The high standards of a termination for cause

A termination for cause is often viewed by employers in Ontario as the most reasonable way to sever their relationship with an unwanted or problem employee. It supposedly establishes that the employee failed to meet certain standards or did something horribly wrong. More importantly, a dismissal for cause eliminates the employer’s obligation to provide the employee with severance pay.

Our firm’s years of experience in employment law has taught us that many employers in the Ottawa region resort to a “for cause” termination when it is not justified. Whether you are an employer or an employee, it is important to review the factors that constitute a legitimate termination for cause, and what the consequences are for both parties when an employer incorrectly wields one against an employee.

Termination for cause: Capital punishment 

A termination for cause occurs when an employer is justified in terminating the employment relationship without providing severance to the employee. This is widely considered the capital punishment of the employment relationship. 

Specifically, termination for cause is often reserved for the most egregious circumstances in the employment setting. It is applied when conduct of the most serious kind occurs. For example, this would include but is not limited to theft, dishonesty, fraud and insubordination. The employer has an extremely high standard to meet if it intends to terminate an employee for just cause, and the gravity of the alleged conduct must be considered.

Discipline before dismissal

To justify a termination for cause, an employer must prove a finding of real incompetence or misconduct, rather than simple dissatisfaction with performance or concern as to the potential misconduct. The employer must also show that the alleged misconduct warranted discipline and that no other reasonable alternatives were available to adequately discipline the employee. 

In certain situations, there is no question that an employee’s conduct would be deserving of discipline. However, if the employee’s misconduct does not result in the breakdown of the employment relationship, the employer should consider whether other disciplinary measures or sanctions are appropriate in the circumstances. This could include issuing both verbal and/or written warnings, participating in coaching sessions, developing performance improvement plans or placing the employee on a paid suspension (unpaid suspensions are generally off the table, as they could trigger a constructive dismissal claim against the employer).

When an employer is contemplating whether to terminate an employee for cause, the question is not whether the employee’s alleged actions could attract discipline. The issue is whether, taking all factors into consideration, the employee’s actions were so egregious and damaging to the company as to warrant the most serious sanction available in the employment law context. 

Despite this, employers consistently allege cause in situations where there is no reason to terminate an employee without severance pay. For instance, in a situation where an employer has alleged that an employee’s misconduct or performance does not reflect the company’s mandate, the employer may have difficulty proving that the employee’s misconduct or performance issues meet the extremely high standard to establish cause. 

When wrongful dismissal applies

There is also a misconception that if an employee is terminated for cause, the employee automatically loses their right to receive compensation. The truth is that if the employer’s reasoning does not hold up to scrutiny, and the employee was not willfully negligent or engaged in misconduct, severance pay must be provided. In that situation, an employee should pursue their severance entitlements through a wrongful dismissal claim. For an employer, such a claim may very well end up exacting a larger financial toll than if they had offered a severance package at the outset through a termination without cause.

Whether it is done intentionally (to avoid the costs associated with a severance package) or unintentionally, one thing is clear: a misapplied dismissal for cause can have a negative impact on both employees and employers.

If you are an employee that has been let go or an employer contemplating a termination for cause, we recommend that you immediately contact an employment lawyer at Samfiru Tumarkin LLP by calling 1-855-821-5900. Our experienced legal team has successfully handled thousands of cases across Ontario. We will pursue your rights, rescue your reputation, and work to secure the severance pay you deserve.

To get a quick idea of whether or not your situation constitutes a legitimate “for cause” termination, use our interactive resource at PocketEmploymentLawyer.ca.

Brock Ouellet is an Ottawa employment lawyer and an associate with Samfiru Tumarkin LLP’s Labour and Employment Law practice group. Through his compassion, expertise and unwavering determination, he is able to produce positive results for both employees and employers.