Court Confirms Just Cause at Common Law Does Not Automatically Disentitle Dismissed Employee to Statutory Termination and Severance Pay

April 7, 2011 | Laura Cassiani

The Ontario Superior Court of Justice has recently confirmed that an employee who is terminated for just cause at common law is not automatically disentitled to statutory termination and severance payments. 

In Oosterbosch v. FAG Aerospace Inc., the Court was asked to consider whether the employer had “just cause” to dismiss the Plaintiff. The Plaintiff, Mr. Oosterbosch, was dismissed for just cause after the employer unsuccessfully attempted to address his performance and conduct issues through its progressive discipline policy. 

The Plaintiff was a 53 year old machine operator with 17 years of service at the time of his dismissal. The employer terminated the Plaintiff’s employment for cause pursuant to its four step progressive discipline policy, which provided for dismissal in the event that an employee receives four written warnings in a 12 month period.  The Plaintiff received four warnings in respect of misconduct that occurred in less than a 12 month period.  The misconduct included unsatisfactory work performance, attendance issues and falsification of a production record. There were several other incidents of lateness, absences and unsatisfactory work performance apart from the four incidents that resulted in termination and the Plaintiff received numerous coaching or counseling sessions.

Pursuant to the Employment Standards Act, 2000 (“Act”), employees who engage in “wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer” are not entitled to notice of termination or pay in lieu or severance pay pursuant to the Act.

The employer argued that the employee was dismissed for just cause and that he was not entitled to either common law notice or termination or severance pay pursuant to the Act.

The Court concluded that the employer had established just cause for the termination of the Plaintiff’s employment, noting “the persistence of the Plaintiff’s misconduct notwithstanding on-going coaching sessions and warnings constitutes a repudiation of the employment relationship. … It is my opinion that the Plaintiff demonstrated a sustained course of casual and careless conduct that was inconsistent with the continuation of his employment…”

The Court, however, did not find that the Plaintiff’s conduct was “wilful” so as to disentitle him from the minimum statutory payments for notice and severance under the Act.  There was no evidence that the Plaintiff’s conduct was intentional or that he was reckless.

As a result, the Court awarded the Plaintiff statutory termination pay equal to eight weeks and severance pay reflecting his 17 years and 4 months of employment.  He was not awarded any common law notice because the Court found that the employer did have cause to terminate.

The case is a reminder to employers that even where just cause can be established at law, an employee may still be entitled to the minimum statutory termination notice or pay and/or severance payment set out in the Act

To avoid potentially costly and time consuming investigations by the Ministry of Labour, employers are well advised to consider whether in each dismissal case the misconduct at issue satisfies both the just cause test and “wilful” statutory test.  They should also consider these issues when structuring termination packages in situations where cause is being alleged.


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