Understanding Your Employment Rights: When ‘Cause’ Doesn’t Justify Termination

Being terminated from your job can be a traumatic and confusing experience. Technically, your employer can dismiss you at any time and for any reason. Or for no reason. However, just because an employer has the right to make hiring and firing decisions to suit its organizational needs does not mean it can simply ignore the law.

Yes, you can be fired without a reason but you must be given proper notice or pay in lieu of notice. This is known as termination without cause and it can be for cost-cutting measures or for poor work performance. The reason can be random and seem unfair but the employer is within its rights to end your employment as long as the dismissal is not discriminatory.

You can also be terminated for cause, but it must be for serious misconduct, such as theft. Even then, your employer must be able to demonstrate a progression in disciplinary action and prove dismissal was the only option available.

In law, there is also something known as constructive dismissal. This is an attempt to force an employee out of their job by imposing significant changes to the terms or conditions of their employment without their consent.

The law is constantly evolving with new legislation and court rulings that can change the employment landscape. Most people are unlikely to have a clear understanding of the many aspects of employment law.  What constitutes cause, wrongful termination or constructive dismissal can be easily misinterpreted. That is why it is essential to seek expert advice if you have a workplace issue.

Termination with cause vs. termination without cause

In Ontario, employees’ rights are protected by the Employment Standards Act, 2000 (ESA). The Act lays out rules about such issues as minimum wage, hours of work limits, termination of employment, public holidays, pregnancy and parental leave, severance pay and vacation.

The ESA provides that in most cases when an employer ends the employment of an employee who has been continuously employed for three months, the employer must provide the employee with either written notice of termination, termination pay or a combination (as long as the notice and the number of weeks of termination pay together equal the length of notice the employee is entitled to receive). If you have been employed for more than five years and work for an employer with an annual payroll higher than $2.5 million, you are also entitled to severance pay.

If you are a federally regulated worker, such as a bank or airport employee, the Canada Labour Code requires employers to provide a minimum of two weeks’ notice (or more depending on the years of service), in writing, when terminating an employee, plus severance pay.

When you are terminated without cause, you may also be entitled to additional severance for the duration of the common law reasonable notice period.

The difference between being terminated for cause and being terminated without cause comes down to your entitlement to notice or pay in lieu of notice. Essentially, if you have been successfully fired for wilful misconduct, your employer does not have to pay you notice or severance.  Being terminated for cause is serious and applies in cases of intolerable workplace misconduct that can include such misbehaviour as sexual harassment, breach of trust, insubordination, assault or theft.  Your employer has to prove it has grounds for a termination for cause.

Notice is required

Many factors can come into play when someone is dismissed without cause. A company may want to restructure or is dealing with a downturn in business. Unless you are a unionized worker, you can be fired at any time and for any reason in Ontario. Your employer does not have to justify their reason. However that doesn’t mean they are free from certain obligations.

You must be given reasonable notice of the termination that states when your employment will end. This allows you to seek out other opportunities to find alternative employment while still being paid. You could be entitled to pay in lieu of notice, which compensates you if a notice period is not provided by your employers. There can also be a combination of termination notice and termination pay.  If your employer does not provide reasonable notice or pay in lieu of notice, you can file a wrongful dismissal claim.

Notice periods vary depending on your age and years of service. There are basic entitlements laid out in the ESA but many employees will be entitled to more compensation under common law.  Under the ESA,  if you have been working for your employer for less than a year, you are entitled to receive one week termination notice. If you have been working for more than a year but less than three years, the notice period is two weeks.  Thereafter it is one week per year of service to a maximum of eight-weeks’ termination notice.  If you have been employed more than five years and work for an employer with an annual payroll higher than $2.5 million, you are also entitled to severance pay of one week per year of service.  Beyond the basic ESA entitlements, you can also be entitled to additional severance under the common law for a failure to provide reasonable notice of termination.

Know your rights

While the law uses precedent to determine a just outcome, every case is based on its own merits. What, if anything, you are entitled to in terms of notice and severance and can vary depending on the circumstances, which is why it is in your best interests to speak with an experienced employment lawyer who can explain your rights.

There are no absolutes, even if you have been terminated for cause. The first thing you should know is that you do not have to immediately accept the severance package your employer offers in a termination meeting. It may be in the company’s best interest to get your signature quickly but it makes sense to have any offer vetted by a lawyer to ensure it is fair. It is too late to change your mind once you have signed the agreement.

If the package you were offered is not acceptable you have two years from the date of termination to file a wrongful dismissal claim.

It is especially important to contact a lawyer if you have been fired for cause. First of all, being terminated for cause means you may not be eligible for Employment Insurance. It may also limit your job prospects.

Many employers mistakenly believe that firing someone for cause means they are not obligated to pay severance. But the fact is, the bar for establishing a termination for cause is extremely high and the onus to prove it is on the employer.

Termination for cause is typically reserved for serious issues. To justify a termination for cause, the employer must show the employee engaged in wilful misconduct and that the conduct was both serious and wilful.

If the employer fails to make its case the employee is entitled to damages

We have the advice you need

For 30 years, the Walter Law Group has been helping clients successfully negotiate better severance packages than they were first offered by their employers. We carefully examine every detail and watch for such things as a non-competition clause, compensation clawbacks, how the money is structured to be paid, tax implications and more.

We work to ensure your future, helping you to keep the most money in your pocket. Contact us today and let’s get started.

Understanding Your Employment Rights: What is constructive dismissal?

When you are hired for any job, you enter into an employment agreement with your employer. It might be a comprehensive written agreement or merely an oral understanding covering such things as your intended duties, hours of work and compensation.

In a constructive dismissal, your employer has not directly fired you. Rather, it has unilaterally made a substantial change to the terms of your employment without your implied or express consent. Constructive dismissal can also occur when the workplace environment becomes hostile or toxic.

With a termination, whether for cause or without cause, the employer signals its intention to let a worker go. With a constructive dismissal, the employer is attempting to make conditions so intolerable that the employee eventually resigns out of frustration.

According to the Government of Canada, constructive dismissal is sometimes referred to as “disguised dismissal” or “quitting with cause.” That is because it often occurs in situations where the employee is offered the choice of resigning or agreeing to a change in their employment agreement.

In today’s work environment, it is not unusual for job descriptions to change. With COVID, for example, many people began working remotely. Some changes are temporary, but when your role and responsibilities change substantially and permanently, the conditions of your original employment contract may no longer apply and a new agreement will be needed.

You can agree to a new employment contract but the employer must provide “fresh consideration” in return. The promise of continued employment is not sufficient. Your employer must offer you something of value – such as a raise or more vacation time – in exchange for you entering into the updated employment agreement.

Some people have confused wrongful termination with constructive dismissal. While in both cases the employer is attempting to avoid paying proper severance, the difference between the two is the way that the employment ends. In a wrongful dismissal, it is the employer who directly terminates the employment. In a constructive dismissal, the employee resigns as a result of the employer’s actions, although the employer effectively forced the resignation.

Without your consent

To be considered a constructive dismissal, the employer’s action must be done without your consent. If not, any variation is seen as an agreed change to the contract of employment.

The employer’s failure to meet its contractual obligations distinguishes a constructive dismissal from a regular resignation. But it is not merely how you view your employer’s actions that count. The seriousness of the employer’s failure as well as the amount of deliberation apparent in its actions are also important factors in determining whether there has been a constructive dismissal.

It is up to you to indicate to your employer that you do not accept the new conditions of employment. This can be done by explicitly protesting the new conditions, making it clear that you reserve the right to take legal action. It can also mean resigning within a reasonable period after the change. By not resigning or making your concerns known, you are essentially accepting the new conditions of employment.

Under the law, if you resign as a result of a constructive dismissal you have been effectively terminated without cause and typically would be entitled to the same severance package as someone who is wrongfully dismissed.

Know the signs of constructive dismissal

Just because your job has changed it doesn’t necessarily mean you have been constructively dismissed. For example, your boss can assign you to work at the company’s office across town. However, if you have been re-assigned to a different city, that may be considered constructive dismissal unless you knew that potential relocation was part of the job when you accepted the position.

Signs of constructive dismissal can include:

  • Reduced compensation This is a significant decrease in salary or loss benefits, typically more than 10 per cent.
  • Withheld remuneration This occurs when your employer refuses to pay wages owed to you.
  • Demotion This can include sudden change in job title or loss of responsibilities or being required to report to a previous subordinate.
  • Increased workload You may be faced with a change in responsibilities that make it difficult to fulfill family caregiving obligations.
  • Toxic work environment Examples of this are being unjustifiably disciplined, abused, harassed or discriminated against.
  • Sudden shift change These can be changes in your work schedule that disrupt your work-life balance.
  • Refusal to accommodate In this scenario, your employer fails to provide any workplace accommodations needed for you to fulfill your duties.
  • Temporary layoff This occurs if you are temporarily laid off in violation of your employment agreement.

What do I do if I suspect constructive dismissal?

If you believe you have been constructively dismissed you cannot afford to sit back and wait. If you fail to act within a reasonable amount of time, your employer can claim that since you continued to work, you tacitly accepted the change.

If you suspect you are being constructively dismissed, keep a record of any emails, texts or letters dealing with the change in your employment agreement. If you meet with your employer about your job, take clear notes about the issues discussed. If you find yourself in a toxic work environment, document any intolerable behaviour and the dates they occurred.

It is important to carefully consider your next move. Remember, constructive dismissal carries the same consequences for an employer as a finding of wrongful dismissal. If an employer is guilty of constructive dismissal you are entitled to receive termination pay and possibly severance pay commensurate with your length of service, position and other factors. Termination and severance packages can include payments for lost wages, benefits and bonuses.

However, constructive dismissal is a complicated area of the law and proving a case can be challenging since it requires proof that your employer breached your employment agreement and did things that were serious enough to force you to quit your job.

Before deciding to resign or confront your employer, you should consult an employment lawyer who can identify if you have a legitimate claim, discuss your options and prepare a response to your employer. This can include sending your employer a demand letter, filing a statement of claim or pursuing other legal options.

We are here to help

If believe your employer has changed your employment relationship without your consent don’t quit before you call us. The Walter Law Group has been trusted as experts in employment law for three decades and we can hold employers accountable and advocate for compensation on your behalf.

We advocate for clients in Mississauga, Oakville, Brampton, Toronto, the GTA and across Ontario and we will work diligently to ensure you get the fair treatment you deserve.

Contact us today so we can help you move on to a brighter future.