Terminating Employment in Ontario: Just Cause vs. Without Cause

In Ontario, if an employer wants to end an employee’s job with the company, it generally has two options: It can either terminate the employee “with cause” or “without cause.” This is an all-or-nothing rule, and there is simply no middle ground for an employer to argue it almost had just cause for termination. What this means is that, if an employer argues it had “cause” to terminate an employee’s job, it must be sure that it had a valid legal reason to fire the employee summarily (or “on the spot”), without any prior notice or appropriate severance package. Otherwise, the employee may be able to pursue their severance entitlements from the employer in a wrongful dismissal claim.

The starting point (and key consideration) for why employment law requires an employer to either prove cause for termination, or provide a fair severance package, is to recognize the overall importance of employment to someone’s life. The courts have described employment as:

“one of the most fundamental aspects in a person’s life, providing the individual with a means of financial support and, as importantly, a contributory role in society. A person’s employment is an essential component of his or her sense of identity, self‑worth and emotional well‑being.”

This is why an employer’s burden to prove cause for termination is high. In fact, the decision to fire an employee for just cause is so severe (since the employee is given no notice of termination or severance pay), it is considered by the courts to be the “capital punishment” of employment law.

What is Notice of Termination?

In Ontario employment law, the term “notice of termination” refers to the period of time an employer is required to give the employee before ending their employment. During the notice of termination, the employee continues to work their regular hours and perform their regular duties at the same rate of pay as before the decision to terminate employment.

What is “Just Cause” for Termination?

Generally, a termination “for cause” means an employee has engaged in serious wrongdoing (misconduct) that, objectively speaking, is so significant that it erodes the entire foundation of the employment relationship.

When determining if an employer has cause for termination, the courts will consider the context in which the termination of employment occurred, which means examining the nature and circumstances of the situation leading to the employee’s dismissal. Even if an employer proves the employee engaged in misconduct, the question still remains: Is the employee’s misconduct so serious that he or she deserves immediate termination without prior notice, or severance pay? Among other things, the employer is required to justify cause for termination by showing that termination for cause was a proportional response to the employee’s misconduct, and that it first considered (and applied) less severe discipline forms of progressive discipline, such as a written warning, suspension or demotion.

Some Examples of Possible Just Cause

The specific facts and circumstances of each case must be considered to determine if there is just cause for termination. Whether or not just cause exists can vary depending on many factors, such as the employee’s conduct, the employer’s business, the employee’s position, history and performance, and the employer’s policies or practices. The following are some examples that may constitute just cause:

Theft
Dishonesty
Serious Incompetence
Violence
Insolence and Insubordination
Wilful misconduct
Habitual neglect of duty
Disobedience
Conflict of interest

Takeaways

Given the severe effects that a termination with cause has on an employee’s livelihood and career, the law in Ontario requires employers to meet a heavy standard in order to justify no giving the employee any notice of termination or severance. The test for termination for cause is an objective one – would an objective, “reasonable person” conclude that termination for cause was warranted in this particular case? Based on employment law in Ontario, it is prudent for employers to first consult with an employment lawyer to review their case before deciding on termination of employment.

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