Navigating the termination of an employee for cause is usually a lot more complicated than want employers expect. Employers should consider their options carefully when they decide to terminate an employee for cause and seek the advice of an employment lawyer to attempt to reduce the employer’s litigation risk.

To remind our readers, termination for cause is found where acts by the employee have gone to the root of the employment agreement, and it will become impossible for the employment relationship to continue. When an employee is fired for cause, the employee is not entitled to any notice of dismissal nor a termination or severance package. However, when an employee is fired for cause, they have the option to sue the employer for wrongful dismissal. For more information related to this topic, please see our recent blog entitled “Fired for Cause in Ontario? Just Cause vs. Willful Misconduct”.

This blog sets out 4 common mistakes that we see as employment lawyers when it comes to firing an employee for cause.

What are 4 Common Mistakes Employers Make?

1. Misunderstanding Willful Misconduct

Ontario’s threshold that must be reached to terminate an employee’s employment “for cause” under the ESA is “willful misconduct.” Specifically, an employee who has been guilty of willful misconduct, disobedience or willful neglect of duty that is not trivial and has not been condoned by the employer (see O. Reg. 288/01). However, the employer needs to show that the behaviour of the employee is in breach of the employment contract or employment agreement. The employer does not need to show willful misconduct per se although a lot of common law causes will require meeting a similar test.

If an employer does not understand the above distinction, it could result in a claim by the employee for wrongful dismissal. For example, it could be the case that the employer has met its burden for establishing cause under the common law but failed to establish “willful misconduct.” In that case, the employee would still be entitled to notice of termination under the ESA and, possibly, severance pay as well.

Another possible issue relating to misunderstanding the distinction between willful misconduct and the common law just cause threshold could be related to the employment agreement itself. If an employer has erroneously used the standard of the common law relating to cause in a provision of an employment agreement, it could result in the entire employment agreement including a without cause provision in that same agreement being held to be void. Please see our blogs entitled “The Ontario Court of Appeal Released a Decision That Will Have a Big Impact on How Employers Draft Employment Agreements” and “More Developments in Employment Termination Clauses in the Wake of the Waksdale Decision” for more information. This in turn will greatly increase the employer’s risk of litigation related to claims wrongful dismissal for by dismissed employees.

2. Moving too Quickly and Failing to Use Progressive Discipline Before Termination

A common error that employers make is that they move to terminate the employee too quickly without utilizing progressive discipline, especially in cases where the threshold for cause only meets the common law standard of just cause. Simply put, progressive discipline takes place when the employer allows the employee time to correct their behaviour and avoid termination for cause.

These steps are generally structured and escalatory, meaning that the employer’s actions related to discipline are orderly, make sense given the context and conduct that has taken place, and the disciplinary steps also increase in seriousness if the misconduct continues. For example, for a first act of misbehaviour, the employer may only provide a verbal warning, and if the conduct does not cease, the employer may then move to other forms of discipline such as a written warning, suspension (if permissible), etc., in an effort to get the employee to stop engaging in the misbehaviour or act(s) of misconduct.

Progressive discipline is necessary in cases where the employer is concerned about an act of misconduct (not necessarily the “willful misconduct” threshold under the ESA but any sort of misbehaviour) that the employee has engaged in but is not confident that the misconduct is grounds for immediate termination. The fact is that in most cases, a first act of misconduct (or even series of behaviours or actions) do not reach the level of gross misconduct (such as violence or major theft) necessary to where an employee can confidently say that the employee would not have a claim for wrongful dismissal. As such, in most cases, the proper course of action would be to engage in progressive discipline rather than immediate termination for cause to minimize the risk of litigation.

3. Moving too Slowly and Condoning the Behaviour.

Another common mistake that employers make is that they do not act in a timely manner regarding certain misbehaviours of an employee by either failing to dismiss the employee for cause or by utilizing progressive discipline. In such cases, if the employer then attempts to dismiss the employee at a later time, the employee may argue that the employer has waived to the right terminate the employee for cause because they condoned the behaviour.

The point of condonation is to prevent the employee from being deceived into a false sense of security that the employer has forgiven or has waived the act of misconduct and will not use it to terminate their employment. The onus to prove condonation is on the employee.

4. Disregarding Human Rights, Workplace Bullying or Workplace Discrimination

It is a common occurrence where an employer moves to terminate an employee for cause but the employee in turn alleges that they have been experiencing workplace bullying or discrimination. Employers should not ignore these claims and should ensure that they are properly investigated before they move to terminate the employee for cause unless the employee’s acts of misconduct are very serious. Ontario courts will look at the situation using a contextual lens. If an employee has cited claims related to discrimination, human rights breaches or workplace bullying that these issues were a factor in the employee’s dismissal, the employer will increase their risk of litigation.

In short, if there is evidence of workplace bullying, human rights breaches or discrimination, the courts will use that as a factor in their analysis of whether there was cause to dismiss the employee. And while it entirely remains possible for long-term employees with positive performance reviews to be dismissed for cause, that fact ought not to be regarded as a cart blanche or blueprint for the summary dismissal of employees in Ontario.

How Zeilikman Law Can Help!

Our employment lawyers at Zeilikman Law routinely help employers when they have issues related to misconduct in the workplace. We review their case and set out how best to deal with the circumstances of their own specific issue to minimize the employer’s litigation risk.

For more blogs on this topic and other related employment law topics, please look at:

• Employee Insubordination in Ontario: Can You Be Fired for Cause?
• Employees Terminated “For Cause” May Still Be Entitled to Statutory Benefits
• Termination Clause Not Enforceable When With Cause Portion Violates Ontario’s Employment Standards Act

Zeilikman Law can be contacted at (905) 417-2227 or online here to schedule your own confidential consultation with one of our employment lawyers.