employer takes the position they do not need to provide the employee prior notice of termination of employment, or pay in lieu of notice. Therefore, the employee’s employment ends immediately, and the employee is not given any prior notice of termination, or pay in lieu of notice (called a “severance package” or “termination package“).
An allegation of just cause is very serious and has significant legal consequences for the employee. Typically, it means the employee is not entitled to a severance package that, depending on the employee’s age, years of service and position, may have included significant compensation. If you have been dismissed for cause, it is critical that you consult with an experienced employment lawyer as soon as possible to review your individual employment termination and severance rights.
Bune Law, Toronto employment lawyer, can help you by explaining in detail your legal rights, entitlements and options under Ontario employment law. By providing you with the knowledge and experience you need to advocate successfully on your behalf, you will be able to navigate the various obstacles your employer may place in your way while you pursue your rights and severance entitlements.
Just Cause Termination in Ontario
In order for an employer to justify a termination for cause, it must prove that an employee’s misconduct undermined the root (or essence) of the employment relationship, such that its underlying confidence is shattered and cannot be repaired. Examples of such misconduct include:
- Dishonesty
- Theft or fraud
- Workplace Harassment
- Neglect of duties
- Insubordination and insolence
- Poor performance/Incompetence
Progressive Discipline and Termination
An employer can justify an employee’ termination was based on just cause for any valid reason, such as repeated poor performance (or incompetence). However, as with other reasons for terminating employment for cause, an employer’s decision will generally be difficult to justify (but not impossible). For instance, an employer cannot fire an employee simply because they are dissatisfied with their performance or disagree with their work product, but must generally prove they made their work expectations known and gave the employee a reasonable opportunity to improve.
Employment Contracts and Termination for Cause
An employer can establish from the outset of an employee commencing their job with the company, what specific circumstances will lead to the end of an employee’s job (termination of employment). Usually, this can be found in a “termination clause” of an employment contract, which specifies to grounds of termination:
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- Employee Resignation
- Termination by Employer “Without Cause”
- Termination by Employer “For Cause”
Termination Without Cause
If the employer wants to limit how much prior notice of termination (or severance package) it will provide when it chooses to terminate employment for no specific misconduct, it can do so under the “termination without cause” section of an employment contract. However, it must provide for at least the minimum legal requirements of termination pay/notice of termination, benefits continuance and statutory severance pay under the Ontario Employment Standards Act, 2000 (“ESA“).
Termination for Cause
An employer can also make it clear to the employee that very serious misconduct will allow it to terminate the employee’s job employee’s without any prior notice or a severance package, under the “termination for cause” section. However, it is important for employers (and employees) to note recent court cases have set specific standards under which this may be achieved. Specifically, an employer must be sure to abide by the legal requirements set out in the ESA.
In the recent court decision of Waksdale v. Swegon North America (“Waksdale“), the Ontario Court of Appeal held that there will be very few circumstances where an employer can justify a termination for cause without imposing an obligation on the employer.
Specifically, in Waksdale, the court emphasized the general rule that, under the basic legal requirements set out in the ESA, the only circumstances justifying a termination for cause (without providing prior notice, or termination pay and severance pay) must meet the following standards (among others):
(a) the employee is guilty of “wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer”
(b) the employment contract has become impossible to perform or has been frustrated by a fortuitous or unforeseeable event or circumstance (“frustration of contract”)
(c) An employee whose employment is terminated after refusing an offer of reasonable alternative employment with the employer
(d) An employee who is on a temporary lay-off and does not return to work within a reasonable time after having been requested by his or her employer to do so (assuming the temporary layoff was authorized under an employment contract – see previous blog post)
(e) the employee’s fixed-term employment contract has come to an end on its expiry date or upon the completion of a specific task.
In other words, a termination clause cannot have a “termination for cause” section which denies the basic ESA minimum protections to employees who committed “just cause” for termination, even if such behaviour did not rise to the level of “wilful misconduct” required by the ESA.
What the court’s decision in Waksdale affirms is that there are effectively two distinct standards of termination “for cause”:
- the ESA “wilful” misconduct, disobedience or neglect of duty standard (extremely difficult to establish)
- the common law “just cause” standard (not as difficult as the ESA “wilful” standard, but still very difficult to establish)
In either case, a court must be convinced by the employer that the specific facts and circumstances on which it relied to terminate its employee’s job without prior notice or a severance package are sufficient.
Further, even if the employer terminates an employee’s job “without cause” without having to rely on the “for cause” termination section in an employment contract, the employer will not be able to use any part of the termination language if any part of it is legally invalid. For instance, if an employment contract’s “for cause” termination language is invalid, the employer will not be able to rely on the termination “without cause” section to limit an employees’ entitlements in a termination “without cause” situation – even if the “without-cause” language in the employment contract would be perfectly valid otherwise.
Therefore, an employer must make sure that, when read as a whole, the termination language in an employment contract is valid and meets legal requirements, even if it the termination for cause and without cause sections are in different locations in the contract.
If You Have Been Dismissed for Cause, Contact Bune Law for Help
At Bune Law in Toronto, you will be provided with experienced legal advice on a wide variety of employment matters, including what steps to take if your employment was terminated for cause. Our employment lawyers takes pride in our reputation for strong advocacy and excellence in client service. Contact Bune Law online or at 647-822-5492 for a consultation.
If you are an employer, you should ensure that your employment contracts are carefully drafted to provide for ESA-minimum requirements on a for cause termination that do not rise to the level of wilful misconduct required by the ESA. You should also review your company’s liability for common law notice entitlements when it comes to employees who have potentially invalid termination with cause provisions – even if those provisions are found together in one paragraph in the employment contract, or are entirely separated in two separate paragraphs.
If you are an employee who has been terminated with or without cause, you should seek legal advice even if you have a written employment agreement that appears to restrict your notice/severance entitlements. You may be entitled to more generous severance compensation under Ontario common law.
No matter which side you are on, our employment lawyer is constantly up-to-date with the law and ready to assist you. Don’t hesitate to reach out to Bune Law at 647-822-5492.
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