Termination – With Cause, Without Cause or Just Cause

It is difficult enough for an individual to be suddenly told that his or her employment has come to an end. It is doubly so when the employer informs the employee that he/she has been terminated for “cause” or that there is “just cause” for termination and they will not be receiving a severance package (damages for wrongful dismissal). The classic statement regarding “cause” was provided by the Ontario Court of Appeal in Port Arthur Shipbuilding v. Arthurs et al. as follows:

“If an employee has been guilty of serious misconduct, habitual neglect of duty, incompetence, or conduct incompatible with his duties or prejudicial to the employer’s business, or if he has been guilty of willful disobedience to the employer’s orders in a matter of substance, the law recognizes the employer’s right to summarily dismiss the delinquent employee.”

If just cause does not exist, the employer has an obligation to give reasonable advance notice of termination or compensate the employee in lieu of notice. Where cause exists, however, the employer may terminate the employee immediately without any further obligation. As serious consequences to an employee flow from a finding of cause, the law places the burden on the employer to prove that it has cause for termination.

Not every act of misconduct will give rise to cause for termination. The conduct in question must be serious enough to constitute a repudiation by the employee of the employment relationship upon which the employment agreement is based. The types of conduct which the law recognizes as giving rise to cause for termination have included: incompetence, insubordination or disobedience, abusive language or behaviour, absenteeism, lateness, intoxication, dishonesty, theft and sexual harassment.

The Courts overall have noted that the employment relationship is a different contractual relationship than commercial contracts based primarily on a difference in bargaining power between the parties.  In such circumstances, the Courts will not easily find that the relationship has been severed by the conduct of the employee. As one commentator has put it, “the punishment must fit the crime” for just cause to be found. Otherwise, the termination will constitute a wrongful dismissal.

In their determination as to whether cause exists, the Courts will look at the employee’s employment history and consider among other things, his or her length of service with the employer, and whether there have been similar instances of misconduct in the past or previous disciplinary action taken against the employee. The Courts may consider personal circumstances or health-related issues which may impact on the conduct in question. The Courts may also inquire as to whether the employee has admitted their error or at least been given the opportunity to tell their side of the story. 

In certain cases, an employer will not be able to rely on cause where it has not previously warned the employee with regard to the conduct in question or given them the opportunity to deal with ongoing performance-related issues. The employer may also not be able to establish cause where it has excused or overlooked similar conduct in the past. In these circumstances, the employee would entitled to damages for wrongful dismissal.

As we pointed out earlier, where there is cause for termination, the employer has no obligation to provide the employee with notice or termination pay. It is therefore not uncommon for an employer to allege cause, even where it will be difficult to prove, in order to discourage an employee from bringing an action for wrongful dismissal. In addition, an employee’s entitlement to Employment Standards payments upon termination, and even eligibility for EI benefits may be affected by allegations of cause for termination. Given all that is at stake, employees in such circumstances, are urged to consult with an employment lawyer to determine their rights going forward and the strength of any case for wrongful dismissal they may have against the employer.