Termination of employment letters
An unfortunate, but sometimes unavoidable part of the employment lifecycle is termination. When a person gets hired, no one expects the situation to end in a termination; however, it is a reality that must sometimes be faced. Terminating an employee is one of the most stressful parts of HR. It can be fraught with legal minefields, not the least of which is the termination letter itself. Despite the best intentions to terminate an employee in accordance with legislation and in the fairest way possible, the termination letter can open an employer up to many legal issues if not done correctly.
Just cause for termination of employment
Termination for cause, also commonly referred to as “termination for just cause” or “termination with cause,” has long been described as the capital punishment of the employment world. This is because employers do not have to give working notice or pay in lieu of notice if they have just cause to terminate an employee.
Usually, employers must provide employees working notice or termination pay in lieu of notice when ending their employment: these are referred to as “termination without cause” or “termination not for cause.” “Cause” is not the same as “a reason.” Only certain, serious reasons rise to the level of “just cause” for termination. All other terminations are considered “without cause.”
In this blogpost, we take a close look at what just cause really means, how we get there, and its application in both non-unionized and unionized workplaces.
Just cause termination of employment defined
It is important to understand that there are also different definitions for what conduct rises to the level of just cause depending on whether the legislated or common law standard applies.
Most jurisdictions explain the circumstances that justify termination for cause in their employment standards legislation. For example, in Ontario, while the Employment Standards Act, 2000 does not directly define just cause, the Termination and Severance of Employment regulation does define a threshold where the terminated employee is not entitled to statutory termination notice and severance. The threshold is defined as when an employee “is guilty of wilful misconduct, disobedience, or wilful neglect of duty that is not trivial and has not been condoned by the employer.”
“Wilful” in this case includes when an employee intended the resulting consequence or acted recklessly if they knew or should have known the effects their conduct would have. Poor work conduct that is accidental or unintentional is generally not considered wilful.
Under common law, courts have held that an employer may terminate an employee’s employment for just cause when an employee is “guilty of serious misconduct, habitual neglect of duty, incompetence, or conduct incompatible with their duties, or prejudicial to the employer’s business, or if they have been guilty of wilful disobedience to the employer’s orders in a matter of substance.” While some language, like “misconduct” or “wilful disobedience” is used in both statutory and common law definitions of just cause for termination, it’s important to remember that these are separate standards that apply in different circumstances.
Employee termination law in Canada
Proving just cause is exceedingly difficult. In the non-union environment, the employer must generally show that the employee’s actions were so serious that it can no longer trust the employee and the employment relationship is broken. There is often no single action that proves just cause. The employer must also show that extenuating circumstances do not justify lesser discipline. In that regard, a court considering whether termination was for just cause may weigh the employee’s actions against certain factors, including but not limited to:
- The circumstances of the employee, including role, responsibility, and personal issues;
- The circumstances of the employer, including the nature of the business, policies, and practices; and
- The circumstances of the incidents, including whether such conduct had been permissible, encouraged, or ignored in the past, and whether it was a first-time occurrence, or the employee had been warned before.
A court applies a contextual analysis when determining whether an employer had just cause to terminate employment. Under this approach, the court first determines the nature and extent of the employee’s misconduct. This review includes determining whether the employer can prove that the employee committed the alleged misconduct and that the employee was made aware of the inappropriate conduct or issues. If the misconduct is proven, the court then considers the surrounding circumstances and decides whether termination is proportional to the misconduct.
Just cause in a unionized context means there must be a justifiable reason to end the employment of a member covered by a collective agreement. The collective agreement may define what counts as a just cause for termination of a union member. When faced with a grievance relating to termination, an employer has the onus of demonstrating that just cause existed for such a level of discipline.
To make a final decision on discipline or termination, an arbitrator considers several factors, including the specific factual circumstances, as well as any aggravating or mitigating factors.
An aggravating factor is anything that may lead to a harsher or more substantial penalty. It can include dishonesty during the investigation process, failure to express remorse, or repeated misconduct taking place over a long time. A mitigating factor is anything that may lead to a lesser or more lenient penalty, and can include a lack of previous discipline, provocation that led to the misconduct, or remorse following the misconduct.
| Aggravating Factors | Mitigating Factors |
|---|---|
| Short service | Lengthy service |
| Prior discipline | Clean disciplinary record |
| Related discipline | Isolated incident |
| Repeated offences | Admission of guilt |
| Premeditated conduct | Momentary aberration |
| Failure to admit wrongdoing | Candour |
| Lying during investigation or hearing | Remorse |
| Lack of remorse | Acceptance of responsibility |
| Genuine apology | |
| Dire Financial Circumstances |
Arbitrators also consider whether the discipline was an appropriate response to the misconduct. Fundamentally, discipline is not intended to be punitive. Rather, the employer’s end goal should be deterrence as well as motivating employees to adhere to the standards of the workplace in question. To this end, an arbitrator could order that a terminated employee be reinstated.
How to terminate an employee
For employers, the following represents some key factors to keep in mind when going through the decision-making process for terminating an employee for just cause.
Risks of wrongful termination
Employers should always exercise caution when making just cause allegations, as one that is found to be unsuccessful can be costly. If an employee successfully appeals a just cause termination, there are significant ramifications, including:
- In a unionized workplace, an arbitrator may order reinstatement of the terminated employee and reimbursement of lost wages; and
- In a non-unionized environment, courts may award significant damages, including additional bad faith or punitive damages.
Please also keep in mind, some jurisdictions offer mechanisms for employees who are terminated with cause to challenge these decisions outside the court or arbitration systems.
- In Quebec, the CNESST provides that provincially regulated workers who have been employed by the same employer for at least two years may file a complaint if they believe their employer has dismissed them without “good and sufficient cause.”
- Similarly, under the Canada Labour Code, federally regulated employees who have completed at least 12 months of employment and who are not subject to a collective agreement may make a complaint and seek to have a review officer reinstate employment with lost wages, similar to the process discussed above in a unionized environment.
Termination for poor work performance
Incompetence is different than wilful misconduct or malicious intent. Many employers have operated under the presumption that poor job performance, addressed with progressive discipline or even a performance improvement plan, forms the basis of a termination with cause. While you may apply the principles of progressive discipline or use a performance improvement plan to manage an employee who is not meeting an acceptable level of performance, keep in mind that an employee who simply is not “cut out for the job” would be terminated without cause, and so is still entitled to both statutory and common law notice in the event of a termination.
Reporting employee complaints
It is common for employers to receive complaints about an employee, alleging conduct that might constitute just cause for termination, such as violence or harassment. Employers must investigate complaints they receive and allow the employee to fully participate and understand the details of any allegations: who, what, when, where, and how. Employers should carefully document the complaint and investigation procedure.
Progressive discipline and employee terminations
Progressive discipline is one factor adjudicators consider when reviewing a termination for cause. Although certain types of conduct (such as theft or violence) may be more likely to warrant termination after a first offence, employers must always take a contextual approach and view mitigating factors, which may include lengthy service, clean record, condonation, admission of wrongdoing, or remorse.
What is termination without cause?
Some reasons cannot be relied on by employers as just cause for termination. These reasons are usually protected by statute: for example, an employer cannot terminate an employee for cause just because they learn the employee is pregnant, as this is a protected characteristic under human rights law. Different jurisdictions outline other protected actions that cannot be considered just cause for termination, such as participation in a union or making some health and safety complaints. Some jurisdictions also provide separate complaint mechanisms and remedies for these circumstances. For example, under Ontario’s Employment Standards Act, 2000, an employment standards officer has the authority to reinstate an employee if it is found that they were terminated for a prohibited reason.
Termination letter sample (for cause)
Warning: This sample document must not be used without first being amended to suit the facts and circumstances of the particular situation. Certain situations may still warrant termination pay, especially in Ontario. This document should be examined by a legal professional before being provided to the recipient. Please remove this disclaimer and all bolded text before providing the final copy to the recipient.
Employee Termination Letter
(Date)
(Name of recipient)
(Title)
(Phone number)
(E-mail address)
(Name of organization)
Dear (recipient name),
You have engaged in conduct that is incompatible with fundamental terms of your employment relationship with (name of organization) and you are therefore being terminated for cause, effective immediately.
This action is necessary due to the following (insert all applicable: inappropriate conduct OR violation of company work policies OR violation of employment legislation), as outlined below:
- (Describe conduct or violations that justify termination for cause, including references to violated company policies.)
Following our investigation of the above and the opportunity afforded to you to explain your conduct, you are being terminated for (insert if and where applicable: wilful misconduct, disobedience, or wilful neglect of duty that is not trivial and has not been condoned by the company).
In accordance with the (insert your jurisdiction’s employment legislation), you will be provided with your final wages up to (insert date), and any accrued vacation pay on (insert date: some jurisdictions have specific requirements on when to pay outstanding amounts owed to the employee). Your employee benefits will expire on (insert date). Optional: Information regarding the transferability of your employee benefits is enclosed.
Note: Choose from the options below based on the content of the employment contract, if there is one. Consider consulting a legal professional to determine the applicability of any contractual entitlements on termination for cause.
Option 1: In accordance with the provisions stipulated in your contract, you are hereby provided with the appropriate amount of termination pay in the amount of $(X), equal to (X) weeks’ pay (if applicable) and (X) weeks’ severance pay.
OR
Option 2: Given the nature of your termination, you are not entitled to severance or termination pay under the (insert your jurisdiction’s employment legislation).
Optional: Notwithstanding the foregoing and in exchange for your signature on the attached agreement and full and final release, we will provide a gratuitous payment of $(X). However, this additional offer is conditional upon you agreeing to keep the terms thereof strictly confidential. Any unauthorized disclosure of the terms of this offer will immediately terminate the offer or entitle the company to recover the additional payments made hereunder. You are therefore encouraged to seek legal advice before signing the enclosed agreement and we request that in the event of your agreement thereto, that you return signed copies to the attention of (insert contact person) by no later than (insert date, usually one week after this letter is provided), 20(XX). If you decide not to sign the agreement and full and final release, you will still be entitled to any entitlements outlined above.
Your (insert either: paper OR electronic) Record of Employment (ROE) will be issued by (insert applicable date that aligns with government requirements). If paper ROE is issued: Part 1 of the paper ROE will be provided to you for your records.
You must return any and all company property that was generated or obtained during your employment with (name of organization), including any works in progress, documents, handbooks, manuals, keys, security cards, and so on. Please return items to (insert company contact) no later than (insert date).
Optional: If you have any personal belongings in the physical workplace, we will be happy to arrange a date and time for you to retrieve them. Please contact (insert company contact) to make the necessary arrangements. Note: Check for specific legislation and common law parameters dealing with employee personal property.
It is (name of organization)’s policy to protect its trade secrets, customer lists and information, and other confidential or proprietary information as vigorously as possible. We remind you that we consider our clients, our business procedures, and our business plans to be proprietary. Optional: To that effect, we remind you that you have signed a (insert relevant document titles: for example, confidentiality, non-disclosure agreement, non-compete agreement, and so on). A copy is included here for your reference.
If you have questions regarding your compensation, benefits, signed policies, returning of company property, or any other pieces of this letter, please contact (insert contact person).
We wish you success in your future endeavours.
Regards,
(Signature)
(Name)
(Position, title, and department)
(Phone number)
(E-mail address)
Termination letter sample (not for cause)
Employee Termination Letter
(Date)
(Name of recipient)
(Title)
(Phone number)
(E-mail address)
(Name of organization)
Dear (recipient name),
I regret to inform you that your employment with (insert organization’s name) is being terminated without cause effective (insert date).
This action has been deemed necessary due to (insert brief reason for termination: for example, restructuring, financial instability, elimination of position).
As required by the Employment Standards Act, and based on your service with the company, you are entitled to (X) weeks’ (Choose: notice OR pay in lieu of notice) (if applicable) and (X) weeks’ severance pay.
In accordance with the Employment Standards Act, you will be provided with your final wages, the required notice payment (if applicable), and any accrued vacation pay by (insert date: per Ontario legislation, the employee’s earnings must be paid within seven days after their last day of employment or on the employee’s next regular pay date, whichever is later). Your employee benefits will expire on (insert date). (Optional:) Information regarding the transferability of your employee benefits is enclosed. (Note: Employers must continue employee benefits for the duration of the employee’s entitled notice period even if the employee received pay in lieu of notice).
(Optional) Notwithstanding the foregoing and in exchange for your signature on the attached full and final agreement and release, we will provide you with an added gratuitous payment of $(X). However, this additional offer is conditional upon you agreeing to keep the terms thereof strictly confidential. Any unauthorized disclosure of the terms of this offer will immediately terminate the offer or entitle the company to recover the additional payments made hereunder. You are therefore encouraged to seek legal advice before signing the enclosed agreement and we request that in the event of your agreement thereto, you return signed copies to the attention of (insert company contact) by no later than (insert date, usually one week after this letter is provided), 20(XX). If you decide not to sign the agreement and full and final release, you will still be entitled to the statutory entitlements outlined above.
Your (choose: paper OR electronic) Record of Employment (ROE) will be issued within five days of your last pay by (insert applicable date that aligns with government requirements). (If paper ROE is issued) Part 1 of the paper ROE will be provided to you for your records.
You must return any and all company property that was generated or obtained during your employment with (insert organization’s name), including any works in progress, documents, handbooks, manuals, keys, security cards, and so on. Please return items to (insert company contact) no later than (insert date).
(Optional:) If you have any personal belongings in the physical workplace, we will be happy to arrange a date and time for you to retrieve them. Please contact (insert company contact) to make the necessary arrangements. (Note to client: Check for specific legislation and common law parameters dealing with employee personal property.)
It is policy to protect its trade secrets, customer lists and information, and other confidential or proprietary information as vigorously as possible. We remind you that we consider our clients, our business procedures, and our business plans to be proprietary. (Optional:) To that effect, we remind you that you have signed a (insert relevant document titles: for example, confidentiality, non-disclosure agreement, non-compete agreement, and so on). A copy is included here for your reference.
(Optional) In addition, we offer optional outplacement support through a career transition program. This service provides you with the tools and skills for reemployment. See additional details attached to this letter. If you are interested in obtaining outplacement support, please contact (insert company contact) by (insert date).
If you have questions regarding your compensation, benefits, signed policies, returning of company property, or any other pieces of this letter, please contact (insert company contact).
We appreciate your service to (insert organization’s name) and wish you success in your future endeavours.
Regards,
(Signature)
(Name)
(Position, title, and department)
(Phone number)
(E-mail address)
*The samples provided above are for demonstration purposes only. Users may use this document as is, or as a starting point for their own documents. Citation Canada, formerly HRdownloads.com assumes no responsibility for the enforcement or effectiveness of these samples. Always consult legal counsel before implementing any new policies or procedures at your organization.
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