Toronto, ON — April 28th, 2026 — When I started this “Dear Counsel” series, I quickly learned one thing: no workplace issue causes quite as much anxiety as termination. People worry about saying the wrong thing, doing too much (or too little), and whether one mistake could turn into a lawsuit.
So, for the second installment of Dear Counsel, I am going straight for one of the biggest questions that lands in our inbox.
It usually starts something like this:
“Dear Counsel,
We have an employee with several years of service who has been struggling with performance for some time. We’ve raised concerns informally, but there have been no documented performance management, written warnings or formal discipline.
Recently, the employee made a significant mistake that caused real disruption to the business. There was no intentional misconduct, but it feels like the final straw. Given the ongoing performance issues and this latest incident, can we terminate this employee for cause?”
This question touches on one of the most misunderstood areas of employment law: the difference between termination with cause and termination without cause.
Let’s break it down.
Termination Without Cause: The Default Option
Termination without cause means ending the employment relationship for reasons that are unrelated to employee misconduct. This might include poor performance, restructuring, role elimination, or simply a decision that the relationship is no longer working. Under Ontario law, employers can terminate employment without cause at any time, provided that:
- The termination is not discriminatory or retaliatory;
- Proper statutory or common‑law notice (or pay in lieu) is provided; and,
- Any contractual termination clause complies with the Employment Standards Act.
Importantly, the employer does not need to prove fault or wrongdoing. But as we say to our clients, if it is performance based, it is better if the termination is not a complete surprise to the employee.
That said, terminating without cause comes with an obligation to compensate the employee appropriately. This often means providing common law reasonable notice especially if contractual termination entitlements are no longer enforceable. Long‑service employees, managers, and executives often have significant notice entitlements, even if the termination feels justified from a business perspective.
Can an Employee Be Terminated Without Warning?
Yes. There is no legal requirement to provide advance warnings or progressive discipline before terminating without cause, as long as proper notice or pay in lieu of notice is provided. However:
- The lack of warnings does not reduce notice obligations as there is no “near cause” threshold for terminations;
- Employers must still act in good faith; and,
- Poor handling of terminations can increase legal risk.
Warnings are often best practice, but they are not legally required in a without‑cause termination.
Now for the bigger, more confusing one.
Termination for Just Cause: The High Bar
Termination for cause is different. It allows an employer to end employment without notice or severance pay, but only where the employee’s misconduct is so egregious that it results in a breakdown of the employment relationship. There is no checklist of behaviours that automatically amounts to just cause. As the Supreme Court of Canada has made clear, whether just cause exists depends on a contextual analysis of the misconduct and the surrounding circumstances.
The core question becomes: Was the employee’s conduct sufficiently serious that it strikes at the heart of the employment relationship?
The Contextual Approach (and Why One Mistake Is Rarely Enough)
Courts assess just cause using a contextual approach which involves three key steps:
- Determining the nature and extent of the misconduct.
- Considering all surrounding circumstances, including:
- The employee’s role, discipline history, and length of service,
- The nature of the employer’s business,
- The level of trust involved,
- The actual or potential harm caused.
- Deciding whether dismissal without notice is a proportional response to the misconduct.
This is why a single incident, especially where there is no dishonesty, insubordination, or intentional misconduct, rarely justifies termination for cause, particularly for a long‑serving employee with little or no prior discipline. Employers are not required to tolerate misconduct indefinitely, but proportionality matters.
Performance Issues vs. Misconduct
Performance management and just cause are often confused. Poor performance, errors, or failure to meet expectations, even significant ones, do not automatically amount to just cause unless they are accompanied by:
- Clear expectations,
- Repeated warnings,
- An opportunity given to the employee to improve,
- Wilful refusal or inability to perform despite support by the employer.
Even with all of the above, it is difficult to assert cause for general incompetence and poor performance especially for long service employees. If an employee has struggled but has not been formally warned, a court will often find that termination for cause is disproportionate. In many cases, this results in a termination without cause as the safer option.
Mitigating and Extenuating Factors Matter
Even where misconduct is established, courts will consider whether mitigating factors reduce the severity of the response. These may include:
- Long service with a clean discipline record,
- Lack of prior warnings,
- Employer tolerance or condonation of the behaviour,
- Personal or medical circumstances that affected judgment,
- Whether the employer considered lesser discipline.
Just cause is not assessed in isolation. It is assessed in the entirety of its context.
What About “Wilful Misconduct” Under the ESA?
In Ontario, the Employment Standards Act, 2000 uses a different (and higher) standard for denying statutory notice and severance pay.
To assert the wilful misconduct standard, an employer must show that the misconduct was:
- Serious, causing real harm and repudiating the employment relationship; and,
- Wilful, meaning intentional or so reckless as to be deliberate.
Careless, thoughtless, or inadvertent mistakes, even serious ones, usually do not meet this standard. This is why an employee may meet the just‑cause test at common law and still be entitled to statutory notice or severance pay under the Employment Standards Act, 2000.
Key Takeaways for Employers
Before relying on just cause, ask yourself:
- Is this misconduct intentional or merely a mistake?
- Have expectations and consequences been clearly communicated previously?
- Have we addressed concerns consistently or have we condoned prior misconduct?
- Is termination for cause proportionate, given the employee’s history?
- Would a lesser sanction reasonably address the issue?
When in doubt, pause… and get advice!
Termination decisions made in haste often become expensive litigation.
Dear Counsel will be back soon with another question from the inbox.
In the meantime, if you need support navigating a difficult termination decision, reviewing termination provisions, or managing performance issues before they escalate, Protea LLP is ready to assist.
Let’s sort this out — before it turns into a claim.
