Walsh LLP - Calgary Lawyers

Articles

Back To Basics: The Difference Between Just-Cause And Without-Cause Termination

Introduction

A business’ greatest asset is its employees.  This is why terminating an employee is never easy.  Terminations must always be handled with sensitivity and care.  The decision is a fine balance between treating the employee fairly, while balancing the relevant legal principles, and considering the company’s best interest.

Walsh LLP’s knowledgeable employments lawyers are experienced in guiding employers on the current legal landscape, to avoid the legal pitfalls associated with terminations, and we assist employees to ensure their legal rights have been fully recognized in their time of need.

What is Just-Cause or Without-Cause? When do they apply?

Alberta employers may terminate an employee’s employment for just-cause or without-cause. Each process is legally distinct.  All too often employers use the wrong form of termination, which exposes the company to liabilities including claims for wrongful dismissal, for insufficient working notice, for severance or reinstatement, or lost wages, human rights claims and other claims.

Basic but fundamental examples of some differences between just-cause and without-cause terminations include the following:

A). JUST CAUSE: Just-cause terminations require a high legal burden of proof. The employer must demonstrate that the decision was a reasonable and proportionate response to the alleged wrongdoing.  This decision must also take into consideration the surrounding circumstances.  Just cause terminations can occur as a result of a single incident or a series of small incidents, such as:

  • Undermining, offending or repudiating fundamental terms of an employment agreement;
  • Misconduct that breaches the essential and inherent trust that is implied in all employment relationships, in a way that trust cannot be repaired;
  • Serious misconduct that is incompatible with the employee’s duties and prejudicial to the employer’s business and reputation;
  • Acts of dishonesty, insubordination and abandonment;
  • A single incident that is criminal or quasi-criminal in nature; and
  • A series of small incidents like habitual neglect of duty, incompetence, poor performance, absenteeism and lateness.

Prior to terminating an employee for just cause, legal guidance should always be obtained.

B). WITHOUT CAUSE: Employment contracts are not perpetual agreements and employment is not a guarantee for life. Therefore, without-cause terminations are a tool that allows an employer to manage its workforce. Examples of without cause terminations include:

  • The employer no longer requires the employee’s services, for whatever reason;
  • The employer has decided to restructure its operations;
  • The employer is forced to respond to economic hardships or a downturn in the economy;
  • An employee exhibits unsatisfactory job performance that falls short of just cause; and,
  • The employee is no longer a good fit for the organization.

The above examples are not an exhaustive list.

To limit an employer’s liability for additional claims, without-cause terminations must not offend the applicable human rights or employment laws or other laws. Further, the manner of termination must be conducted carefully and reasonable severance must be provided. Determining what constitutes ‘reasonable severance’ can be complex.  For more information on determining reasonable severance, please see my article titled: How Is Severance Calculated?

Walsh LLP is here to help

In both just-cause and without-cause terminations, the courts review each matter on a case-by-case basis.  To reduce your risks and to avoid the legal pitfalls, we recommend you obtain legal advice.  Walsh LLP’s experienced team of employment lawyers can provide the legal advice you require and advice that is tailored to your specific needs and unique circumstances.

For assistance or additional information on terminations, calculating reasonable severance and legal considerations specific to your circumstances, whether as an employer or an employee, please contact Walsh LLP’s Employment Lawyers.