The “Just Cause” Trap In Employment Terminations

The “with cause” section in an employment agreement is a potential trap that can destroy entire termination provisions. There has been increasing judicial scrutiny of termination clauses, and several recent Ontario decisions have voided entire termination sections that defined “just cause” for termination without notice too broadly.

Just Cause vs. Wilful Misconduct

There is a gap between the common law concept of “just cause” and the statutory standard of “wilful misconduct” under the Employment Standards Act, 2000 (“ESA”). Under Ontario Regulation 288/01, an employee is only exempt from the minimum notice or termination pay entitlements if they are guilty of “wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.” Traditionally, “just cause” includes a range of employee failings, from poor performance to persistent lateness. Wilful misconduct is a much higher bar.