Termination for cause: a guide for Ontario employers

Termination for cause is one of the most serious forms of employee dismissal under Ontario law. It requires strong justification, thorough documentation, and clear evidence that the employer acted in good faith throughout the process.

Because of the high legal threshold involved, terminations for cause are frequently challenged by employees. This type of dismissal carries significant legal risk for employers and must be handled with careful attention to detail and proper procedural steps.

Termination for cause defined

Termination for cause, also referred to as “just cause termination,” occurs when an employer alleges that an employee’s conduct was serious enough to warrant immediate dismissal without notice or severance pay.

The burden of proof rests with the employer to show that, considering the context, the misconduct was so serious that it justified dismissal without notice or severance. Therefore, all incidents and recourse must be meticulously documented.

The employer must also demonstrate that the misconduct led to an irreparable breakdown of the employment relationship, making continued employment untenable.

While the employer makes the decision to terminate employment, entitlement to Employment Insurance (EI) benefits is assessed independently by Service Canada, which may deny benefits if it determines the termination was for just cause.

It is important to note that an employee cannot be terminated for just cause for a specific event that they have already been disciplined for.

The importance of progressive discipline

Progressive discipline is generally required before an employer can justify termination for cause. This means giving an employee a fair opportunity to correct their behavior through a series of documented steps, such as verbal and written warnings. However, there are exceptions: in cases of egregious, one-time incidents, such as theft, physical violence, or serious harassment—immediate termination without progressive discipline may be justified.

Because termination for cause is so difficult to prove in Ontario, having a clear, documented progressive discipline process is often essential. It shows the employer acted reasonably and in good faith, providing the employee with a chance to improve before dismissal became necessary.

Employers who fail to follow a fair process risk having the termination deemed wrongful or unjustified, making them liable for wrongful dismissal damages. Progressive discipline must be applied consistently across the workplace, or it may undermine arguments for just cause, as it would potentially demonstrate unfair treatment or bad faith from the employer.

Common steps of progressive discipline

While the Employment Standards Act does not mandate progressive discipline steps, Ontario courts and tribunals consider it a key factor in assessing just cause. Commonly accepted steps in progressive discipline include:

1. Verbal warning

Informal discussion to identify the issue and set expectations for improvement.

2. Written warning

Formal documentation of the misconduct or performance issue, outlining consequences if behavior does not improve.

3. Final written warning or suspension

A more serious notice, often including a temporary suspension without pay, signaling that continued issues may result in termination.

4. Termination for cause

Considered only after previous steps have been documented and the employee has failed to improve.

How context can define “just cause”

The exact number and nature of disciplinary steps may vary depending on the severity of the conduct, the employee’s role, and the workplace context. Consistency and fairness in applying these steps are critical to justifying termination for cause. However, a regular process may not be enough in specific cases.

Ontario courts set a high threshold for just cause terminations, especially for relatively minor issues such as lateness. However, just cause may be upheld if the misconduct is repeated, clearly documented, and warnings have been issued frequently over a short period, demonstrating that the employee failed to correct their behavior despite being made aware of the consequences.

Courts also consider the employee’s overall record and the context of the misconduct, meaning that summary dismissal for something such as lateness alone is rare and usually requires significant aggravating factors.

Viable reasons for just cause terminations in Ontario

Harassment or workplace violence

Physical violence, threats or threatening behavior, or harassment. This can take place within the workplace or digitally. This includes workplace and private communications, such as via text, email, or social media.

Sexual harassment

Unwanted sexual advances, verbal or physical harassment of a sexual nature. This can also take place within the workplace or digitally—also including workplace or private communications.

Theft or fraud

Stealing from the company; money, property or engaging in fraudulent activity. This includes direct and indirect attempts to defraud the company, coworkers, or customers.

This can include time theft.

Willful insubordination

Refusal to follow reasonable, lawful instructions or orders. Employees do have the right to refuse unreasonable requests; therefore, clear documentation of reasonable requests through employment contracts, workplace policy, and requests must be made.

Habitual neglect of duties

Consistent failure to perform essential job duties despite prior coaching or warnings. Sometimes referred to as incompetence, this may justify termination for cause only if the neglect is serious, persistent, and accompanied by documented, progressive discipline.

Breach of company policy

Repeated violations of company policy despite prior warnings, or a single serious breach. This can result in termination with cause depending on documentation and employer compliance with the ESA.

Dishonesty or Misrepresentation

Dishonesty in resumes or falsified certifications, degrees, licenses, etc.

Conflict of Interest

Engaging in outside activities or business dealings that directly compete with or harm the employer’s interests, especially if done without disclosure.

Substance abuse

Being under the influence of drugs or alcohol while working, particularly if it endangers others or violates a clearly communicated policy.

This must be approached carefully, as addiction is a protected disability.

Violation of H&S Standards

Deliberately ignoring safety protocols, especially if it endangers others. This is especially relevant in regulated industries like childcare, construction, and food service.

Just cause vs. willful misconduct under the ESA

It’s important for employers to understand that “just cause” under common law is not the same as “willful misconduct” under the Ontario Employment Standards Act.

Under common law, if an employer can establish just cause, they are not required to provide reasonable notice or pay in lieu. However, this does not automatically eliminate the employee’s entitlement to ESA minimums, such as termination pay or severance pay.

To deny ESA entitlements, the employer must prove that the employee engaged in willful misconduct, disobedience, or willful neglect of duty. This is a distinct and higher threshold than just poor performance or even serious mistakes. The conduct must be intentional or deliberate, and not simply careless, negligent, or the result of incompetence.

As a result, it is possible for employers to be required to pay ESA entitlements even after a successful just cause termination—unless the willful misconduct standard is also met.

Employers seeking to rely on both standards must be particularly diligent. Clear documentation, progressive discipline, and legal advice are key to avoiding liability for wrongful dismissal or non-compliance with ESA requirements.

Want to ensure compliance with provincial legislation?

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