Empowering employees past dismissal

In Ontario, an employer may terminate your employment without cause for any reason, except for reasons related to a protected ground under the Ontario Human Rights Code. 

Your employer does not have to provide a reason as to why they are terminating your employment if it is without cause. 

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Generally, there are three categories of termination: without cause; for cause or just cause; and constructive dismissal. It is important to understand which category your termination falls under, because your rights may be affected differently. Generally, terminations for cause, and constructive dismissals add additional layers of complexity to obtaining any money owed to you. 

This is the most common type of termination. 

An employer terminates your employment for a reason unrelated to misconduct or poor perforamance.  

After being terminated without cause, the main issue then becomes how much working notice, pay in lieu of notice, and/or severance pay you are owed. 

You may have been terminated without cause if the termination letter does not list a reason for your termination, or does not list a reason related to poor performance or misconduct.

A termination for cause, also known as 'just' cause, is considered the 'capital punishment of employment law.' 

A termination for cause occurs when an employer terminates your employment for misconduct or poor performance. 

A termination for cause can affect many of your rights, from whether you are owed termination pay to your ability to collect Employment Insurance. Because of this, an employer must meet a high bar to establish cause. 

Common examples of 'cause' that meet this high threshold warranting termination may include serious theft, assault or violence, wilful disobedience, gross negligence in required duties, or misconduct that harms the business. 

An employer must demonstrate that the employee's misconduct was serious, malicious, and termination was the only reasonable option. 

Constructive Dismissal occurs when an employee resigns because their employer has unilaterally changed a fundamental term of their employment contract. Under Ontario law, this is treated as a termination, not a voluntary resignation.

It typically arises in two scenarios:

1. Substantial Changes: The employer significantly reduces pay (often >15%), demotes the employee, or changes their hours/location without consent.

2. Toxic Environment: The employer allows unendurable working conditions (e.g., harassment or abuse) that make remaining in the role impossible.

3. A temporary layoff that is not permitted under the employment agreement and which has not been agreed to by the employee.

Essentially, the employer has broken the employment agreement, forcing the employee to leave and triggering entitlements to termination pay.

If an employee is terminated without cause, or is constructively dismissed, then they may be entitled to:

1. Notice: is designed to help an employee transition from their old position to a new role. It is based on the traditional obligation of household employers to inform their staff if they would no longer be needed ahead of the last day of their job. This would allow them to find new employment while reducing the time the period of unemployment. 
2. 1. Working Notice: Working notice is described above, and is provided when an employee is told that their employment will be terminated at a future date. The employee remains in their position, working throughout their notice period. 
   2. Pay in Lieu of Notice: Pay in lieu of notice is more common today than working notice. Instead of providing working notice, the employer will instead choose to pay the employee for the time they would have been employed for during the notice period, but does not require them to continue working. 
3. Severance Pay: is prescribed under the Employment Standards Act ("ESA") for employees who work five or more years for their employer, if their employer has an annual payroll of over $2.5M. Although severance pay is often treated the same as notice, they are defined differently under the ESA.
4. Termination Pay: Termination pay encompasses all forms of pay that an employee receives upon termination, including outstanding wages, notice, severance, and benefits.