Even though it is not often specifically mentioned in verbal or written employment contracts, an implied term in all employment contracts is that an employee may be terminated if cause is found to exist.
Where an employee is dismissed for cause, and cause is found to exist, there is no obligation for the employer to provide any notice or pay in lieu of notice.
The Fundamental Factor Underlying Termination for Cause
For an employer to dismiss an employee without providing any notice or pay in lieu of notice, there must be proof that the employee has undermined the entire employment relationship such that the employment contract is considered to have been fundamentally breached.
The conduct claimed by the employer to be cause must be:
- fundamentally inconsistent with the employee’s obligations to the employer; or
- substantially prejudicial to the employer’s business such that the employee’s conduct causes damage to the employer’s business or reputation or causes harm to the employer’s customers.
The action may be a single act, an omission, or a series of acts or omissions.
Examples of Termination for Cause
An employee may be terminated for cause if the employer can prove that the employee was:
- guilty of theft or fraud in the workplace, or was persistently dishonest;
- habitually incompetent or neglectful of their duty;
- insubordinate or willfully disobedient to the employer’s lawful orders;
- intoxicated or under the influence of illicit drugs if these are not related to a disability;
- excessively and unjustifiably absent or late;
- harassing or abusive towards other employees, clients or customers; or
- guilty of off-duty misconduct.
The above is not an exhaustive list of reasons for termination without notice. It is also important to note that even in the presence of such reasons, cause is determined by a number of additional factors.
Misconduct is Not the Sole Determining Factor
Even in the presence of conduct that seems to justify termination for cause, the misconduct must be of such a degree that the employment relationship is completely undermined. If the conduct is not of such gravity in order to terminate for cause, the employer must still provide sufficient warnings and progressive discipline to the employee before the employer may be able to terminate the employee for cause.
Furthermore, in certain cases, such as alcohol or substance abuse, an employer may be expected to accommodate the employee since such substance abuse may be a disability that prohibits the employer from terminating the employee under the Human Rights Code or Canadian Human Rights Act.
An employer may also lose the ability to terminate for cause if the employer has condoned the employee’s actions either explicitly or implicitly through failure or delay in addressing the misconduct, or if the employer lacks a satisfactory paper trail of evidence demonstrating that the employer has progressively disciplined and warned the employee.
How is Cause Determined?
The onus and burden of proof rest on the employer to show cause for terminating an employee. As such, the employer must establish sufficient evidence that the employee has acted in such a way as to fundamentally breach the employment contract.
If the employer fails to provide sufficient evidence, the dismissal may be considered wrongful and the employer may be liable to pay damages. Such damages are usually similar to the value of reasonable notice. The employer who fails to prove a termination for cause may also be liable for bad faith damages due to inappropriately alleging cause.
There are no concrete and solid rules for determining cause for termination. As such, each case must be determined by its own particular circumstances. Factors taken into consideration include:
- the nature of the transgressions or misconduct;
- the organizational culture of the workplace;
- the nature of the employer’s business;
- the position held by the employee; and,
- whether the behaviour was committed on- or off-duty
For related case studies and more information on Termination for Cause, search our blog.
More Concepts on Employment Terminations
- Bad Faith, Unfair Dealing and Conduct of Dismissal
- Constructive Dismissal—When Resigning May Actually be Wrongful Dismissal
- Lay-Off — a Strictly Regulated Area of Employment
- Notice Period—What are Employees Statutorily Entitled To?
- Mitigation – the Duty of Every Wrongfully Dismissed Employee
- Reasonable Notice—What Constitutes “Reasonable”?
- Severance Pay: Not the Same as Termination Pay
- Terminations – Almost Always an Employer’s Right
- Wrongful Dismissal—What Makes them Wrong?
Minken Employment Lawyers is your source of expert legal advice and advocacy on terminations for cause and other employment law issues, serving Toronto, Greater Toronto Area (Markham, Newmarket, Aurora, Richmond Hill, North York, Vaughan, Woodbridge, Mississauga, Brampton, Pickering, Ajax, Stouffville, Uxbridge, Brooklin, Whitby, Oshawa etc.), Ontario, Canada as well as national and international clients for over 20 years.