Just Cause Termination: Why It's Hard To Establish

Terminating an employee “for cause” means firing them for serious misconduct without providing termination pay. It’s the most severe form of dismissal, and employers often believe they have cause when legally they do not.

Just cause termination occurs when an employee’s conduct is so serious that it fundamentally breaks the employment relationship, making it impossible to continue. When an employer successfully proves just cause, they can dismiss the employee immediately without notice or severance pay.

This differs dramatically from termination without cause, where employers can end employment as long as they provide proper notice or pay in lieu. 

Canadian courts have consistently held that just cause is difficult to establish because termination without severance is the “capital punishment” of employment law. Losing your job without compensation can be financially devastating, so courts require clear and convincing evidence of serious misconduct before allowing it.

The law recognizes the power imbalance between employers and employees. Employers control the workplace, set the rules, and make termination decisions. Courts scrutinize these decisions carefully to prevent employers from using “cause” as an excuse to avoid paying legitimate severance obligations.

Examples include:

Theft or dishonesty involving company property, funds, or falsifying records can constitute cause, but context matters. Stealing significant amounts likely justifies dismissal, while taking a pen home likely doesn’t.

Harassment or workplace violence creates liability for employers and can justify immediate dismissal, particularly when safety is at risk or the conduct is severe.

Conflict of interest or competing with the employer violates fundamental duties of loyalty, especially for senior employees with access to confidential information.

Chronic absenteeism may justify dismissal when excessive, unexplained, and continuing despite warnings, though legitimate illness complicates this significantly.

Courts apply the principle of proportionality. The punishment must fit the misconduct. Even serious issues may not justify immediate dismissal without severance if less severe responses were appropriate.

Progressive discipline is usually required. Except for the most egregious conduct, employers must warn employees, give them opportunities to improve, and document problems before terminating for cause. A single mistake rarely justifies dismissal.

Context matters. Courts consider the employee’s length of service, employment record, position, whether the conduct was condoned in the past, and any mitigating circumstances. 

Condonation may defeat cause. If you knew about misconduct and continued employing the person without addressing it, you may have condoned the behavior and generally can’t later rely on it as cause for dismissal.

If you terminate for cause but can’t prove it in court, you’ll face a wrongful dismissal lawsuit. The consequences include:

Full common law severance, often much more than Employment Standards Act minimums. A long-service employee might be entitled to 12-26 months of pay.

Bad faith damages, particularly if you handled the termination poorly, made unwarranted allegations, or damaged the employee’s reputation.

Legal costs, both yours and potentially the employee’s if you lose.

For most situations, terminating without cause and paying proper severance is safer and cheaper than trying to establish cause.

Considering terminating an employee for cause? Pinto Shekib LLP advises employers on termination decisions. Contact us at 416.901.9984 or info@pintoshekib.ca.