Just Cause For Termination
Just Cause is a legal term that means an employer is justified in terminating an employee and not providing the employee with any notice of termination at common law. Generally, the courts decide what constitutes just cause.
The Core Question
When deciding whether Just Cause exists, the courts in Ontario have stated:
…the core question for determination is whether an employee has engaged in misconduct that is incompatible with the fundamental terms of the employment relationship. The rationale for the standard is that the sanction imposed for misconduct is to be proportional – dismissal is warranted when the misconduct is sufficiently serious that it strikes at the heart of the employment relationship.
The Three-Step Approach
The Ontario courts have outlined a three-step approach for determining whether misconduct strikes at the heart of the employment relationship.
The first step is determining the nature and extent of the misconduct.
The second step involves considering the surrounding circumstances for both the employer and the employee.
The third step is determining whether dismissal is warranted as a proportional response; this involves determining whether the misconduct is sufficiently serious so as to give rise to a breakdown in the employment relationship.
Lessons to be learned:
- It is generally difficult to prove “just cause”. You can limit your organization’s termination pay obligations by including a termination clause in your employment contract.
- In some cases you can prove “just cause” but your organization may still owe the person notice of termination, and severance pay under the Employment Standards Act.
- You can stipulate in your employment contract that specific misconduct (i.e theft) is deemed to be just cause. This is called a specific penalty clause.If you are thinking about terminating an employee and want to discuss your organization’s potential legal liability, or you want to amend your employment contract to enhance your management rights, please email us at [email protected] or call us at 1-888-640-1728.
In the recent decision of Andros v Colliers Macaulay Nicolls Inc., the Ontario Court of Appeal (“OCA”) found yet another termination clause to be unenforceable. In this decision, the OCA reaffirmed and clarified various principles surrounding the enforceability of such clauses.
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