Termination "For Cause" - Capital Punishment of Ontario Employment Law

When a non-unionized employee in Ontario is released from their employment (commonly referred to as a “termination of employment”), they are generally entitled to receive either prior notice or severance compensation. In other words, the employer must usually provide them with a “heads up” before their last day of work, or provide them with a severance package for the loss of their employment.

But there’s a catch: an employee can only receive these protections if their employment is terminated “without cause”. What does “cause” mean? It means the employee has committed serious misconduct that gives rise to a breakdown in the entire employment relationship. If an employer can prove cause for termination – which is usually very hard to do – it has no obligation to provide the employee with prior notice of termination or a severance package. As one court put it:

… just cause for dismissal exists where the misconduct violates an essential condition of the employment contract, breaches the faith inherent to the work relationship, or is fundamentally or directly inconsistent with the employee’s obligations to his or her employer.

To determine whether an employer is justified in terminating an employee’s job with cause, the courts apply the following analysis on a case-by-case basis depending on the existing circumstances:

1. determine the nature and extent of the employee’s misconduct;

2. consider the surrounding circumstances; and

3. decide whether summary dismissal was warranted (i.e., proportional and fair response to the misconduct).

Put differently, the court first determines: (i) whether the employer has enough to prove the misconduct alleged against the employee, and (ii) whether the nature and degree of such employee misconduct justifies summary dismissal when considering the circumstances.

Examples of Cause for Termination

Depending on a court’s assessment of the facts of each case, an employer might be able to establish one of the following reasons for termination for cause:

dishonesty
insubordination
incompetence/poor work performance
neglect of duties and responsibilities
breach of the duty of good faith and fidelity owed to the employer
off-duty misconduct detrimental to the employer’s interests
workplace harassment
significant breach of employer’s workplace rules and policies

In addition to the above list, there are also other reasons for a termination for cause. However, it is important to note that even if an employer believes they have a reason for termination for cause, it is prudent for companies (and employees) to seek legal advice from an experienced employment lawyer based on the specific facts of each case.

Severance Packages and Termination for Cause

Because of the significant financial disruption a termination of employment for cause can have in preventing employees from receiving some assistance in managing the loss of their employment (either prior notice of termination or a financial severance package while they begin their search for new employment), a termination for cause is often reserved for the most serious circumstances. As such, the employer has an extremely high standard to meet if it decides to terminate an employee for cause. As one court aptly put it in one notable case:

“Just Cause is the capital punishment crime of employment law”.

What happens if an employer cannot prove cause for termination?

The consequences for the employer are significant if the employee succeeds in a wrongful dismissal claim. Generally, an employee who is improperly terminated from their employment will be entitled to not only a severance package, but possibly also additional compensation for bad faith conduct by the employer and punitive damages. For example, in one case, an employee who was successful in a wrongful dismissal claim against their employer was awarded 12 months’ of severance compensation, as well as an additional $50,000 in punitive damages for the employer’s “reprehensible” conduct, with the court concluding the employer’s decision to allege cause for termination was not justified and had a significant financial and psychological impact on the employee in a vulnerable time of their life.

It is also important to note that, to maintain flexibility in managing their workforce, employers have the option to negotiate the terms of their employee’s termination/severance entitlements in a written employment contract. Briefly, the employer could request the employee to accept only the basic employment standard minimum entitlements to termination and severance pay required under Ontario’s employment standards legislation. However, it is important for both employees and employers to carefully review the terms of employment contracts to ensure compliance with the essential legal rules that govern all employment relationships.

Contact

If you are an employee whose employment was terminated by your employer with or without cause, feel free to contact Bune Law at 647-822-5492 to get legal advice regarding your specific rights and options.

If you are an employer and would like to discuss your options in managing your workforce, including termination of employment, contact Bune Law for assistance and detailed analysis of your workplace needs and solutions.

Disclaimer: The content on this website and blog is not legal advice or legal opinion of any kind, and is only to provide general information. It is in no way particular to your individual case and should not be relied upon in any way. The outcome of a legal matter depends on its unique circumstances, and prior successes are not indicative of future results. No portion or use of this website or blog will establish a lawyer-client relationship with the author, this law firm or any related party. Should you require legal advice for your particular situation, please fill out the form below, or call 647-822-5492, to request an initial consultation.