Termination paperwork

What is Termination for Cause?

Termination for cause (also referred to as “termination for just cause” or “termination with cause”) is known as the capital punishment of the employment world. This is because if an employer has just cause for termination, they do not have to give working notice or pay in lieu of notice. 

What is considered “just cause”? “Cause” is not the same as “a reason.” Only certain serious reasons are considered just cause for termination. All other terminations are considered “without cause”. 

Let’s take a closer look at what employers need to know about termination for cause.

What does termination for cause mean? 

There are different definitions depending on whether the legislated or common law standard applies. 

Legislated standards 

Most jurisdictions explain the circumstances that justify termination for cause in their employment standards legislation. In Ontario, the Termination and Severance of Employment regulation defines a threshold where the terminated employee is not entitled to statutory termination notice and severance.  

The threshold is defined as when an employee: 

“Is guilty of wilful misconduct, disobedience, or wilful neglect of duty that is not trivial and has not been condoned by the employer.” 

“Wilful” in this case includes when an employee intended the resulting consequence or acted recklessly if they knew or should have known the effects their conduct would have. Poor work conduct that is accidental or unintentional is generally not considered wilful. 

Common law standards 

Under common law, an employer may terminate for just cause when an employee is: 

“Guilty of serious misconduct, habitual neglect of duty, incompetence, or conduct incompatible with their duties, or prejudicial to the employer’s business, or if they have been guilty of wilful disobedience to the employer’s orders in a matter of substance.” 

While there is some similar language in both statutory and common law definitions, such as “misconduct” and “wilful disobedience,” it’s important to remember that these are separate standards that apply in different circumstances. 

How is just cause applied in non-unionized and unionized settings? 

Proving just cause is very difficult, and there are differences in its application depending on the workplace. 

Non-unionized settings 

The employer must generally show that the employee’s actions were so serious that the employee can no longer be trusted and the employment relationship is broken.  

Often, there’s no single action that proves just cause. A court may weigh the employee’s actions against certain factors, including but not limited to: 

  • The circumstances of the employee, including role, responsibility, and personal issues; 
  • The circumstances of the employer, including the nature of the business and policies and practices; and 
  • The circumstances of the incidents, including whether such conduct had been permissible, encouraged, or ignored in the past, and whether it was a first-time occurrence, or the employee had been warned before. 

A court applies a contextual analysis when determining whether an employer had just cause to terminate employment. The court determines the nature and extent of the employee’s misconduct. They also determine whether the employer can prove that the employee committed the misconduct alleged and that the employee was made aware of the inappropriate conduct or issues.  

If the misconduct is proven, the court then considers the surrounding circumstances and decides whether termination is proportional to the misconduct. 

Unionized settings 

Just cause in a unionized context means there must be a justifiable reason to end the employment of a member covered by a collective agreement. The collective agreement may define what counts as a just cause for termination of a union member. When faced with a grievance relating to termination, the onus of demonstrating just cause is on the employer. 

To make a final decision on discipline or termination, an arbitrator considers several factors, including the specific factual circumstances, as well as any aggravating or mitigating factors. 

An aggravating factor is anything that may lead to a harsher or more substantial penalty, including:  

  • Short service 
  • Prior discipline 
  • Related discipline 
  • Repeated offences 
  • Premeditated conduct 
  • Failure to admit wrongdoing 
  • Lying during investigation or hearing 
  • Lack of remorse 

mitigating factor is anything that may lead to a lesser or more lenient penalty, including: 

  • Lengthy service 
  • Clean disciplinary record 
  • Isolated incident 
  • Admission of guilt 
  • Momentary aberration 
  • Candour 
  • Remorse 
  • Acceptance of responsibility 
  • Genuine apology 
  • Dire financial circumstances 

Arbitrators also consider whether the discipline was an appropriate response to the misconduct. Discipline is not intended to be punitive. The employer’s end goal should be deterrence as well as motivating employees to adhere to workplace standards. To this end, an arbitrator could order that a terminated employee be reinstated. 

What key factors should employers keep in mind when considering terminating with cause? 

If you are going through the decision-making process for terminating an employee with cause, there are several important factors to consider. 

There are significant ramifications if an employee successfully appeals a just cause termination. 

Always exercise caution when making just cause allegations because the results can be costly. 

In a unionized workplace: an arbitrator may order reinstatement of the terminated employee and reimbursement of lost wages. 

In a non-unionized environment: courts may award significant damages, including additional bad faith or punitive damages. 

Some jurisdictions offer mechanisms for employees who are terminated with cause to challenge these decisions outside of the court or arbitration systems. 

In Quebec, the CNESST provides that provincially regulated workers who have been employed by the same employer for at least two years may file a complaint if they believe their employer has dismissed them without “good and sufficient cause.” 

Under the Canada Labour Code, federally regulated employees who have completed at least 12 months of employment and who are not subject to a collective agreement may make a complaint and seek to have a review officer reinstate employment with lost wages (similar to the process in a unionized environment). 

Incompetence is different than wilful misconduct or malicious intent. 

Many employers presume that poor job performance, addressed with progressive discipline or even a performance improvement plan, forms the basis of a termination for cause. Progressive discipline is one factor adjudicators consider when reviewing a termination for cause. However, an employee who simply is not “cut out for the job” would still be terminated without cause—this means they are entitled to both statutory and common law notice. 

On the other hand, certain types of conduct (such as theft or violence) may be more likely to warrant termination after a first offence. But employers must always take a contextual approach and view mitigating factors (such as lengthy service, clean record, or remorse). 

Employers must investigate complaints. 

If an employer receives complaints about an employee alleging conduct that might constitute just cause, such as violence or harassment, the employer must investigate these complaints.  

The employee should be allowed to fully participate and understand the details of any allegations made against them, such as who, what, when, where, and how. Employers should carefully document the complaint and investigation procedure. 

Some reasons cannot be used as just cause. 

Different jurisdictions outline statute-protected actions that cannot be considered just cause for termination, such as pregnancy, participation in a union, or making some health and safety complaints.  

Some jurisdictions also provide separate complaint mechanisms and remedies for these circumstances. For example, under Ontario’s Employment Standards Act, 2000, an employment standards officer has the authority to reinstate an employee if it is found they were terminated for a prohibited reason. 

Get personalized support by an HR expert 

Have a specific question about termination for cause, or have another pressing HR question? Our advisory team is here to help!  

Live HR Advice offers unlimited on-demand phone support by our award-winning team of HR experts, who have experience across a range of areas and industries. Whatever HR concern or problem you are facing, our advisors can tailor recommendations and strategies to your situation and workplace.