What Is ‘Just Cause’ for termination?
In Ontario, an employer is legally entitled to terminate the employment of its employee for ‘just cause’. If an employee is terminated for cause, the employer is not obligated to pay the employee statutory termination or severance pay under the Employment Standards Act or any pay in lieu of notice under the common law. Essentially, an employee who is terminated for just cause is not entitled to any notice.
As this is a very powerful tool, the law requires that an employer show justification for terminating an employee for cause. If the employer terminates an employee on the ground of just cause, the onus rests upon the employer to prove facts supporting the existence of cause. This onus must be demonstrated beyond the balance of probabilities.
See: Rutkowski v. Edmonton Transit Mix & Supply Co. Ltd., 2007 ABQB 277 (CanLII), at para. 91
What Type of Action Constitutes ‘Just Cause’?
What the courts will look at is whether the actions of the employee are so grievous as to give rise to an inference that the employee no longer intends to be bound by the contract. Essentially, the employee's actions must be so contrary to the terms of the employment contract that it in effect undermines the viability of the employment relationship between the employee and the employer.
See: Dowling v. Ontario (Workplace Safety and Insurance Board), 2004 CanLII 43692 (ON CA), at para. 43
Typically, just cause exists when an employee is found to be guilty of serious misconduct, habitual neglect of duty, incompetence or conduct incompatible with his/her duties. Conduct prejudicial to the employer's business or wilful disobedience to the employer's orders in a matter of substance can also constitute just cause for dismissal.
See: Tse v. Trow Consulting Engineers Ltd., 1995 CarswellOnt 795, at 38.
It is important to note that there is no middle ground when determining whether just cause for termination existed or not. Either the employee’s conduct constitutes just cause or it does not. As the onus is on the employer to show just cause, said employer must show that the misconduct by the employee actually occurred and the misconduct was sufficiently severe enough to cause an irreparable breakdown in the relationship between the parties.
Over the years, the courts have recognized certain categories of misconduct that can constitute just cause for termination. Some of these categories include:
1) Dishonesty
2) Conflicts of Interest
3) Insubordination or Insolence
4) Incompetence
5) Sexual Harassment
6) Pattern of lateness or absenteeism
Two of the most commonly cited grounds for just cause termination are dishonesty and incompetence. This blog post will address these two categories.
Dishonesty
Mere dishonesty in and of itself does not constitute just cause for termination. The court will take into account the nature and context of the dishonesty in question. The question the court will consider is whether, in the circumstances, the dishonest behaviour was to such an extent that the employment relationship could no longer viably subsist. Essentially, did the dishonesty give rise to a breakdown in the employment relationship?
See: Dowling v. Ontario (Workplace Safety and Insurance Board),2004 CanLII 43692 (ON CA), at para. 43.
When the dishonesty relates to theft, this will likely be sufficient for termination for just cause as theft breaches the faith inherent to the work relationship and is fundamentally and directly inconsistent with the employee’s duties and obligations to his/her employer.
Incompetence
Sometimes, employers are dealing with an employee who seems to be incompetent in adequately performing his/her responsibilities. In such a situation, it is not enough for the employer to dismiss for what he/she honestly believes to be just cause; the true test is whether just cause existed.
To justify termination for cause on the basis of incompetence, the level of incompetence in question must fall below the objective standard of reasonable competence.The employer does not need to show that the employee was grossly incompetent. Rather, just cause will exist if the employer can show a repeated pattern of incompetence by the employee. However, in a situation where the employer abruptly terminates an employee, said employer will have to show gross incompetence by the terminated employee.
See: Matheson v. Matheson International Trucks Ltd., 1984 CarswellOnt 753, at para 10, 14
Proportionality, Accumulated Series of Events and Warnings
Regardless of the category, the Supreme Court of Canada has made it clear that an employer's response to employee misconduct must reflect the principle of proportionality. Just cause for the most serious sanction, namely dismissal, requires the most serious misconduct.
Accumulated series of events may amount to just cause for termination, if it is accompanied by warnings from which it may be implied that an employee's job is in jeopardy. Such a situation may entitle the employer to dismiss for cause. However, the jurisprudence is also clear that an employer should not rely upon a series of minor transgressions, cumulatively, in an effort to avoid the obligation of providing notice or pay in lieu thereof.
See: Laszczewski v. Aluminart Products Limited, 2007 CanLII 56493 (ON SC), paras. 26-27.
Final Thoughts
Employers need to be careful when they are deciding whether to terminate an employee for just cause. It is a powerful tool at the employer’s disposal. However, if an employer terminates an employee for just cause and the employee sues the employer, the onus will rest on the employer to show that there was justification to terminate the employee for just cause. This is becoming increasingly difficult to prove.
The existence of just cause is not easy to determine and it depends highly on the facts of each particular case. Whether you are an employer or an employee, Ahmed Law can provide you with guidance on this complicated area of employment law.