Should Employers Provide Reason for Termination of Employment

Wrongful Dismissal Claims: Termination Without Cause, or Termination for Cause

It is well known in Ontario employment law that an employer has a choice to terminate an employee’s job either “for just cause” (good reason) or “without cause“. In other words, an employer can dismiss an employee for misconduct (e.g., wilful misconduct) without having to provide them with prior notice of termination (or a financial severance package), or they can fire them for no reason at all or for any reason (but not discrimination), as long as they provide them employee with prior reasonable notice of termination (or a severance package).

In general, an employer’s decision to terminate an employee’s job is an all-or-nothing principle: either fire the employee for cause or without cause. This means that, in Ontario, employers cannot argue they had “near cause’ to terminate the employee’s job. In other words, that the employee engaged in misconduct that while not serious enough to amount to just cause, should be enough to still permit the employer to not have to provide the employee with prior reasonable notice or a severance package. Importantly, the Supreme Court of Canada in a decision called Dowling v Halifax (City) rejected an employer’s argument recognizing “near cause”.

As such, an employee’s misconduct, negligence or incompetence that falls short of justifying a termination for cause is irrelevant and cannot be considered when determining the employee’s entitlement to wrongful dismissal damages. In other words, an employer either has cause for dismissal or it does not – there is no middle ground.

At other times, the courts have recognized the concept of “after-acquired cause” – that is, an employer who has dismissed an employee (either termination for cause or termination without cause) may be entitled to rely upon evidence it discovers after an employee’s termination if that evidence would have justified a decision by the employee to terminate the employee’s employment for just cause. In other words, after-acquired cause may arise where an employer dismisses an employee without cause and subsequently discovers evidence of misconduct that would have justified summary dismissal had it been known at the time of dismissal.

Do Employers Have to Provide Employees Reason for Termination of Employment?

Generally, no – employers do not have to provide employees for terminating their employment. However, there are some exceptions, particularly if an employer terminates employment alleging just cause. In fact, the courts have held that:

“an employer does not have a duty to give reasons for dismissal at the time of termination, however, allegations of just cause alleged after the fact, will affect their weight.”

As such, the courts are usually reluctant to accept an employer’s argument alleging just cause based on reasons that it knew about at the time of termination but chose not to rely upon in the employee’s termination letter. Why? This is usually do to policy reasons: the courts conclude employers are only alleging just cause after-the-fact as a bad faith tactic, which is a violation of its duty of good faith (to always be honest, candid, reasonable and forthright, especially upon termination).

In a recent case called in Alberta called Alayew v The Council for the Advancement of African Canadians, the court held summarized the issue as follows:

“Can a without-cause dismissal be characterized later as for cause when the material circumstances were known to the employer before the dismissal?

The answer is no.”

In this case, an employee was provided with a termination letter stating she was terminated without cause, and as a result, sued the employer for wrongful dismissal to obtain a severance package. To defend itself, the employer argued it had evidence to support a just cause termination, and that while it was aware of the allegations against the employee prior to the dismissal, it had mistakenly relied on an investigator’s interim report to conclude that it did not have just cause to dismiss the employee.

The court rejected the employer’s argument and stated bluntly: employers are not permitted to “change horses” and assert just cause later as a strategy against a wrongful dismissal action when they had evidence to support just cause at the time of termination but chose not to use it.

Similarly, the court rejected the employer’s second argument that it had after-acquired cause for termination, again finding that the employer was fully aware of all the material information concerning the employee’s alleged misconduct before termination yet failed to act on it. As such, it was precluded from relying on after-acquired cause. In the court’s words:

“Armed with all the material allegations against Mr. Ayalew, the AC Board decided, on its own, to dismiss him without cause.

Employment Lawyer in Toronto

If you are an employee who believes you have been wrongfully dismissed, please speak with our experienced employment lawyer in Toronto regarding your options, including negotiating your severance package to obtain the severance compensation you deserve, as well as wrongful dismissal claim.

Contact us by phone 647-822-5492 or fill out the contact form to the side. Our employment lawyer in Toronto would be happy to assist in your employment law matter as quickly as possible.

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