Navigating Termination Without Cause in Ontario: Key Considerations for Employers and Employees

Whether you are an employee who has been fired from your job or an employer who is thinking about terminating an employee’s contract, it is important to know the law when it comes to termination without cause in Ontario.  

In order to validly dismiss an employee, the employee must be accorded due process by the employer. It requires that the employee be given notice of termination and payment of corresponding severance pay. 

The employer has a legal obligation to follow the employment laws when terminating an employee in Ontario. The employee may have a claim for wrongful termination if the termination was illegal.

Ontario Termination Laws

There are two kinds of termination of employment in Ontario:

  1. Termination with Cause
  2. Termination without Cause

The Ontario’s Employment Standards Act provides for guidelines in terminating an employee. The act clearly sets out rights on termination of employment and governs individual termination of employment. 

The right of the employee includes the right to be terminated based on “Just Cause”.  

Just Cause Termination occurs when an employee’s performance or conduct becomes so intolerable that continued employment is no longer tenable. 

The Ontario Employment Standards Act provides several standards of just cause dismissal. Accordingly, the termination based on just cause requires grave and serious employee misconduct which may include the following:

  • Disobedience 
  • Wilful neglect of duty that is not trivial and has not been condoned by the employer
  • Sexual misconduct or harassment 
  • Fraud 

In order to qualify as just cause termination the following must be present:

  1. There must be a prior warning given by employer to the employee on the unacceptable conduct or performance
  2. The employee’s conduct must be so serious as to amount to gross misconduct for which no other reasonable alternative exists. 

What is Termination without cause?

The Ontario’s Employment Standards Act defines “termination without cause” as follows:

“Termination without cause” means the termination of an employee’s employment by an employer without good reason or by an employer who is required to give notice under this Act.

A dismissal is considered to be without cause if it occurs in any of the following circumstances:  

1. The employer dismisses the employee or otherwise refuses or is unable to continue employing him or her;

When an employer dismisses the employee or otherwise refuses or is unable to continue employing him or her for whatever reason the law requires that employer must provide an employee with the following relief prior to termination:

  • At least two weeks’ written notice of their intention to terminate an employee. OR
  • In lieu of written notice, the employer must pay the employee two weeks’ wages at the regular rate. 

2. The employer constructively dismisses the employee and the employee resigns from his or her employment in response to that within a reasonable period; or

Constructive dismissal occurs when there is a significant change in employment’s term or condition of work and as a result, continued employment is rendered impossible and unreasonable. Constructive dismissal is also present when there is a demotion in the rank or diminution in pay or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee leaving the employee with no other option but to quit.

The employee would have to resign in response to the change within a reasonable period of time in order for the employer’s actions to be considered a termination of employment as provided by the Employment Standards Act. 

3. The employer lays the employee off for a period longer than the period of a temporary lay-off. 

Temporary Lay-Off in Ontario

As a rule, a temporary lay-off is not to be considered as termination of employment except when the period of lay-off exceeds the required period provided by law. 

Under the Employment Standards Act., a “temporary layoff” can last:

  • not more than 13 weeks of layoff in any period of 20 consecutive weeks;
  • more than 13 weeks in any period of 20 consecutive weeks, but less than 35 weeks of layoff in any period of 52 consecutive weeks, where:
    • the employee continues to receive substantial payments from the employer;
    • the employer continues to make payments for the benefit of the employee under a legitimate group or employee insurance plan (such as a medical or drug insurance plan) or a legitimate retirement or pension plan;
    • the employee receives supplementary unemployment benefits;
    • the employee would be entitled to receive supplementary unemployment benefits but isn’t receiving them because they are employed elsewhere;
    • the employer recalls the employee to work within the time frame approved by the Director of Employment Standards;

the employer recalls the employee within the time frame set out in an agreement with an employee who is not represented by a trade union;

Termination without cause cannot be Discriminatory

The Ontario Human Rights Code does not allow an employer to terminate an employee without cause for discriminatory reasons. An employer cannot terminate an employee because they recently learned that the employee wants to start a family or because of their religious believes. 

What happened when an employer dismisses an employee without cause?

If an employee has been constructively dismissed; laid off for a period longer than the period provided by law, or the employer simply wants to end the employment of that employee, the employer is considered to have terminated the employee’s employment without cause and therefore required to provide relief as provided by Employment Standards Act as follows:

  • The employee must be given termination pay in lieu of notice – Termination pay is a lump sum payment equal to the regular wages for a regular work week. The amount of Termination pay to which the employee is entitled shall be calculated as if the employee continued to be employed for a period equal to the period of notice that should have been given and was not. 
  • The employee should also earn vacation pay on their termination pay.
  • The employee is also entitled to the benefits that the employee would have been entitled to have the employee continued to be employed within the period provided in the notice including the payment of whatever mandatory contributions.

Do you need advice on the termination of employment in Ontario?

Whether you’re an employer considering termination without cause or an employee who has been terminated without cause, it’s important to proceed with an understanding of your legal rights and options. To get in touch with one of our employment lawyers in Toronto, simply give us a call at (647) 724-5179 or fill out our contact form.