Terminated for Cause or Misconduct?

Terminated for cause or misconduct - a slam dunk case for a quick settlement. Am I crazy in telling you that you have just won the lottery by being terminated for cause? The best thing that could happen to an employee and the best thing an employment lawyer could hope for is a case of termination for cause.

Why A Termination for Cause is NOT as Bad as It May Seems?

Why A Termination for Cause is NOT as Bad as It May Seems? What if I tell you, you can usually get a better settlement and sometimes much quicker, with the help of an experience employment lawyer, than if you are being let go for termination without cause? It’s not so bad, then, ha?

Time after time after time, the Court has warned employers NOT to terminate an employee for cause absent the most serious type of job related misconduct. So you, as an employer, can go ahead and terminate an employee if he or she was caught on tape by surveillance camera stealing from the cashier, you will probably be able to get away with it. Absent that, please just terminate the employee and give him or her compensation in compliance to Ontario employment laws.

In most cases, a termination for cause will be viewed by the Court as an attempt to “get cheap” by terminating an employee without just compensation. It’s one of the factor the Court considers when deciding whether to grant morale damage and punitive to the employee in a wrongful dismissal case, and a termination for cause tilt to scale strongly to the employee’s favor.

Do note that even if the employee’s conduct was inappropriate, criminal even, if it’s unrelated to the job, there’s no ground for a termination for cause. For instance, a worker who has been convicted of sexual assault at a location outside of the workplace, while he or she was off duty will probably NOT be found by Court to be a valid ground for a termination for cause. The same hold true in a case where a worker who operates heavy lifting equipment who has been convicted of drunk driving off duty. An employer has NO right to terminate the employee for cause in that scenario.

What is a Genuine Termination for Cause Allowed by Court?

Generally, where an employer has concerns based on an employee’s performance or even misconduct, the employer must warn or advise the employee of the specific concerns, and that the employer must further provide reasonable opportunity to the employee to change. It is only if no improvement or change is demonstrated after a prolonged period and the presentation of repeated warnings, usually in written form, will an employer be considered whether grounds present for a termination with “just cause”. Since it’s a factual driven determination, preservation of evidence is key in establishing a “just cause” termination.

However, in rare circumstances of gross misconduct, “just cause” termination can be established much easily. This is especially so if the employee has engaged in activities that are actionable in courts. Examples of such circumstances could include misappropriation of company funds, criminal fraud, a significant breach of client/ customer confidentiality, etc…

​Why A Termination for Cause Clause Is A Bad Idea in An Employment Contract?

A Poorly Drafted Termination for Just Cause Clause in the Employment Law Contract Can invalidate the entire Section of the employment agreement regarding termination. The Supreme Court of Canada in Waksdale v. Swegon North America Inc., 2021 CanLII 1109 (SCC) has dismissed with cost an appeal from an earlier Court of Appeal decision, and as such indirectly affirmed the Ontario Court of Appeal's position, in 2020 ONCA 391, that termination provisions should not be analyzed independently but as a whole, and the illegality of one voids the other, even if the unenforceable clause is not at issue. So absent a stipulation in the employment contract that termination for just cause  would only be invoked in the extreme cases where wilful misconduct on the part of the employee had been committed, it's very likely the entire section regarding termination (involving both termination at will and termination for just cause) will be invalidated by Court. In fact, several recent cases has already applied the Waksdale test proposed by the Court of Appeal in their legal analyses, see e.g. Sewell v. Provincial Fruit Co. Limited, 2020 ONSC 4406.

So if you are an employer, delete the termination for cause clause in your employment contract or at the very least, limit its scope to wilful misconduct as defined by the Employment Standards Act (ESA).

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