Dismissal for Cause in Canada: Understanding When It’s Justified and What Employers Should Know
In Canada, employers must tread carefully when considering termination for cause. While dismissal for cause in Canada is legally possible, it comes with significant challenges and risks. In this article, we explore what it means, when it may be justified, and why proper legal advice is critical before making such decisions—highlighting a real case that sheds light on this complex area of employment law.
What Is Dismissal for Cause in Canada?
Dismissal for cause in Canada occurs when an employer terminates an employee without notice or severance pay due to serious misconduct that fundamentally breaches the employment relationship. The misconduct must usually be so severe that it destroys the employer’s trust and confidence in the employee.
Examples of conduct that could support dismissal for cause include:
- Dishonesty, fraud, or theft
- Gross insubordination or workplace violence
- Serious breaches of company policy
- Conflict of interest or misuse of confidential information
However, proving cause is complex, as courts and adjudicators often apply a high standard before upholding such terminations.
Case Spotlight: Morton v. Royal Bank of Canada
The 2024 case of Morton v. Royal Bank of Canada, 2024 F.C. 311, illustrates when dismissal for cause in Canada may be upheld. Let’s look at the facts and findings:
| Key Aspect | Details |
|---|---|
| Employee background | 18-year employee at RBC |
| Misconduct | Manipulated client transactions to earn nearly $100,000 in improper bonuses and commissions |
| Prior warning | Received from RBC before termination |
| Legal finding | Adjudicator and Federal Court upheld termination, citing breach of trust and dishonesty |
The adjudicator concluded that RBC was entitled to lose confidence in Morton’s trustworthiness, and that her actions irreparably damaged the employment relationship—which relied on honesty and integrity.
Legal Context and Why It Matters
While dismissal for cause in Canada remains legally possible, it’s important to recognize:
- High legal threshold: Courts and adjudicators typically expect employers to demonstrate that no other reasonable option existed before termination.
- Context matters: Length of service, previous discipline, and the seriousness of the misconduct all play a role.
- Jurisdiction differences: Different rules may apply under the Canada Labour Code, provincial Employment Standards Acts, or the common law.
Employers should always seek legal advice before deciding to terminate an employee for cause to reduce risk and ensure compliance with relevant laws.
Practical Steps for Employers Considering Dismissal for Cause
Before deciding to terminate
- Investigate allegations thoroughly and document findings
- Assess whether progressive discipline (e.g., warnings or suspensions) is more appropriate
- Consult internal HR policies and legal counsel
- Evaluate if misconduct fundamentally breaches the employment relationship
After termination
- Provide clear written reasons for termination
- Maintain documentation in case of a legal claim
- Comply with applicable reporting obligations
FAQs About Dismissal for Cause in Canada
1. What is the difference between dismissal for cause and without cause?
Dismissal for cause ends employment without notice or severance due to serious misconduct. Without cause requires notice or severance pay under employment standards or the employment contract.
2. Can a single mistake justify dismissal for cause?
Usually, no. Courts typically look for repeated misconduct, serious dishonesty, or behaviour fundamentally incompatible with continued employment.
3. Is prior warning always required before dismissal for cause?
Not always, but it helps show the employer tried to correct the behaviour before resorting to termination.
4. Does length of service matter?
Yes. Longer service often means courts expect a higher level of misconduct to justify dismissal for cause.
5. What should employees do if they believe dismissal for cause was unfair?
They can file a wrongful dismissal claim or, if federally regulated, an unjust dismissal complaint under the Canada Labour Code.
Conclusion
Dismissal for cause in Canada is legally possible, but difficult to prove and should only be pursued in serious circumstances. As the Morton case shows, dishonesty and breach of trust can justify termination—but employers must approach such decisions cautiously. Seeking professional legal advice, documenting facts carefully, and considering the broader context are all essential for handling these complex situations properly.
