Ontario severance pay: What if I am fired for cause?
A recent decision of the Ontario Court of Appeal, Render v. ThyssenKrupp Elevator (Canada) Limited, 2022 ONCA 310, confirmed that where an employee is terminated on a “for cause” basis, the employer may be required to provide severance pay under the minimum standards set out in the Employment Standards Act (the “ESA”).
According to the Court in Render, this will be the case where the conduct giving rise to the termination of employment “for cause” does not meet the standard of “wilful misconduct” set out in the ESA, required to disentitle an employee to notice of termination.
The Court’s finding in Render follows the same reasoning outlined by the Court of Appeal in previous decisions, such as Waksdale v. Swegon North America Inc., which held that “wilful misconduct” is a higher threshold to meet than the common law “for cause” standard.
Historically, employers in Ontario have had the option of terminating an employee’s employment in one of two ways:
- “with notice”, at any time, upon providing reasonable notice of termination or notice under the terms stipulated in the employment contract, with the later required to be equal or greater than the ESA minimum notice requirements; or
- “without notice”, meaning without notice or pay in lieu thereof, where the employer establishes that the employee has engaged in conduct which renders the continuation of the employment relationship untenable.
The latter has generally been referred to as ”for cause” termination.
The Court’s decision in Render determined that an employee, although properly terminated “for cause”, will be entitled to ESA notice of termination or severance pay in lieu thereof, where the conduct does not amount to “wilful misconduct”.
Accordingly, in light of the Court’s decision in Waksdale, and further clarification by the Render case, an employer may terminate an employee’s job:
- “without cause”, meaning with notice as outlined above;
- “for cause” meaning without providing reasonable notice in accordance with the common law, but still providing the employee with the minimum ESA termination pay, where the conduct does not amount to “wilful misconduct”; and
- for “wilful misconduct”, meaning the employee would not be entitled to termination pay under the common law or the ESA.
The Court in Render further clarified that, for misconduct to meet the standard of “wilful misconduct” threshold, the employee must do something deliberately, meaning on purpose, knowing that it was wrong. To arrive at this conclusion, the Court in Render relied on previous case law which held that inadvertent conduct, regardless of how serious, careless or thoughtless, does not amount to “wilful misconduct”.
In the Render case, the Court found that, although the employee’s conduct allowed the employer to dismiss the employee “for cause”, it did not raise to the level of “wilful misconduct” because the conduct was not found to have been preplanned.
The Court’s decision in Render highlights that employers will only be able to terminate an employee without notice under the ESA in very limited circumstances, being where an employee not only engages in severe misconduct, but does so purposefully. Similarly, the Court’s decision seems to indicate that the misconduct must also be preplanned, and actions taken in the “heat of the moment” will not suffice.
As lawyers with expertise in employment law, we often advise employees on their rights upon termination and assist with the negotiation of separation/termination packages. Similarly, we advise employers regarding potential liabilities associated with the decision to dismiss an employee, in accordance with the relevant legislation, the employment contract, and the most recent case law.
Employers and employees may contact us at any time regarding their questions on severance pay and their rights.