Just Cause Terminations – An Update

The vast majority of terminations are on a without cause basis, in some circumstances employers are permitted to terminated employees for just cause without the requirement to provide advanced notice of termination or payment in lieu thereof.  The burden of proof rests with the employer to demonstrate the basis for the just cause termination.

The seminal case on just cause terminations is McKinley v. BC Tel, 2001 SCC where the court indicated, among other things, that “just cause for dismissal exists where dishonesty violates the essential condition of the employment contract, breaches the faith inherent to the work relationship, or is fundamentally or directly inconsistent with the employee’s obligations to his or her employer.”

The case of Dowling v. Ontario provides guidance on the examination that should be undertaken to ascertain whether such misconduct has occurred to demonstrate just cause:

  1. determine the nature and extent of the misconduct
  2. consider the surrounding circumstances
  3. decide whether the dismissal was warranted

Where Just Cause Has Been Found: 

Dunsmuir v. Royal Group, Inc., 2018 ONCA 773
Just cause termination of a senior executive upheld by the Court for breach of fiduciary duty.  In this case, a senior officer and shareholder of the company bought property from a third party and then sold it back to the company for a personal profit of $6.5 million.  The individual never disclosed this information to anyone in the company with authority. The executive engaged in other activities of this nature that was found as a breach of his duty of loyalty, fidelity and candour, requiring him to disclose to the corporation conflicts of interest and the misappropriation of corporate opportunities and assets.

McNabb v. Clouatre et al., 2018 ONSC 1058
The Plaintiff was an employee of a construction company and was involved with behavioral issues over a prolonged period of time, including insubordination, absenteeism, consuming alcohol on the job and using equipment under the influence of alcohol. He was verbally abusive to employees and constantly engaged in behavior detrimental to the company. The extensive list of misbehaviors was deemed to sufficient to constitute just cause.

If you are an employee in Ontario that has been terminated for just cause, it is imperative that you seek out counsel to determine whether the alleged misconduct sufficiently satisfies the test for just cause termination. If not, you could be entitled to a substantial severance package.

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