Unfairly Terminated for Cause in Ontario? Understand the 2 Standards That Define Your Rights

Termination for cause is one of the most severe actions an employer can take against an employee. Often referred to as “the capital punishment of employment law,” it strips an employee of severance and other important rights. This is in contrast to a termination without cause, which typically entitles an employee to termination pay or notice under the Employment Standards Act, 2000 (ESA) and potentially common law notice, as well as entitlements to employment insurance benefits. However, employers often misapply or exaggerate cause allegations, making it crucial for employees to seek legal advice. What most people do not know is that there are two (2) separate standards of cause: one under the ESA and one in our common law courts.

Defining “Cause”: What It Means to Be Terminated for Cause

Under common law, the courts have defined cause to include misconduct as “serious” enough that it disrupts the employment relationship. This includes actions that demonstrate a complete disregard for the employer’s interests and incompatible with the fundamental terms of the employment relationship. Once found, the employee would not be entitled to common law notice.

The ESA, on the other hand, establishes a higher threshold for employers seeking to terminate an employee for cause without providing the minimum statutory termination pay or notice. Pursuant to the ESA, in order to disentitle an employee of statutory minimum payments, an employer must demonstrate that the employee’s conduct amounted to “wilful misconduct, disobedience, or wilful neglect of duty that is not trivial and has not been condoned by the employer”. Therefore, the actions must be deliberate and intentional – essentially the conduct preplanned; not merely thoughtless and careless or “incompatible” with the employer’s interest, which may be sufficient at common law.

Render v. ThyssenKrupp Elevator (Canada) Limited, 2022 ONCA 310

The Ontario Court of Appeal’s decision in Render v. ThyssenKrupp Elevator (Canada) Limited highlights the distinction between statutory cause under the ESA and common law just cause. In this case, the employer terminated the employee, Render, for cause after he slapped a female colleague on the buttocks. The Court found that while the misconduct justified dismissal for cause at common law, thereby denying Render common law reasonable notice, it did not meet the ESA’s higher standard of “wilful misconduct” because he did not preplan his action; rather, there was an element of spontaneity in the act itself. As a result, while the court did not award common law severance, the court, however, awarded the employee his entitled to his statutory termination.

This case reinforces that even when an employer has sufficient grounds to terminate for cause under common law, they may still be required to provide statutory entitlements under the ESA. Employees who are terminated for cause should always seek legal advice to determine whether they are owed compensation.

After-Acquired Cause: A Common Employer Tactic

After-acquired cause occurs when an employer initially terminates an employee without cause but later discovers misconduct and retroactively claims just cause. Courts assess after-acquired cause cautiously, requiring employers to demonstrate that they were not aware of the employee’s misconduct at the time of the without-cause dismissal and that the employer did not condone the employee’s misconduct at the time it occurred, either expressly or implicitly.

In recent years, after-acquired cause has been considered somewhat difficult to establish. Courts have heavily scrutinized after-acquired cause claims to determine whether an employer attempted to use after-acquired cause to justify a wrongful dismissal retroactively or whether the employer truly had sufficient grounds.

Seeking Legal Advice When Being Terminated for Cause

If you have been terminated for cause, do not assume that your employer's decision is final. Many employers overstate misconduct or fail to meet the high legal thresholds required to justify a for-cause termination. Speaking with an employment lawyer can help you:

• Determine whether your termination meets the ESA and common law standards for cause.
• Assess whether you are owed termination pay or notice.
• Challenge a wrongful dismissal and seek appropriate compensation.
• Negotiate a severance package or pursue legal action if necessary.

A termination for cause is one of the most serious allegations an employer can make, but many fail to meet the legal standard. Before you walk away from your job without compensation, contact us today. Our team of Toronto employment lawyers can help you protect your rights and ensure you receive the compensation you deserve.

Author: Maria Esmatyar & Soniya Ponniah