A common question we regularly field from employers during consultations for terminations is whether the employee has behaved badly enough to warrant a dismissal for cause and whether they really need to provide the employee with a termination package.

We can’t fault employers for asking. After all, poorly performing employees or employees engaged in harmful misconduct towards their colleagues are a big problem for employers. Usually, it takes the employer time, money and potentially some action to address the harmful behaviour of the employee in the workplace before the employer is truly ready to consider termination. With all that’s been invested, paying a badly behaved employee, especially one whose behaviour is inappropriate, malicious, or unaligned with the values of the company, can be a tough pill to swallow.

A failure to warn may mean a failure to establish cause

A recent case from New Brunswick serves as an important reminder to employers that a termination for cause can quickly unravel when an employer fails to get its ducks in a row before terminating for cause. In 2023 NBKB 065, the Court found that the behaviour of the Employee, if properly brought to his attention, and not corrected by the Employee, would have ‘easily’ amounted to just cause for dismissal. However, in light of the Employer’s failure to warn the Employee that further incidences of misconduct could result in dismissal for just cause, the Court found that the Employer had not met the burden of establishing cause and awarded the Employee a 7-month reasonable notice period.

There are some rare instances in which a single act of misconduct is sufficiently serious to warrant immediate termination for cause without warning. However, in most cases, employers should be careful to document, discipline (where appropriate), and warn employees that future acts of misconduct can lead to discipline and when appropriate termination for cause. Here are a few important tips when approaching a potential termination for a cause:

1. Don’t rely on your mental running list: We’ve spoken to countless employers who seem to have a mental running list of all the bad behaviour exhibited by a particular employee over the last several months (or years!). Without proper warnings, that list is effectively meaningless. As soon as possible following an incident of misconduct, it’s critical that employers conduct a thorough and fair investigation into incidents of misconduct. Notes from disciplinary meetings (including verbal warnings) should be detailed and stored along with copies of any disciplinary written warnings issued to the employee. In case it’s not obvious from the above, the letter should include a warning regarding the consequences of continued misconduct.
2. Issue a final warning: The final warning needs to come before the ‘last straw’ and the employee must be aware that this is the final warning. The employer must provide the employee with sufficient opportunity to improve their conduct before the final warning is acted upon and it’s best to avoid relying on especially minor incidents as the final event before termination.

Leaving emotions and considering a practical route

Ultimately, it’s critical that an employer leave emotions aside and think practically about the termination. While feelings of frustration are completely understandable along with the often present financial constraints associated with a termination package, it’s important to understand the time and costs associated with a just cause dismissal and the potential outcomes of a claim for wrongful dismissal. It could take months to build a sufficient record to establish a just cause. In the meantime, the employee may continue to cause disruption to the workplace costing the company time and money. In the end, there is no guarantee that a court would agree that the actions truly constitute just cause, leaving the employer in a situation likely more costly than proceeding to a without-cause termination from the get-go. 

In the end, if just cause is the only option, make sure you have your ‘warning ducks’ in a row before terminating. 

By Tiffany Thomas