Termination Without Cause in Ontario: Know Your Rights

termination without causeCan you really be terminated without cause in Ontario for no reason? Does your employer have to give you a reason if they fire you? Read on to find out more about without cause terminations, your rights, and what kinds of compensation you may be entitled to if you were terminated without cause. 

Can you terminate without cause in Ontario?

Yes, in Ontario, your employer can terminate you without cause, and they don’t have to provide a reason. However, they must provide notice and or pay in lieu of notice of termination. 

Note that the ability of an employer to terminate an employee without cause is not without limits: an employer cannot terminate an employee for discriminatory reasons as per the Ontario Human Rights Code, in reprisal for an employee enforcing certain rights such as your right to a safe work environment under the Ontario Health and Safety Act, or in extremely problematic circumstances. In those cases, the termination is illegal and you may be entitled to compensation. 

What does it mean to be terminated without cause?

Termination without cause means that an employee is being terminated for reasons other than serious employee misconduct, such as willful negligence, fraud, or harassment. Often, the employee has not done anything wrong. Examples of termination without cause include being terminated for poor work performance, because of the employer’s finances, or because of a lack of “fit” with the workplace community.

Can I get Employment Insurance if I was terminated without cause?

Employment Insurance (EI) is generally available to workers who have been terminated without cause. However, only some workers are entitled to EI; independent contractors, for example, are not entitled to EI, regardless of how their employment with a party ceased. If you are not excluded from EI because of the type of worker that you are, then you are likely entitled to EI if you have been terminated without cause. 

What am I entitled to if I was terminated without cause?

Notice or Pay in Lieu
If you have been terminated without cause, you are entitled to either common law reasonable notice or your Employment Standards Act minimums, depending on your employment contract and termination clause.  What is recoverable as pay in lieu is any sort of compensation you would have received had you worked through your notice period.  A variety of factors factor into your severance pay and influence what may constitute a good severance package

Punitive, Aggravated, and Keays Damages
Your employer may be liable to pay you aggravated damages. Aggravated damages are meant to compensate an employee for the harm caused by outrageous or reprehensible conduct by the employer. These damages may be awarded in circumstances where an employee suffered mental distress caused by an employer’s bad faith conduct in the manner of dismissal.

Your employer may also be liable for punitive damages. As the name suggests, these damages are awarded by the court to punish and deter employers from engaging in similar behaviour again in the future. Unlike aggravated damages, punitive damages are not meant to compensate the employee; rather, they are intended to sanction employers for inappropriate conduct. They are awarded in exceptional circumstances when an employer radically departs from ordinary standards of decency and when compensatory damages are insufficient to express the court’s rejection of such behaviour.  

In addition, your employer could be liable for damages for compensatory damages such as mental distress or moral damages, also known as Keays damages. These damages are sometimes awarded when:

    • An employer breaches its duty of good faith and fair dealing in the manner of dismissal, including conduct that is untruthful and/or unduly insensitive and a failure to be reasonable, candid, honest, and forthright with the employee; 
    • It is within the reasonable contemplation of the parties that the manner of dismissal would cause the employee mental distress; and 
    • The employer’s wrongful conduct causes the employee mental distress beyond normal hurt feelings and distress.

What are 5 reasons considered fair for dismissal?

There are different standards of just cause dismissal under the ESA and the common law. However, terminating an employee with cause generally requires very serious employee misconduct. Some examples include:

    • Wilful misconduct 
    • Disobedience 
    • Wilful neglect of duty that is not trivial and has not been condoned by the employer
    • Sexual misconduct or harassment 
    • Fraud 

If an employer can improve that an employee partook in activities of such a serious nature, then the employee might not be entitled to any notice or pay in lieu of notice of termination. 

There may also be a section in your employment contract on dismissal with just cause. Increasingly, Ontario courts have found just cause clauses to be problematic, meaning you may be entitled to compensation for your termination.

Is quitting better than getting fired?

Quitting or resigning is not generally advisable. If you quit your position, you are no longer entitled to any severance pay. There are exceptions to this: a lawyer can argue that you were, in fact, constructively dismissed and that you are therefore entitled to a severance package. However, proving constructive dismissal is an uphill battle that requires significant legwork on the part of you and your legal counsel and alleging constructive dismissal can expose you to some liability. Remember — your employer cannot make you quit. It is often better to get legal advice earlier to ensure that you are playing your cards correctly.  

Do I have to sign a termination letter?

Your employer may ask you to sign various documentation upon your termination. It is extremely important that you carefully read and understand whatever it is you are asked to sign before putting down your signature. Employers may ask you to sign a release, which states that, in exchange for some sort of compensation — often, termination pay — you give up all your legal rights to later pursue the matter. These are often binding and should therefore be avoided.

If possible, have a legal professional review any documents you are requested to sign before you actually sign. A lawyer will be able to explain in plain language what each contract means, if it is enforceable, and the consequences of signing. From there, you’ll be able to make an informed decision regarding how to proceed.

If your employer has offered you termination pay in exchange for you signing a release by a certain date and you’d like some time to think it over, ask for an extension. You can use that time to seek legal advice on how to proceed. 

What do I do if I was fired unfairly?

If you were terminated without cause, you have a few options.  You can attempt to negotiate a reinstatement or return to work. Often, though, the employment relationship has soured to the point where a return is not feasible. More often, employees simply wish to leave that workplace and look forward to the future. In that case, it may be best to look forward to negotiating a favourable and fair severance package and seeking new employment opportunities.

If you have been terminated without cause and are unsure of what to do next, it is important that you move forward with knowledge of your rights and your options. Employment Lawyers at Monkhouse Law are experienced in navigating claims of termination without cause and can provide you with the perspective, information, and advocacy you need to best protect your interests.  

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