In Ontario employment law, an employer (or business) is permitted to termination the job of one of its employees. However, there are specific circumstances, rights and obligations when it comes to an employer’s right to terminate employment. In this employment law blog, we will outline the employer’s right to terminate, while considering the conditions under which this right must be exercised properly.
An Employer’s Right to Terminate Employment
There are generally two ways a company can terminate an employee’s job: termination for cause or termination without cause.
Termination for Cause
In a termination for cause (or “termination with cause”), the employer can allege (and must be able to prove with evidence) that the employee deserves to be let go immediately, without providing them with prior notice of termination or pay in lieu of notice (financial compensation in the form of a severance package). While not impossible, it is typically very hard for employers to meet this standard. Generally, an employer must prove that the employee committed serious misconduct that undermined the confidence and trust the company has and justifies ending the employment relationship.
Under this termination of employment scenario, the employer must have a valid reason to dismiss the employee immediately, without any notice or severance package. Essentially, the employee’s behavior or actions are so severe that continuing the employment relationship is no longer possible. This might include:
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Serious Misconduct: Common reasons for termination with cause include theft, workplace harassment and violence, dishonesty, drug or alcohol abuse at work that is sanctioned by workplace accommodation needs, or repeated insubordination. In these situations, an employer can act quickly and dismiss the employee without any warning.
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Incompetence or Poor Performance: Poor performance or failure to meet expectations may also lead to dismissal for cause, but only after a proper performance management process has been followed. Employers must typically show that the employee was given it could be argued that the employee has been given ample opportunity to correct the issue., had an opportunity to improve (through training, feedback, etc.), and failed to do so. Simply not liking someone’s performance is not enough to terminate with cause.
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Repeated Misconduct: If the employee has repeatedly violated company policies, despite warnings or attempts to correct the behaviour, this can constitute grounds for cause. For example, if an employee continues to arrive late to work despite multiple warnings and without a valid excuse (such as workplace accommodations for disability or family caregiving obligations), it could be argued that the employee has been given ample opportunity to correct the issue.
However, under recent employment caselaw, not every scenario will allow an employer to immediate terminate an employee’s job without providing any financial compensation. Specifically, if an employer proves the employee had committed serious misconduct but does not amount to intentional misconduct in the form of “wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer,” then it must still provide the employee with their minimum statutory entitlements to notice of termination (or termination pay in lieu of notice), benefits continuation and severance pay.
Termination Without Cause
In a termination without cause, the employer takes a different stance. Put simply, the employer can terminate without providing any reason, but at an expense: it must provide the employee with a prior notice of termination or a severance package. As such, the main employment dispute typically centres on how much severance is the employee entitled to receive. In other words, did the employer provide the employee with a fair severance package? In these cases, the employer will provide an employee with legal documents to review (ideally with an experienced employment lawyer in Toronto), which contains an offer to receive financial compensation in exchange for signing a legal release giving up any legal rights to sue the employer, such as for:
- wrongful dismissal claim
- constructive dismissal claim
- human rights (or discrimination) claims
Termination without cause is more common, and it occurs when an employer decides to end the employment relationship for reasons unrelated to the employee’s behaviour. For example, this can happen due to:
- restructuring or downsizing
- budget cuts
- change in business needs or performance
- end of an employment contract
Overall, it is always wise for employers to first consult with experienced Ontario employment lawyers before making any termination decisions to avoid costly mistakes.
Termination of Fixed-Term Employment Contracts
Fixed-term contracts are employment contracts where the employee is hired for a specific period (e.g., a one-year contract). Terminating a fixed-term contract early can be tricky, as employees may have legal rights even if the contract has not yet ended.
Generally, if there is a termination of employment before the expiry of the fixed-term employment contract, the employee must be compensated for the remainder of the contract term (i.e., the amount of salary, bonus, benefits, and so on, that the employee would have earned until the end of the contractual period).
Conclusion
In Ontario, employers in non-unionized workplaces have the right to terminate employees, but this right is subject to various legal requirements, protections, and procedures that are in place to ensure fairness and prevent abuse. The employer’s ability to terminate an employee is governed by several laws, including the Ontario Employment Standards Act, common law, employment contracts, and in some cases, the Ontario Human Rights Code and Occupational Health and Safety Act.
Call for Employment Lawyer Consultation Today
If you were terminated from your employment with or without severance package, call today to discuss your options. As an employment law firm in Toronto, Bune Law has reviewed many severance packages and are skilled at negotiating improvements. You will review and get guidance on your severance package before you agree to sign any termination documents, and help ensure that your severance package is fair and reasonable.