What is Just Cause for Dismissal?

What is Just Cause For Dismissal of Employment?

by Karen Zvulony

Just Cause is a legal term that means an employer is justified in terminating an employee without providing reasonable notice or payment instead of the notice. There is no hard and fast method of spotting what will constitute just cause. Rather, each case is unique and must be determined with attention to the particular facts.

When determining whether there is Just Cause for dismissal without notice in a particular case, courts will look at answering the following two questions: (1) whether the employee misconduct may be proven; and (2) whether the nature and degree of the misconduct is sufficient to dismiss the employee without notice. If the answer to both questions is yes, then there will be Just Cause for the dismissal; however, if an answer to either question is no, then the employer will be obligated to give reasonable notice of termination or payment instead of the notice.

How can you tell whether the nature and degree of the misconduct is sufficient to dismiss the employee without notice? Courts will typically look at a number of factors. First, courts look at whether the employee’s misconduct caused a breakdown in the employment relationship, by either violating an essential condition of the employment contract, or destroying the employer’s inherent faith in the employee. If the misconduct resulted in any of these developments, then there is Just Cause.

Second, courts look at how senior the employee is in the employer organization. The more senior an employee is, the more serious the conduct will be considered to be.

Third, courts look to see whether the employer gave a warning before termination. Where there was no warning before the dismissal that such misconduct could result in termination, except in the most serious of cases, the employer will have a harder time proving Just Cause.

Lastly, courts look at whether the employee’s misconduct was tolerated before the dismissal. Where the misconduct occurred in the past, and the employer said nothing about it, the employer would have to have given a warning that such misconduct will not be tolerated before dismissing the employee without notice. These factors are used as guidelines in answering the second question, mentioned above.

The method of determining Just Cause by asking the two questions outlined above was established by the Supreme Court of Canada in McKinley v. BC Tel, a case involving dishonesty as grounds cited for Just Cause. In this case, an employee experienced high blood pressure resulting from hypertension, and saw a physician about his condition. The physician prescribed medication that would allow the employee to continue working as before, however he recommended that an option might be to seek a less demanding position at work. The employee asked his employer to be transferred to a less demanding position, without informing management of his ability to continue working in the same position with the prescribed medication. The employee was dismissed without notice, after the employer became aware of the employee’s capabilities while on the prescription.

The court came to the conclusion that there was no Just Cause to dismiss the employee, because the employee’s dishonesty was not of a degree sufficient to justify dismissal without notice.

Although McKinley specifically involved dishonesty as a ground for Just Cause, the method outlined above may be applied to all categories of employee misconduct. The determination is the same, involving an examination of the facts in the case, and answering the two broad questions mentioned above.

Some Examples of Just Cause

Ontario case law has pointed to numerous categories of misconduct forming grounds for Just Cause . The following are some examples:

Dishonesty

The category of dishonesty encompasses misconduct that indicates an employee’s disregard for the employer’s inherent trust in the employee. Fraud and theft are examples of dishonesty.

Not every act of dishonesty will give rise to Just Cause . For example, in Geluch v. Rosedale Golf Assn., Ltd., the court held that an employee’s act of taking food and wine home from the golf club he managed without paying for it was not serious enough to warrant dismissal without notice, because the employee’s job involved sampling food and improving its quality for the golf club. Also, where an employer fails to prove an employee’s intention to steal, dismissal without notice will be considered too harsh a response to the misconduct. (See Kidd v. Hudson’s Bay Co., where a manager of industrial engineering was terminated following an incident of alleged shoplifting).

On the other hand, where an employee intentionally covers up for a shortage in the employer’s inventory, and encourages subordinate employees to do the same, as was the case in Alvi v. YM Inc. (Sales) (c.o.b. Stitches), the employer will have had Just Cause to dismiss the employee without notice. In Alvi, the court held that the employee’s instructions to his staff to cover up a shortage in leather jacket inventory had amounted to a fundamental break down of the employer’s inherent trust in the employee. Likewise, where an employee repeatedly lies about leaving during a work shift and only admits to it after being caught leaving on surveillance camera, the dishonesty will form sufficient grounds for Just Cause. (See Noun v. Sterling Trucks, a Division of Freightliner Ltd.)

Breach of Trust

A breach of trust is as it sounds: when someone in a position of trust violates the trust invested by someone else in some way. In an employment context, it typically occurs where the employee exhibits misconduct that promotes his or her interests instead of the employer’s interests. Where the employee’s misconduct was motivated by a conflict of interests, the inherent trust placed in the employee will usually have been destroyed. However, attention must be paid to the particular facts to tell for sure if a breach of trust has taken place.

In Ng v. Canadian Imperial Bank of Commerce, a financial advisor at the CIBC, responsible for securing client loans, mortgages and other investment portfolios, frequently cashed cheques on behalf of her husband into her account and gave him money withdrawn from the bank, without waiting the required time for clearance. The advisor also acted as her husband’s personal banker at a time during which she knew that he had a gambling problem, while using the bank’s money to help him. The court said that the decisions made by the employee while doing favours for her husband were within her understanding that they violated bank rules and procedures; further, the employee’s misconduct violated an essential term of her employment contract, and therefore there was Just Cause for termination.

Similarly, in Dowling v. Ontario (Workplace Safety and Insurance Board), a manager with the Workplace Safety and Insurance Board used his position to obtain financial benefits. He lowered insurance rates for certain clients in exchange for the purchase of computers for personal use at their wholesale price. In addition, he entered into secret arrangements with select clients, whereby he lowered the cost of insurance and split any amounts made as profit over and above the regular price with them. The employer’s Code of Conduct expressly forbade the acceptance of gifts or monetary reward by an employee for a business decision. The court found Just Cause for dismissal.

Insubordination

Insubordination is a kind of misconduct whereby the employee refuses to recognize and submit to the authority of the employer, and refuses to comply with the employer’s clear instructions, policies and procedures without reasonable excuse. Usually, the courts will not allow an employer to fire an employee for a single, minor incident of insubordination, unless it was of some significance.

Daniels v. Canadian Gift & Tableware Assn. was a case involving numerous and extreme instances of insubordination. The employee, an assistant editor and co-publisher of a major consumer gift trade publication, repeatedly exhibited hostility toward her direct supervisor, refused to comply with her supervisor’s instructions, and treated her assistant abusively. The employee also challenged her supervisor’s authority on numerous occasions, going over her head to speak with board members any time she and her supervisor disagreed. The court said that the employer had Just Cause to dismiss the employee without notice. The employee had constantly undermined the reporting structure and had considered herself an equal with her supervisor, and had behaved as though she had the authority to make the decisions she did, even though she had no such authority. Despite several warnings that this kind of conduct would not be tolerated in the workplace, the employee continued her campaign of insubordination. Just Cause was found in this case.

Just Cause was also found in Kontopidis v. Coventry Lane Automobiles, Ltd., where a manager at a body shop started being absent from work and did not account for his absences, despite explicit instructions from the employer to notify management when he was not going to be at work. The employee’s absence affected the productivity of the body shop, as he failed to train a new manager that had been hired. The employee also removed automobiles from the body shop without explanation. The court said that the failure to comply with explicit instructions, together with the impact of the employee’s failure to notify management of repeated absence, amounted to conduct that warranted Just Cause for dismissal without notice.

Absenteeism

An employer would, in most cases, be expected to formally warn an employee before proceeding with outright dismissal under the ground of absenteeism. An employer could not justify firing an employee who was late on only one occasion. On the other hand, persistent lateness and absenteeism may justify dismissal if the employee was given adequate warnings and failed to correct this behavior and did not have a valid reason for the conduct. This was the case in Kontopidis, mentioned above: Because the employee was repeatedly absent from work and did not provide an explanation, the employer was justified in firing the employee without notice. This outcome was also the result because the employer had provided the employee with numerous warnings and written instructions, with which the employee repeatedly had refused to comply.

Incompetence

The category of incompetence encompasses an inability to perform basic work functions as required by the employer. To justify dismissing an employee without notice or payment instead of notice, the level of incompetence must “fall below an objective standard of reasonable competence” and therefore must be blatant. (See Matheson v. Matheson International Trucks Ltd., [1984] O.J. No. 306 (H.C.J.)), a case where the president and general manager of a truck dealer was dismissed for Just Cause after he failed to carry out basic accounting and financial management tasks, for which he was responsible.)

A lack of adequate skill by an employee who is doing his or her best does not typically permit dismissal. However, an employer will likely be justified in dismissing an employee if, after several warnings that the incompetence may lead to dismissal, the employee does not improve. In Matheson, the employee routinely ignored letters sent to him by the board of directors and was seldom able to give them the financial information they requested. His incompetence continued even after receiving failing grades in the employer’s formal evaluation. The court said that the employee would have had reason to know that his employment would end, given that he had received numerous warnings that his level of performance was unsatisfactory. Therefore, there had been Just Cause for his dismissal.

The court in Matheson also mentioned another kind of incompetence that may justify dismissal without notice and also without a warning: gross incompetence. Where the level of incompetence is extreme, an employer may abruptly dismiss the employee without providing notice or payment instead of the notice. The employer in such a case would have to prove a level of incompetence beyond that which would constitute grounds for Just Cause where a warning was given.

Misrepresentation at Time of Hiring

Misrepresentation at time of hiring occurs where an employee was hired on the basis of a skill s/he indicated s/he possesses, but in reality does not. The employee in such a case may be dismissed with Just Cause for misrepresenting the skill. For example, a person who represented that he can swim and was hired as a lifeguard may be dismissed for just cause after the employer discovers the employee’s lack of ability to swim.

Sexual Harassment

The Ontario Human Rights Code protects workers from sexual harassment. An allegation of sexual harassment, if substantiated, is Just Cause to dismiss an employee without notice or payment instead of notice. However, the allegation must be substantiated. Also, except in the most serious of cases involving sexual assault, an employer will have to prove that a warning system was put in place before summary dismissal is warranted. For serious allegations including theft, fraud and sexual assault, the employee must be given an opportunity to respond to the allegations before termination is warranted.

In the Geluch case mentioned above, the employee managed a golf club and had many staff members reporting to him, a few of whom were female. His staff complained of sexual harassment on various occasions, after he had made unwanted comments, and poked two women in the shoulder. The employee was only advised of the reasons for his dismissal four months after being terminated. The court said that the incidents did not amount to Just Cause.  Furthermore, the employee was not advised of the reasons for dismissal until four months following his termination, and therefore the employer was not justified in dismissing the employee without notice.

Cumulative Events Just Cause

Sometimes a court will not find that each act cited against an employee amounts on its own to Just Cause, however, when taken together, numerous incidents of misconduct will amount to cumulative Just Cause. In Daley v. Depco International, Inc., the employee had been employed for 13 years as an industrial operator. The employee exhibited numerous incidents of misconduct, involving fights, drunkenness on the job, incompetent work and behavior causing danger in the workplace. The employer maintained a disciplinary system and documented each incident of misconduct as well as all required disciplinary steps before dismissing the employee, including warnings. The court said that there was cumulative just case when looking at the nine incidents of misconduct together: the employee had demonstrated negligence when carrying out his duties as an operator; the employee had been absent from work, and had only notified management of his upcoming absence on few occasions; the employee’s behavior, on numerous incidents involving drunkenness, had caused workplace hazards. Therefore, the various incidents of misconduct, when observed together, formed sufficient grounds for Just Cause.

Conclusion

Just Cause means that an employer may terminate an employee without notice or payment instead of the notice. In order to justify terminating an employee without providing either of these, the kind of misconduct amounting to just cause will have to be of a serious nature that justifies dismissal without notice, having regard to the circumstances, and the two-part test outlined in the beginning of this article. The determination of Just Cause is very fact-driven, and will involve investigating all of the particular facts, with specific attention to various factors such as: the nature of the employee’s relationship with the employer; the relative seniority of the employee; the degree of trust invested in the employee; the nature of the misconduct; whether the employer warned the employee that the misconduct could lead to dismissal; and whether the misconduct was allowed in the past. If the employer has alleged Just Cause , then the employer will first have to prove the misconduct, and then establish that the misconduct in question was sufficient to result in dismissal without notice.

Employers should be alert to any acts of condonation of misconduct, as there will be no Just Cause to dismiss an employee for misconduct that was tolerated in the past without a subsequent warning that such misconduct could lead to dismissal. Therefore, an incident of misconduct that the employer let slide will not be capable on its own of forming grounds for Just Cause .

The information provided in this article is not applicable to unionized employees and may not apply to employees who work for a federally regulated employer. This article also does not provide an exhaustive list of the kinds of conduct that may be cited by an employer.