An employee has broken your trust in a way that can't be fixed. You care about the workplace environment in your practice and feel that you can't continue to work with this employee. What do you do?
“When an employer terminates a staff member with cause, they need a good reason,” says Inna Koldorf. Like terminations without cause, common law and employment standards legislation provide protections for both employees and employers in cases of misconduct that may require termination with cause.
“An employee who is terminated with cause would be terminated for instances of severe misconduct,” says Koldorf. “Misconduct that fundamentally breaches the essential terms of the employment contract or relationship between the parties and renders continued employment impossible.” There is typically a very high threshold for termination with cause, often cases of grave misconduct, such as theft and insubordination.
The threshold for “just cause” in termination in common law, as opposed to employment standards legislation, is different. In common law, when an employer has just cause, the employer can dismiss an employee without notice or pay in lieu of notice for serious misconduct. This also applies in instances of less serious misconduct such as negligence, incompetence or conflict of interest, especially if such conduct is repeated.
Employment standards legislation in most jurisdictions in Canada contain similar rules to common law, but the legislation in some jurisdictions have a higher threshold for misconduct. “For example, in Ontario, the Employment Standards Act (ESA) specifically states that employees who are guilty of willful misconduct, disobedience, and willful neglect of duty that isn't trivial and has not been condoned by the employer, are not entitled to notice,” says Koldorf. “When you look at that definition, you see the word ‘willful' multiple times. The misconduct must be intentional. Negligence and incompetence may not actually be intentional.”
Courts have distinguished between the two interpretations of misconduct that warrants termination with cause under the two different legal standards. What does this look like in real life? “In a situation where an employee isn't doing their job properly, and they've been disciplined a few times and have improved a little, but not to the level that the employer requires, it may meet the threshold under common law,” says Koldorf. “But the higher threshold of willful misconduct or willful neglect of duty, which is in the ESA threshold, wouldn't likely be met. So, an employer may be faced with a situation where the employee is not entitled to common law reasonable notice, but is entitled to termination pay under the ESA,” she says.
What Scenarios Could Lead to Termination with Cause? There are two broad categories of terminations with cause and the first is when an employee has done something very serious one time, like theft or intentional violence in the workplace. A single incident has made the working relationship untenable and meets the criteria of both common law and employment standards legislation. “This category is very clear-cut,” says Koldorf. “These situations can be difficult emotionally, but the employer knows what must happen next unequivocally.”
The second category is more ambiguous and includes situations where there are several minor incidents of misconduct that represent a pattern of behaviour. For example, it could be a situation where an employee disrespects or talks back to a manager and uses profanity. In response, the employer writes a disciplinary letter, but something similar happens again. The employer suspends the employee for one day, but it happens again. The employer then suspends the employee for three days without pay.
“As an employer, you reach a point where you've tried everything you can think of to remedy the situation, but nothing has worked,” says Koldorf. “There is nothing else you can do to get your employee to act appropriately and within the requirements of the workplace. You have other team members who are affected by what could quickly become a toxic work environment. There comes a time when termination with cause needs to be considered.”
If an employer isn't certain that they've reached the level of just cause, Koldorf often recommends termination without cause. “If an employee sues for wrongful dismissal and the thresholds of both the common law and employment standards legislations hasn't been met, a court case plus the pursuant damages can be very expensive,” she says. “If you aren't totally sure, it's best to seek legal advice before terminating an employee.”
A situation that can occur, though infrequently, is called after-acquired cause. This is when an employer dismisses an employee without cause, but later discovers misconduct that would have justified dismissal for cause at the time. In this case, an employer may claw back compensation in lieu of notice and other parts of a termination package. These cases
As an employer, you reach a point where you've tried everything you can think of to remedy the situation, but nothing has worked.
are rare, but they do exist. “Sometimes after an employee leaves a workplace, other employees come forward with new information or the employer discovers past evidence of misconduct that was quite serious,” says Koldorf.
During a termination with cause meeting, the employer must explain the reason for the termination. “By the time you're in the termination meeting, the employee will likely know what they've done because you should have already talked about it with them,” Koldorf says. She recommends that an employer recount the events that led to the termination and keep dates and records regarding when they occurred. This information should also be in the termination letter. “Have a witness, don't argue with the employee, keep it short, and if the employee has questions that you can't answer on the spot, ask that they send them in writing to give yourself a chance to provide an accurate and thoughtful response,” she says. “For the person being terminated, the experience is often upsetting, even if they know it is coming.” She says that these meetings are difficult for the employer as well, and often HR people with many years of experience find them to be the most difficult part of their jobs.
Reasons which may justify termination of employment with cause:
- Theft
- Fraud
- Dishonesty
- Falsification of company records
- Repeated insubordination
- Harassing or violent behaviour toward co workers or third parties associated with the employer (e.g., customers, suppliers)
- Repeated tardiness or absenteeism
- Not meeting performance standards despite company performance management efforts
Originally Published by Issue 4 | 2025 of CDA Essentials
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
