Wednesday, September 22, 2010

Ontario Employment Law: “Just Cause” for Dismissal

When can employment be lawfully terminated "for cause?"

In order for the courts to find that an employer has dismissed an employee for “just cause," the employee must be found to have breached a fundamental term of the contract of employment.

In other words, the employee must fail to perform a fundamental obligation of his or her job: Mckinley v. B.C. Telephone, 2001 SCC 38, (2001) 200 DLR (4th)

What constitutes “just cause” in any particular circumstance?

In the classic English case of Pearce v. Foster (1886) 17 Q.B.D. 536, a case whose discussion of “just cause” is regularly cited by Canadian courts with approval, the court stated:

What circumstances will put a servant into the position of not being able to perform, in a due manner, his duties, or of not being able to perform his duty in a faithful manner, it is impossible to enumerate. Innumerable circumstances have actually occurred which fall within that proposition, and innumerable other circumstances which never have yet occurred, will occur, which also will fall within the proposition.

In the much more recent Canadian case, Mckinley, the following description of “just cause” is given by the Supreme Court of Canada:

The conduct under consideration must be seen in context. The issue is whether the employee’s misconduct was such that gave rise to a breakdown in the employment relationship.

If a court finds that there was just cause for the dismissal, the employee loses entitlement to notice, pay in lieu of notice, and may fail to qualify for unemployment insurance.

An important point to remember is that “just cause” can only be relied upon by an employer to justify termination when cause arises.

If an innocent employer does not warn the employee or dismiss for cause at that time of discovery of the misconduct, or otherwise fails to respond when fully aware of the circumstances surrounding the misconduct, it may be found to have condoned, or essentially forgiven, the misconduct.

Thus, absent timely response by the employer, the employee’s alleged or actual misconduct can not alone be relied upon by the employer as a reason to dismiss the employee at some remote, future time.

We see this rule at work in the following passage from Kellet v. Mazda, 2008 CanLii 74291 (ON S.C.), a case involving termination of an employee by an employer for, among other things, multiple acts of sexual harassment:

The sexual harassment evidence herein is properly taken into account in deciding whether there was just cause for dismissal. The defendant did not condone or waive these serious acts of employee misconduct. It disciplined the plaintiff and warned him by letter about the seriousness of the conduct in issue. That letter also contained a warning about other unprofessional conduct. Pursuant to Nossal v. the Better Business Bureau of Metropolitan Toronto (1985) 51 O.R. (2d) 279 (C.A.), further misconduct allows past misconduct, even of a different nature, to be considered when deciding whether there is just cause. In other words, all acts of misconduct, unless condoned or otherwise forgiven, properly may be accumulated for the purpose of deciding whether there was just cause, in the circumstances.

With respect to the definition of “just cause," courts have stated that the misconduct for which an employee is dismissed must be of a serious nature; mere dissatisfaction by the employer is not enough.

Of course, assessing the seriousness of the misconduct will be context-specific; in other words, it will depend largely on the nature of employment. Only in rare instances will a single mistake justify the dismissal of an employee, for example where that mistake threatens life or the continuance of a business. In most circumstances, a pattern of conduct and a series of warnings will be required before just cause justifying a termination will be found by a court.

In Pearce v. Foster, the court identified specific circumstances that can justify a finding of “just cause” by the employer:

  1. serious misconduct;
  2. habitual neglect of duty;
  3. incompetence, off duty conduct that is incompatible and prejudicial to the employer’s business;

Other circumstances that can justify dismissal of an employee include insubordination, post-dismissal conduct, and sexual harassment.

Legal tests, which are highly sensitive to context, have been articulated by our courts to address these various circumstances.

In future posts, we will consider each of the noted circumstances.

We will also look at the key role written warnings by an employer may play in determining whether grounds exist for termination of employment for just cause. Finally, we will look at alternate forms of discipline, such as temporary suspension of employment, which may be an appropriate remedy to misconduct.

- Robert Tanha, Toronto

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