An employee in Ontario can be terminated in two ways: with cause or without cause. A without cause termination is when an employer terminates an employee at any time without any reason.
Is Termination Without Cause Legal?
As can be seen in the legislation, an employer can terminate an employee without cause legally. Nevertheless, there are few rules for this.
Terminations Without Cause Must Come with Notice
An employer who wishes to terminate an employee with cause must provide the employee with “reasonable notice of dismissal” or “pay in lieu of notice.”
Employers are required to give notice their employees’ employment will be terminated without cause. Reasonable notice of dismissal is the heads-up from the employer to an employee that they are being dismissed before proceedings take place, which can help ease the blow psychologically. Pay in lieu of Notice means that if an employer provides an employee with a set number of days before termination, they don’t need give them any more pay after the termination date has passed.
After 1 year of employment in Ontario, an employee can terminate without cause. If the employer has a payroll greater than $2.5M and the employee has worked for 5 years or more, they are entitled to notice, severance pay – or a combination.
Without Cause Terminations Cannot Be Discriminatory
Employers are committing unlawful terminations when they terminate employees for discriminatory reasons. Article 2 of the Ontario Human Rights Code guarantees that no individual can be discriminated against because of factors such as family status, ancestry, etc. For example, if an employer decides to terminate an employee because they think that they are too often missing work while taking care of their own children, the employer would be in violation of the Ontario Human Rights Code.
Without Cause Terminations Can’t be for Revenge
It is against the law for an employer to bully their employee into leaving. They cannot terminate an individual without good cause as outlined in the Ontario Health and Safety Act and Employment Standards Act.
Without Cause Provisions in Employment Contracts
Termination clauses in work contracts typically refer to minimum provisions offered under the ESA. An employer is likely trying to bypass common law by stating an employee will only be entitled to the employment standards as referenced in the contract. The ESA allows less notice than that given under common law and employees should think twice about an employer who tries to ‘contract out’ of these standards.
Discrediting a Termination Clause
A recent decision made certain clauses in employment contracts invalid, and it all has to do with “without cause” and “with cause.” If a clause has to do with termination without restriction, the other half, including those restriction clauses for termination with an explanation, goes out the window. In the recent decision of Waksdale v. Swegon North America, the Ontario Court of Appeal held that ‘without cause’ and ‘with cause’ termination clauses in employment contracts must be read together. This means that if a ‘with cause’ provision violates the Employment Standards Act, then the ‘without cause’ portion of the contract gets thrown out too.
If an employer terminates you without cause, you may be eligible for more compensation than your contract suggests. Usually, termination clauses in employment contracts are voided. If you have been terminated from a lengthy contract without being given a specific reason, it is important to consult with an employment lawyer to see if you can get more money than your standard severance package.
Here we would like to point out that this article is not intended as legal advice and should not be taken as such. If you have any legal questions, we hope that you contact us and seek our expertise on your issue.