Ontario Termination of Employment for Just Cause
In Ontario employment law, the courts often use exceptional words to describe the rare circumstances where an employer can lawfully terminate an employee’s job on the spot – without prior notice or severance pay. This is called a termination for “just cause” under common law. (Note: this is considered a lower standard to prove than “wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer” that is required to deprive an employee of their minimum entitlement to termination pay or severance pay under the Ontario Employment Standards Act, 2000.)
The courts have concluded that employers can only rely on a termination for just cause – which is referred to as the “nuclear option” or “capital punishment“ of the employment relationship – in the most serious cases of employee misconduct. In other words, it must be proportionate and is reserved only for situations where the employee’s misconduct is so egregious that no reasonable employer would be expected to continue the employment relationship. Some examples of termination for just cause include theft, repeated poor performance or serious workplace harassment.
Given the difficulty for employers in successfully proving a just cause for termination, most employers terminate employment “without cause,” which generally means they do not have to have a reason for termination – as long as they provide the employee prior notice of termination, or severance pay, required by an employee’s employment contract or under common law (often part of a financial severance package). If the employer is not able to prove it had just cause for termination (or failed to prove appropriate severance package), the employee could bring a claim for wrongful dismissal against the employer.
Case Example of Just Cause for Termination of Employment: Goruk v. Greater Barrie Chamber of Commerce
However, in a recent court case called Goruk v. Greater Barrie Chamber of Commerce, an employer was able to successfully prove that the cumulative effect of different acts of misconduct by an employee could give rise to a termination for just cause.
In this case, a 75-year old employee was terminated from her employment as an Executive Director after 17 years. Despite having a flawless performance record, the employer eventually discovered “irregularities” in some of her work documentation. After two months of workplace investigation, the employer fired the employee (by email) for just cause. As such, it refused to provide the employee with prior notice of termination, or severance pay.
Following trial, the court sided with the employer and concluded that, unlike in many other cases, the employer had just cause for termination. In finding that the employee’s “conduct was incompatible with the fundamental terms of the employment relationship,” the court referred to the following acts of misconduct by the employee and surrounding circumstances:
- altering and falsifying banking and financial documents (and refuse to admit wrongdoing)
- unilaterally and inexplicably authorized pay raises for herself
- a tendency to exercise very poor judgment in significant ways, including impeding the treasurer’s access to financial documents and paying herself vacation pay in cash
- she was the “public face” of the employer, volunteer-based, non-profit organization and ran its day-to-day operations, which meant that it was “simply unable to watch over the executive director’s every move” and “relied implicitly on her integrity and trustworthiness”
- she was a “fiduciary” employee given her position and significant decision-making authority as the employer’s Executive Director. As such, she owed them duties of loyalty, honesty, good faith, a strict avoidance of conflicts of interest and to act in their best interests, at all times..
In assessing the employee’s conduct, the court held that: “any one of the incidents of malfeasance or the exercise of poor judgment would not, in my view, be sufficient to support a termination for cause. But taken together they do.” In those circumstances, the court concluded that:
Honesty, faith and trust were integral components of Ms. Goruk’s employment. I find that the board was justified in reaching the conclusion that Ms. Goruk had not acted with complete honesty in the discharge of her duties as executive director. That absence of integrity and the demonstrated exercise of poor judgment on significant issues justified her immediate termination.
In the end, with the employer having proved it had legitimate grounds for termination for just cause under common law, the court refused to award the employee compensation or a severance package (termination pay or severance pay). Additionally, the court commented that the employee’s acts of misconduct met the definition of intentional wrongdoing to deprive her of the minimum termination pay and severance pay under the Employment Standards Act, 2000, as follows:
I also find that no termination pay is payable pursuant to the ESA. Section 57 of the ESA provides for a notice period of eight weeks on termination. Section 2(1)3 of Ontario Regulation 288/01 made pursuant to the ESA provides, however, that no notice is required in respect of a termination where the employee “has been found guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.”
I find that Ms. Goruk engaged in wilful misconduct, particularly in relation to the forged banking document and the unauthorized pay raise. In the result, no notice was required under the provisions of the ESA.
Contact Bune Law
If you are an employee whose employment was terminated, contact Bune Law to obtain an initial consultation to determine your rights, legal entitlements and options. If you are an employee who would like to discuss your severance package, feel free to contact Bune Law at 647-822-5492 to get legal advice regarding your specific rights and options.
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