Termination for Cause in Ontario: When Long-Service Employees Lose Severance

Written by: Sezar Bune, J.D. | Toronto Employment Lawyer

Termination for cause in Ontario is one of the most severe actions an employer can take, particularly when the employee has decades of service.

As an employment lawyer who has handled hundreds of wrongful dismissal cases, I’ve seen how termination for cause decisions can devastate both employees and employers when handled incorrectly. 

The Legal Test for Termination for Cause in Ontario

Ontario courts do not apply a checklist approach to just cause. Rather, they consider the decision of the Supreme Court of Canada’s in McKinley v. B.C. Tel, 2001 SCC 38, which established a contextual, proportionality-based analysis.

Under McKinley, courts must strike a balance between the severity of the misconduct and the ultimate penalty of summary dismissal. This requires a careful, fact-specific inquiry that includes:

• The nature and seriousness of the misconduct

• The surrounding circumstances, including the employee’s role, seniority, and length of service

• The impact of the misconduct on the employment relationship, particularly whether it has destroyed trust or made continued employment incompatible

This is why long service usually weighs against a finding of cause — but also why it does not provide immunity where misconduct is fundamentally incompatible with the employment relationship.

As Sezar Bune, employment lawyer and founder of Bune Law, explains:

“In essence, under Ontario employment law, termination for cause in Ontario requires misconduct so serious that it irreparably damages the employment relationship.”

The Reality of For-Cause Terminations

After practicing employment law for over a decade, I can tell you that true “for cause” terminations are rare – and for good reason. Ontario courts have consistently set an extremely high bar before allowing employers to dismiss someone without notice or severance pay.

The decision in Savarie v. Leon’s Furniture Limited (2022 ONSC 6116) is an example which demonstrates just how serious misconduct must be to cross this threshold, even for employees with nearly three decades of service.

Case in Point: The Savarie Case Breakdown

Background That Matters

The terminated employee was not just any worker – he was an Area Supervisor with 29 years at Leon’s Furniture, overseeing multiple retail locations. At 49 years old, he had what most would consider bulletproof job security.

That assumption proved wrong.

The Investigation Process (Why This Matters for Employees)

What was interesting about this case was the employer’s approach to responding to the employee’s misconduct. They did not rush to judgment. Instead, they:

1. Held initial discussions when concerns arose
2. Conducted a thorough investigation before making accusations
3. Gave multiple opportunities for the employee to respond
4. Documented everything properly

Professional insight: I have seen employers lose winnable cases because they skipped these steps. Courts scrutinize the investigation process almost as much as the underlying misconduct. 

The Misconduct That Sealed His Fate

The court found a pattern of serious violations:

• Unauthorized pricing decisions: Marking down furniture for personal purchase without required approvals
• Undisclosed conflicts of interest: Hidden romantic relationship with a vendor
• Abuse of supervisory authority: Using his position for personal financial benefit
• Inventory manipulation: Facilitating improper refunds and repairs

Why This Was Not Just “Poor Judgment”

In my experience, courts distinguish between isolated mistakes and systematic breach of trust. This case fell squarely in the latter category.

The Legal Framework Courts Actually Use

Step One: Proving Misconduct Occurred

The court must find clear evidence of misconduct that strikes at the heart of the employment relationship or makes continued employment incompatible, such as serious policy violations or contractual breaches. Here, the employee’s own admissions under cross-examination were damaging – he acknowledged his actions violated company policies.

Lawyer’s tip: Credibility matters enormously. The court found this employee’s testimony unreliable, which undermined his entire defense.

Step Two: Does It Justify Summary Dismissal?

This is where most for-cause cases fail. Courts ask: “Does this misconduct make continued employment impossible?”

For the Leon’s supervisor, the answer was yes. His actions struck at the core of the employment relationship—trust and integrity.

Why 29 Years of Service Didn’t Save Him

This surprises many clients. Long service usually provides significant protection in wrongful dismissal cases. Here’s why it didn’t help:

1. Senior position = higher expectations: Supervisors are held to stricter standards
2. Pattern of misconduct: Multiple violations over time, not isolated incidents
3. Personal enrichment: Using company resources for personal benefit
4. Breach of fiduciary duty: Violating the special trust placed in management

What Employers Need to Know

Before You Terminate for Cause

Based on my practice handling wrongful dismissal claims involving an employer alleging just cause for dismissal, here is what usually works:

Investigate thoroughly first. Half the cases I see could have been avoided with proper investigation. Don’t rely on assumptions or incomplete information.

Document the process. Courts will examine whether you acted fairly. Poor documentation can turn a winning case into an expensive loss.

Consider progressive discipline. Unless the misconduct is severe (fraud, theft, violence), courts often expect you to try lesser measures first.

Get legal advice early. I’ve seen too many employers paint themselves into corners by making hasty decisions.

The High Cost of Getting It Wrong

If a court finds your for-cause termination was unjustified, you may owe:

• Full reasonable notice period (potentially 24+ months for long-service, senior employees)
• Benefits continuation (including pension plans)
• Legal costs
• Potential aggravated/moral damages or punitive damages for bad faith conduct

What Employees Should Understand

If You Have Been Terminated for Cause

Do not panic, but act quickly. You have limited time to challenge wrongful dismissal, typically two years but shorter limitation periods may apply.

Gather your evidence. Employment records, performance reviews, and witness contact information become crucial.

Understand the real test. It is not whether you made mistakes – it is whether those mistakes justify losing all severance rights.

Red Flags in Your Termination

Based on cases I have handled, be suspicious if:

• No investigation occurred before termination
• You were not given a chance to respond to allegations
• The “cause” seems minor compared to your service record
• Company policies were not clearly communicated

The Practical Reality

After handling these cases for years, I can tell you that legitimate for-cause terminations are actually quite rare. Most employer allegations do not meet the legal threshold (particularly given the lack of evidence to justify termination without a severance package).

However, when misconduct does reach that level – as in the Leon’s case – the courts will support the employer’s decision regardless of service length.

Moving Forward: Practical Steps

For Employees

If you are facing termination allegations:

1. Request details of the allegations in writing
2. Review your employment contract for specific cause provisions
3. Document your side of events while memory is fresh
4. Seek legal advice before signing anything or admitting fault

For Employers

Before terminating for cause:

1. Pause and investigate properly
2. Review your policies to ensure they are clear and current
3. Consider the employee’s full record, not just recent incidents
4. Calculate the risk of getting it wrong

The Bottom Line

The Savarie decision reinforces that while the bar for termination for cause remains high, it is not insurmountable. When misconduct involves dishonesty, breach of trust, and personal enrichment, even decades of service would not provide protection.

The courts assessing termination for cause in Ontario apply the contextual proportionality test set out by the Supreme Court of Canada.

Whether you are an employee questioning your termination or an employer considering this serious step, the stakes are too high to navigate alone. The difference between a justified and unjustified for-cause termination can mean tens of thousands of dollars – and significantly impact careers and businesses.

If you’re facing a wrongful dismissal situation or have questions about termination for cause, our employment lawyer available for confidential consultations. You can reach my office at 647-822-5492 to discuss your specific circumstances.

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