Employers can’t plead performance concerns if employee is fired without cause

In Ontario, employers can terminate employees in one of two ways: with cause or without cause. Cause for termination is often referred to as the capital punishment of employment law and the threshold for establishing cause is high. Employers must ensure that they are terminating employees in the proper manner, or they risk forfeiting their right to assert just cause later.

In Kaminsky v. Janston Financial Group, the Ontario Superior Court confirmed that when an employer fires an employee without cause, when they knew at the time that they had grounds to terminate that employee for cause and chose not to, that employer cannot turn around and assert just cause for the termination in response to a wrongful dismissal claim.

Kaminsky v. Janston Financial Group

What Happened

Ms. Kaminsky worked at Janston Financial Group (Janston) for almost 18 years when her employment was terminated without cause. Janston provided her with 20 weeks of severance pay. Ms. Kaminsky filed a wrongful dismissal claim seeking 20 months’ salary and her bonus.

Janston alleged that Ms. Kaminsky failed to carry out her duties in a loyal and diligent manner, was working for another business while on Janston’s time, and took advantage of another employee’s absence to further her misconduct. For these reasons, the company claimed that they had the right to fire her for cause, or without a severance package.

The Court’s Decision

Ms. Kaminsky argued that Janston should not have been able to make allegations of cause after the company had already fired her without cause.

Regarding that argument, the court determined that:

1. A severance payment to an employee when they are let go would not remove an employer’s ability to subsequently assert termination for cause; and
2. An employer has the right to apply a termination for cause after the employee is dismissed when facts are discovered by the employer that were unknown at the time of dismissal.

However, the Court found that these principles did not apply to Ms. Kaminsky’s case, because Janston knew that it had grounds to terminate the employee with cause, but chose not to. Therefore, the employer could not turn around and claim that they had cause to terminate Ms. Kaminsky once she filed her wrongful dismissal claim.

Takeaway for Employees

High threshold on dismissal for cause

The threshold for termination for just cause is a high one. If you have been terminated in this manner, it is essential that you consult with an employment lawyer to determine your rights.

Severance and dismissal for cause

If your employer originally terminated you without cause but has since changed their mind and is now suggests you were dismissed for cause, you may still be owed severance pay.

Takeaway for Employers

Consult with a lawyer before pulling the trigger

Employers should take caution to review each termination carefully, prior to deciding whether to terminate the employee with or without cause. They must do their due diligence and consult with one of our employment lawyers to confirm whether they can legitimately fire an employee without a severance package.

Don’t allege cause after termination

Failing to assert cause at the time of termination may forfeit an employer’s ability to assert cause later.

Avoid improper application of dismissal for cause

In addition, applying a dismissal for cause when it is not appropriate may expose the employer to further liability down the road.