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Cause for concern

Dismissal for cause has a high bar of proof that can’t be obtained without a proper investigation

By Jeffrey R. Smith

While many employers feel it’s ridiculously difficult to fire an employee in Canada, that’s not entirely true.

It’s actually pretty easy to terminate someone’s employment — if it’s without cause and the employer provides the appropriate notice of termination, or pay in lieu of. Figuring out that notice of termination could be where things get more complicated, but a look at case-law precedents or properly executed termination provisions in the employment contract can help solve that issue.

Where things can get a little dicey for employers is if they terminate an employee for cause. Because termination for cause means cutting the employee loose without notice or any further pay, the bar is set pretty high for employers to prove just cause. And the best way to determine whether that bar is met — and to protect from liability in any legal action — is for employers to conduct a fair and thorough investigation into the reason for considering dismissal, before dismissal takes place.

Without a good investigation, it’s possible some details that may mitigate misconduct could be missed. In addition, an employer needs concrete evidence that misconduct actually happened and was perpetrated by the employee in question. Because flimsy evidence of misconduct could mean a dismissal for cause turns into a wrongful dismissal, leaving the employer on the hook for pay in lieu of notice anyway, not to mention the potential for additional damages.

An Ontario company recently found out what can happen without conducting a proper investigation after it fired an employee for making anti-Semitic comments about the company’s owners, who were Jewish. The employee, who was a plant superintendent, reportedly made the comments in an angry outburst after the company announced it wouldn’t be giving employees the Family Day holiday off because it provided an extra holiday at Christmas.

The comments were reported to management by an undercover investigator who was working in the plant on another case. The investigator said she was told about it by other employees and also said everyone on the shift heard what the employee said. Management took this seriously and proceeded to terminate the employee for the remarks. The employee asked to apologize but was told it wouldn’t do any good.

The employee challenged the termination and the Ontario Superior Court of Justice found the company failed to conduct a proper investigation. Management had no direct knowledge of the employee’s misconduct and it relied on “double hearsay” — the undercover investigator’s description of what other employees had told her.

In the court hearing, other employee’s denied hearing the comments. The company should have investigated the matter more thoroughly and obtained direct accounts of those who heard the comments — of which none could be found. Without stronger evidence, it was “unwise” to dismiss the employee, said the court. The company was ordered to pay the dismissed employee a year’s worth of wages in lieu of notice for wrongful dismissal, though no additional damages were warranted: Ludchen v. Stelcrete Industries Ltd., 2013 CarswellOnt 17334 (Ont. S.C.J.).

While employers don’t need Sherlock Holmes on staff to get to the bottom workplace incidents, when employee misconduct is alleged as cause for dismissal — even serious discipline — it’s a good idea to make sure as many of the facts are obtained from reliable sources as possible. Dismissal for cause can happen — just make sure the cause is confirmed.

Jeffrey R. Smith is the editor of Canadian Employment Law Today, a publication that looks at workplace law from a business perspective. He can be reached at or visit for more information.

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Jeffrey R. Smith

Jeffrey R. Smith is the editor of Canadian Employment Law Today, a publication that looks at workplace law from a business perspective.
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