Termination pay: With or Without Just cause

Just Cause Means No Notice of Termination is Required at Common Law

Generally, an employer can fire an employee for just cause and not owe any termination pay at common law.

However, the terminated employee may still be owed up to 8 weeks termination pay and 26 weeks severance pay under Ontario’s employment standards legislation.

Termination Pay under the Employment Standards Act (ESA)

An employee with more than 3 months service is generally entitled to up to 8 weeks notice of termination (or termination pay instead of this notice). There are, however, several exemptions to this general rule, including an employee who has been guilty of willful misconduct.

Severance Pay under the ESA

In addition to termination pay, a terminated employee is generally entitled to receive severance pay if they have worked at least 5 years and the employer’s Ontario payroll exceeds $2.5M.  An eligible employee is generally entitled to one week severance pay for each year of service up to a maximum of 26 weeks. Again, there are some exemptions to this rule, including the same willful misconduct exception.

The Willful Misconduct exception under the ESA

An employee who has been found guilty of willful misconduct, disobedience or willful neglect of duty that is not trivial and has not been condoned by the employer is not entitled to termination pay.

Interpreting the Willful Misconduct exemption

One adjudicator has interpreted this exception as follows: “a person cannot be said to be guilty of willful misconduct or willful neglect of duty unless he is conscious of doing the act which is complained of or in omitting to do the act which it is said he ought to have done knowing he was committing a breach of his duty and also recklessly careless, whether it is a breach of duty or not”.

Generally, in order for an employer to rely on the willful misconduct exception, they must prove that the employee’s misconduct was willful, it was not trivial and it was not condoned.

Just Cause and the Willful Misconduct exception are not the same

It is generally more difficult for an employer to prove the “willful misconduct” exception than it is to prove “just cause”. Accordingly, an employer may be able to prove just cause and avoid wrongful dismissal damages, but, because it cannot prove that the misconduct was willful, still owe termination pay and severance pay under the ESA.

Lesson to be learned: If you were terminated for serious misconduct that you didn’t intend to do, your employer may owe you up to 8 weeks termination pay and 26 weeks severance pay under the ESA, even if your employer has “just cause” to terminate your employment at common law.

For more information about wrongful dismissal, read here. 

If you have been terminated  and you want to speak with an employment lawyer with experience in this area, contact us at  [email protected] or 1-888-640-1728 (toll free) or 647-633-9894 (within the GTA).