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Termination for Cause

Just cause terminations have been considered the ‘capital punishment’ of employment law.  The employer bears the evidentiary burden to prove that the alleged misconduct satisfies the high threshold of just cause dismissal. The employer must prove that the act(s) or omission(s) of the employee are so significant that the effect was that the employee repudiated the contract of employment; failure to establish such an effect will preclude a Court from finding that the employment has been terminated for cause.

There are several types of misconduct that may be grounds for dismissal for cause. Examples of common grounds for dismissal, discussed in detail below, include the following:

  • dishonesty (e.g. fraud, theft, breach of trust, deception etc.);
  • workplace harassment and violence;
  • insubordination and insolence; and
  • absenteeism and lateness.

A Court will provide a contextual analysis to determine whether, in the totality of circumstances, the misconduct amounts to just cause. In order to satisfy the Court, employers should institute progressive disciplinary and performance improvement plans to provide a guidepost for improvement for the employee.  If the employee continues to perform incompetently or engage in ongoing misconduct, the employers paper-trial and diligence will assist in reaching the just cause threshold.

If you have been terminated for cause by your employer, please contact Goldstein Employment Law to discuss your potential rights and entitlements.

Severance Pay and Inducement

When an employee is terminated from their employment, the severance pay calculation is based on a number of factors, including but not limited to age, years of service, job titles, availability of replacement employment, and inducement.

Inducement refers to a situation where an employee was recruited from a previously stable job posting in order to join a new company with the expectation of reasonably secure employment. A reasonable employee would not forgo years of service with a company, in order to join a new company for a short period of time, only to be terminated thereafter. Accordingly, be re-signing your rights from a previous employer, your severance entitlements will increase upon hiring at the new job.

One of the exceptions to a longer severance period resulting from inducement was argued in the case Nagribianko v. Select Wine Merchants (ONSC 2016 490), wherein an employee was recruited from a previous job posting but his new employment contract contained a probationary period, which expressly indicated that the “first three months of employment were probationary in nature, meaning that they would be a trial period to determine whether the employee was suitable for permanent employment thereafter.”

The Court found the wording in this probationary clause in the employment contract to be inconsistent with a finding of inducement. Where an employee reviews and employment contract and understands that they will not be hired on past the probationary period if they are not deemed suitable for the job, the argument will fail that they were induced to leave their previous job for long-term employment.  A probationary clause will not always negate an inducement argument, however, as it depends on the precise wording of the clause and other circumstances around the hiring decision.  Accordingly, it is imperative that an experienced employment lawyer is consulted if you have been recruited to sign a new employment contract or if you have been terminated from your new employment after being induced by to leave your previous employer.

What Are Your Employers’ Obligations on Termination?

Employers have various obligations upon terminating an employee from employment, including but not limited to complying with the Employment Standards Act, 2000, S.O, 2000, c.41 in Ontario.

If you have been terminated from your employment without cause, your employer is required to pay a minimum number of weeks of compensation in accordance with the Employment Standards Act in Ontario, equivalent to one-week of pay per year worked, up to a maximum of 8 weeks’ of termination pay. It is illegal for an employer to pay a termination package that does not comply with at least the minimum standards set out in the Employment Standards Act.

The minimum standards include a requirement to pay termination pay, severance pay, and continue employer benefits through the statutory notice period.  Termination pay must be paid on the basis of one-week per year worked, up to a maximum of 8 weeks.  Severance pay is different than termination pay.  Only those employees that have been employed for longer than 5 years for an employer with a payroll of greater than $2.5M will be entitled to severance pay upon termination of their employment. The Employment Standards Act governs the formula to calculate severance pay should you be entitled.

Employers are required to pay terminated employees their base minimum statutory entitlement 7 days after termination or on the employees’ next pay date, whichever is later.  This statutory pay must be distributed irrespective of whether the employee has executed a signed release, which an employer will typically require in order to formalize the severance.

Employees that are employed in certain designated, federally regulated sectors (i.e., telecommunications, banks, airlines, etc.) are entitled to benefits as outlined in the Canadian Labour Code, which codifies a set of employer obligations upon terminating employees in the designated sector.  Many of the rights and obligations therein are similar to those enumerated in the Employment Standards Act.

If you have been terminated from your employment, consult with an experienced employment lawyer to determine if your employer has upheld its obligations on termination.

What is “Wrongful Dismissal”?

Many laypeople talk about being ‘wrongfully dismissed’ from their employment – without understanding what the legal concept of wrongful dismissal really is.

Employers have the right to terminate an employee, at any time, for any reason whatsoever if they are not alleging just cause for dismissal, so long as the employer provides the terminated employee with sufficient notice of termination, or payment in lieu thereof.

The Employment Standards Act sets out the statutory minimum requirements that an employer must comply with upon the termination of an employee in Ontario. There is a presumption at law, absent an express clause in an employment contract restricting the amount of termination pay, that an employee is entitled to ‘common law’ notice pay, in addition to the statutory minimums as governed by the ESA.

Reasonable notice at common law is governed by precedent cases and requires a fact-specific inquiry – there are no hard-and-fast rules to determine the length of reasonable notice; however, one-month per year worked is a rule-of-thumb often employed in Ontario. Accordingly, a claim for ‘wrongful dismissal’ is the basis for an allegation that the employer has not provided sufficient severance upon termination, and the employee is seeking damages a result.

 

Does Your Misconduct Amount to Just Cause?

Many employees call our employment law firm indicating that they have been terminated from their long-standing employment for just cause; and therefore, after several years of dedicated service to an employer, they are abruptly dismissed without notice or without pay in lieu thereof.

Courts in Ontario have referred to a just cause dismissal at the “capital punishment” of employment law. In other words, the employer has to demonstrate such egregious misconduct to satisfy the test for a dismissal for cause.

Call Goldstein Employment Law to review your termination letter and the circumstances around the dismissal to determine whether we believe that your employer has made a mistake in terminating you for cause, and, instead, that you are entitled to a severance package.