In contrast to the more common situation of termination without cause, a termination for cause (also known as termination with just cause) occurs when an employer relies on an employee’s misconduct to dismiss an employee without paying termination entitlements, such as common law reasonable notice. 

The misconduct needs to be sufficiently serious to justify a termination for cause. Misconduct that might rise to this level includes where the employee destroys the employer’s property and displays insubordination by refusing to comply with instructions given by the employer

This article looks at the recent decision of the Ontario Superior Court of Justice in the case of Park v Costco Wholesale Canada Ltd., in which an employee challenged his termination for cause on these grounds.

Termination for cause may be justified if the employee engages in conduct incompatible with the employment relationship

As we wrote in more detail in a previous article, an employer may be entitled to dismiss an employee for cause if they have engaged in conduct incompatible with the employment relationship’s fundamental terms. 

The misconduct must be sufficiently serious to cause a breakdown in the employment relationship. This is a fairly high bar for an employer to demonstrate. This makes sense because an employee terminated for cause loses the right to receive reasonable notice of the termination or compensation in lieu of that notice. However, the minimum statutory notice period is required unless the employee is guilty of wilful misconduct, disobedience or neglect of duty. 

An employee terminated for cause can argue their conduct did not justify termination

An employee dismissed for cause can sue for wrongful dismissal, arguing that their conduct did not justify termination for cause. The onus is on the employer to prove that it did.

While the core question is whether the employee engaged in misconduct that is incompatible with the fundamental terms of the employment relationship, courts apply a three-stage analysis to determine whether the conduct justifies termination:

  1. The nature and extent of the employee’s misconduct. 
  2. The surrounding circumstances of the employment relationship, including the employee’s employment history, role and responsibilities, and the employer’s business, policies and practices.
  3. Considering the above, the court decides whether the dismissal was a proportional response by considering whether the misconduct was serious enough to cause a breakdown of the employment relationship. 

Plaintiff was transferred between departments

The plaintiff employee worked for Costco for 20 years, beginning his career with the company in 1995. He worked his way up the organization, eventually reaching the position of assistant buyer with the Canadian head office in Ottawa.

The plaintiff worked in the seasonal and toys department. He spent part of his work time building a Google-cloud-based website for the department that allowed users to share files. His manager told him that this was useful.

After the conflict with his manager that caused stress and medical leave, the plaintiff was transferred to the lawn and garden department. 

Plaintiff was terminated for cause after deleting a website

The plaintiff’s now-former manager sent him an email asking for access to the site and for its ownership to be transferred. After reading the email, the plaintiff deleted the website, replying that no one had told him that they wanted to use it. 

After the general merchandise manager responded, telling him not to delete something from the system without buyer permission, the plaintiff sent an angry email which included:

“I was using the site for my use, no one was interested …. exactly how many times should I be asking for an update, can I not trust in my managers to be able to get back to me in a timely manner and not ignore my requests?

They need to take some ownership and responsibility.”

Costco was then able to restore the website, at which point the plaintiff deleted it again, including from the computer’s recycling bin. After an internal IT investigation confirmed the deletions, the employer terminated his employment for cause.

Plaintiff committed several acts of misconduct

The parties did not dispute that the website was the employer’s property. In addition, the plaintiff’s contract allowed the employer to terminate for wilful destruction of company property and any act of insubordination.

Justice Ryan Bell decided that the plaintiff committed numerous acts of misconduct, namely:

  • deliberately deleting the website after receiving an email from his former manager, which amounted to the destruction of the employer’s property;
  • sending a misleading email to the manager, which wrongly suggested that he deleted the site in the past because no one wanted it;
  • sending an email to the general merchandise manager which was insubordinate and disrespectful; and 
  • permanently deleting the website a second time in defiance of instructions. 

Wilful misconduct justified termination for cause

Her Honour noted the surrounding circumstances, including the plaintiff’s employment in a managerial position and frustration with how he had been treated.

Justice Ryan Bell decided that the employer had sufficient justification for terminating the plaintiff’s employment because the misconduct could not be reconciled with his employment obligations:

“His actions were not mere errors in judgment; they were intentional, discrete acts involving the destruction or attempted destruction of company property, insubordination, and sending a misleading email. These actions were committed in the face of his obligation to act with integrity and honesty in the discharge of his duties as an assistant buyer. The Employee Agreement provided that wilful destruction of property and insubordination could result in termination of employment.”

Her Honour determined that the plaintiff’s conduct met the higher requirements for amounting to wilful misconduct because it was intentional and deliberate. The court dismissed the plaintiff’s claim.

Contact Haynes Law Firm in Toronto for Guidance on Termination for Cause

The Haynes Law Firm helps both employers and employees manage situations relating to termination for cause. Receiving advice from an experienced employment lawyer is an important stage in managing the risks presented by an employee’s misconduct or an employer’s attempt to remove an employee from the organization without paying termination entitlements. Please contact us online or call us at 416.593.2731.