Terminating employees for cause in Canada, including in Ontario, is a serious matter due to the fact that an employee terminated for cause will not be entitled to termination notice, pay in lieu of notice, or severance. It may also disentitle the employee from obtaining Employment Insurance. As such, cause terminations are often risky and vulnerable to challenge. Employees who successfully challenge a cause termination may be entitled to higher damages than employees who are simply terminated without cause and with severance.
When considering a cause termination an employer will invariably run into the concept of condonation with its attendant duty to warn. Condonation essentially means that the employer condoned the employee’s misconduct by its actions or lack thereof. Employers who fail to warn their employees about the potential of a cause termination may have a much weaker case for a cause termination.
History of the Duty to Warn
Back in 1889, the Ontario Court of Appeal in McIntyre v. Hockin, was considering a termination of an employee. The Court found that the employer had two options when presented with misconduct: dismiss the employee or overlook the fault. An employer who retained an employee following misconduct was, from the Court’s perspective, essentially condoning the misconduct. This reasoning meant that an employer could not retain an employee while at the same time retaining the right to dismiss the employee for cause at a later time for previously overlooked or condoned misconduct. Of course, if in the future the employee commits misconduct yet again, the employer can rely on the new misconduct for cause for dismissal.
That case was, at the time of this writing, decided 133 years ago.
The McIntyre v. Hockin case so succinctly describes condonation that it continues to be cited to this day. Flowing from those principles, condonation could therefore be a positive action where the employer acknowledges the misconduct and does not terminate the employee, but it could also be negative action, where the employer who is aware of misconduct fails to discipline the employee, or fails to investigate misconduct, or fails to warn the employee.
A recent example is the federal case Yang v. Northern Inter-Tribal Health Authority 2021 FC 850. In that case the employee was initially performing well, but after some time her performance decreased. Over the course of 6 months the employee’s performance was impugned, she was provided training, and frequent recommendations to improve her performance. However, at no time was she informed that the performance concerns could result in her termination for just cause.
Instead of an explicit warning, the employee was told that if her performance did not improve it would be necessary to “move this conversation to a higher level”. Instead of any higher level conversation, the employee was terminated with cause and without notice.
In order to rely on the ground of incompetence for a cause termination, the Court cited an Alberta case stating that the employer “will bear the onus of showing that clear warnings were given”. The Court also cited a Saskatchewan case that considered a warning with the following sentence (in larger font): “Failure to refrain from any of these actions will result in dismissal.” A comparable warning was not given to the employee in the Yang case.
The Court therefore found that the employee’s cause termination was not justified and set aside an earlier adjudicator’s decision that found the opposite.
Employers should always ensure:
- that they have a well-developed progressive discipline policy to rely on.
- that employee misconduct and performance issues are well documented, in writing, and that consequences are well and unambiguously communicated to employees.
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