Canadian Employment Law: 5. When is just cause just?
Terminating an employee is a reality that most businesses will have to face at some point in time. Oftentimes, employees who have been terminated are entitled to reasonable notice or severance pay in lieu of notice. However, that isn’t always the case. When an employee is terminated with cause they are not entitled to either.
As an employer you have the ability to terminate with just cause at any point in time, but it’s important to understand that doing so you’re also opening yourself up to the potential of a wrongful dismissal claim. This blog explains the categories, consequences and considerations of just cause termination you’ll want to consider before terminating an employee with cause.
Categories for Just Cause
Just cause will often (but not always) fall into one of these five categories:
- Serious misconduct that goes to the crux of the employment contract;
- Habitual neglect of a duty;
- Incompetence;
- Conduct incompatible with the duties the employee is required to perform; and
- Willful disobedience, dishonesty, and insubordination.
Potential consequences of Just Cause Termination
Just Cause Termination creates potential consequences for the employer and the employee. If an employee is terminated with cause they are not entitled to reasonable notice or severance pay, may not be eligible to receive their employment benefits and risk reputational damage that could impact their ability to find another job. For these reasons, employers should always keep records as proof to justifies termination with cause. You’ll need these supporting documents in the event that the employee brings forward a wrongful dismissal claim. If you’re unable to justify termination with cause, wrongful dismissal claims can be very expensive. Damages are often awarded on the higher end of what the employee would have been entitled to if they were terminated without cause. This could be upwards of 24 months of termination pay in addition to aggravated or punitive damages if an employer harassed, bullied or acted maliciously towards the employee during the termination. These damages occur more frequently in wrongful dismissals for just cause cases because it’s more likely the employer/employee relationship has deteriorated.
Always be cautious when terminating an employee for cause and consider the following:
- Was the misconduct was serious enough to warrant just cause?
- Are you acting impulsively?
- Is it difficult for the employee-employer relationship to continue objectively?
- Is there an alternative way to discipline the employee?
- Has an investigation been conducted?
Proving just cause termination can be difficult and complex, so it’s incredibly important for employer to carefully consider all options before moving forward with a just cause termination.
Since these terminations impose considerable risk, financial and otherwise, we highly recommend consulting with your legal council in advance. If you’re in need of legal aid, we would be glad to connect you with a professional from our team. Contact us today.
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