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…

ESA Termination Pay

Under the ESA, employees who have been continuously employed for three months or more and less than one year are entitled to at least one week of notice of termination; two weeks if the period of employment is one year or more and fewer than three years, and thereafter an additional week of notice for each additional year of employment up to a maximum of eight weeks. However, employers are allowed to terminate employment without notice by paying termination pay equivalent to the required period of notice and maintaining any benefits the employee would otherwise have received over that period.

​Unpaid temporary layoffs lasting 13 weeks or more will be deemed a termination of employment; and paid temporary layoffs lasting 35 weeks or more will be deemed a termination of employment. Click here to learn more about ESA temporary Layoffs.

​Employers who terminate 50 or more employees in a four-week period, on the other hand, are subject to different notice provisions. Under the Sub-section entitled Termination and Severance of Employment under the Employment Standards Act (ESA), the notice period is increased depending on the number of employees being affected (eight weeks for 50–199 employees; 12 weeks for 200–499 employees; and 16 weeks for 500 or more employees). Notice to government authorities is also required.

​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 indirectly affirmed the Ontario Court of Appeal's position 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 440.

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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