After-acquired cause in Ontario happens when an employer fires an employee and later discovers serious misconduct that took place before the termination.
The employer may then argue that the newly discovered misconduct would have justified a termination with cause in Ontario — potentially affecting the employee’s right to severance.
But an employer can’t simply point to something it discovered after the fact and declare that no compensation is owed. It still has to prove that the conduct actually happened and was serious enough to justify cause.
On This Page:
- 1. What Is After-Acquired Cause?
- 2. What Must an Employer Prove?
- 3. Can an Employer Change the Reason for Termination?
- 4. What If the Employer Already Knew?
- 5. Ontario Employment Standards Act
- 6. Does It Eliminate Severance?
- 7. Cause Alleged After You Ask for More Severance
- 8. What You Should Do
- 9. FAQs
What Is After-Acquired Cause in Ontario?
After-acquired cause allows an Ontario employer to rely on serious misconduct discovered after an employee has already been terminated.
The alleged misconduct generally must have happened while the employee was still working, even if the employer only learned about it later.
For example, an employee may be fired without cause and offered severance. The employer then discovers evidence that the employee committed serious misconduct months earlier.
The employer may argue that, had it known about the misconduct at the time, it would have fired the employee for cause instead.
That does not automatically mean the argument will succeed.
Learn more about after-acquired cause across Canada.
What Must an Employer Prove for After-Acquired Cause?
An employer must prove more than the existence of a workplace problem.
Generally, it must establish that:
- The misconduct actually occurred. An allegation or suspicion is not enough.
- The misconduct was serious enough. A mistake, minor policy breach or ordinary performance issue does not automatically amount to cause.
- The misconduct would have justified termination for cause. The conduct must be serious enough, in context, to justify ending the employment relationship without proper notice.
- The employer genuinely discovered it after termination. Conduct the employer already knew about and accepted can raise different issues.
The Supreme Court of Canada’s decision in McKinley v. BC Tel established a contextual approach to just cause. The question is not simply whether misconduct occurred, but whether the seriousness of that misconduct justified dismissal when viewed in the context of the employment relationship.
If a warning, discipline or another lesser response would have been appropriate, the conduct may fall short of just cause.
Can an Employer Change a Without-Cause Termination to For Cause?
Potentially, yes. An Ontario employer that originally terminated someone without cause can later argue that newly discovered evidence would have justified a for-cause dismissal.
However, the employer can’t simply rewrite the termination letter and make the employee’s severance rights disappear.
The newly discovered conduct must be able to support a termination with cause on its own.
If the conduct falls short of cause, the employer generally can’t simply reduce the employee’s common-law notice because the behaviour was concerning or deserving of discipline.
What If the Employer Already Knew About the Misconduct?
An employer can have difficulty relying on after-acquired cause if it already knew about the conduct before the termination.
If the employer knew what happened but allowed the employee to continue working, chose not to discipline them or otherwise accepted the behaviour, it may be harder to later rely on that same conduct as cause.
This can involve the legal concept of condonation.
For example, if management knew about an incident for months and took no meaningful action, it can be difficult to later argue that the same incident made continued employment impossible.
What if the employer only discovered additional details later?
That can be different.
An employer may argue that it knew something had happened but did not understand the full seriousness of the conduct until after termination.
The result can depend on what the employer knew at the time and whether the newly discovered information materially changes the situation.
How Does the Ontario Employment Standards Act Affect After-Acquired Cause?
Ontario employees need to distinguish between common-law just cause and the minimum standards under the Employment Standards Act.
Under Ontario’s employment standards rules, an employee can lose minimum termination pay and, where applicable, statutory severance pay for wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.
That is not necessarily the same test as common-law just cause.
The Ontario courts have recognized that an employee can, in some circumstances, be dismissed for just cause at common law while still remaining entitled to minimum payments under the ESA because the conduct was not sufficiently wilful.
Just cause does not always mean zero ESA pay
In Oosterbosch v. FAG Aerospace Inc., an Ontario court found that an employee’s conduct justified dismissal at common law but did not meet the higher statutory standard of wilful misconduct required to eliminate his ESA termination and severance pay.
That distinction can make a significant financial difference.
Does After-Acquired Cause Eliminate Severance in Ontario?
It can affect severance if the employer successfully proves that the newly discovered misconduct amounted to just cause.
But an allegation alone does not eliminate your rights.
If the employer can’t establish cause, a non-unionized employee may still be entitled to full severance pay in Ontario.
For many employees, full severance can reach as much as 24 months’ pay, depending on factors such as:
- Age
- Length of service
- Position
- Compensation
- The availability of comparable employment
- The wording of the employment contract
There is no automatic “one week per year of service” rule for full common-law severance.
What If Your Employer Alleges Cause After You Ask for More Severance?
The timing of the allegation can matter.
You may initially be fired without cause and offered a severance package. After you challenge the amount or get legal advice, the employer may then claim that it has discovered misconduct.
That does not automatically mean the allegation is improper. Employers can legitimately uncover new information after termination.
However, the timing does not lower the legal threshold. The employer still has to prove that the conduct actually occurred and was serious enough to justify cause.
An unsupported or exaggerated allegation does not automatically defeat a valid wrongful dismissal claim.
What Should You Do If Your Employer Alleges After-Acquired Cause?
Do not assume you have lost your rights because your former employer says it discovered cause.
Take these steps:
- Do not sign a release. Signing can prevent you from pursuing additional severance.
- Keep your original termination documents. Save your termination letter, severance offer and any later correspondence alleging misconduct.
- Be careful how you respond. Do not admit to allegations you disagree with before understanding the legal consequences.
- Preserve relevant records. Keep lawful copies of emails, performance reviews, messages or other records already in your possession that relate to the allegation.
- Look at what the employer knew before termination. Earlier emails, warnings or discussions may be relevant if the employer was already aware of the conduct.
- Get legal advice. Have the cause allegation, ESA entitlements and your full severance reviewed together.
After-Acquired Cause Ontario: Frequently Asked Questions
What does after-acquired cause mean in Ontario?
It means an employer discovers serious misconduct after termination that allegedly happened while the employee was still working. The employer may then argue that the misconduct would have justified termination for cause.
What does an employer have to prove?
The employer must establish that the misconduct actually occurred and was serious enough, in context, to justify termination for cause. It is not enough to simply identify a mistake or policy violation after the employee has been fired.
Can an Ontario employer change a without-cause termination to for cause?
Potentially. If serious pre-termination misconduct is genuinely discovered later, the employer can attempt to rely on it. The conduct still has to satisfy the legal test for cause.
Does after-acquired cause automatically eliminate severance?
No. The employer has to prove cause. Ontario’s separate ESA standard must also be considered when determining whether minimum termination or statutory severance pay is still owed.
Can I get ESA termination or severance pay even if there is just cause?
Potentially, yes. Ontario’s statutory standard focuses on wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned. Conduct can potentially support common-law just cause without meeting that separate statutory test.
Can my employer rely on conduct it already knew about?
That can be much more difficult. If the employer knew about and condoned the conduct, it can weaken a later attempt to rely on that same incident as cause.
Can something I did after being fired justify the earlier termination?
After-acquired cause generally concerns misconduct that happened before termination but was discovered afterward. Conduct that occurred only after employment ended is a different issue.
Can I still challenge my termination?
Yes. An allegation of after-acquired cause does not automatically prevent you from challenging the termination or pursuing compensation.
What if I am unionized?
Termination disputes involving unionized employees are generally handled through the union and grievance process. Our employment law team assists non-unionized employees.
Employer Alleging After-Acquired Cause in Ontario? Get Advice Before You Respond
If you were fired without cause and your employer is now alleging serious misconduct, your severance could be at stake.
Do not assume the employer has established cause simply because it says new information has come to light.
Samfiru Tumarkin LLP helps non-unionized employees across Ontario understand their termination rights, challenge improper cause allegations and determine how much severance they may be owed.
Before you sign, always check first.