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Termination for Cause: The Legal Standard in Canada
Faculty of LawEmployment Law
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The human resources manager at a mid-sized manufacturing company in southwestern Ontario has been asked to prepare a recommendation on whether a machinist with 11 years of tenure should be terminated for cause. The request came from the plant manager after an incident 3 weeks earlier in which the machinist refused a direct instruction to operate a piece of equipment he had operated routinely for years, stating in front of several co-workers that the plant manager's directive was "idiotic" and that he would not comply. The machinist eventually completed the task after a 45-minute delay, but only after speaking with the company's general manager by telephone.

The employee's personnel file reveals a more complicated history than the recent incident alone might suggest. Over the past 4 years, the machinist has received 2 written warnings for workplace conduct — one for using profane language toward a supervisor during a disagreement about scheduling, and another for failing to follow established safety protocols during a machine changeover. Both warnings were issued promptly after the incidents and acknowledged in writing by the employee. However, a separate series of documented conversations between the machinist and his direct supervisor show that concerns about the quality of his work have also been raised on at least 5 occasions over the past 18 months. These conversations, recorded in handwritten notes of varying detail, indicate that the machinist's error rate on precision components had increased and that customer complaints had been traced to his workstation twice. The notes do not reflect any formal performance improvement plan, specific targets for improvement, or timelines for reassessment.

The file also contains an unsigned incident report from approximately 9 months ago describing an occasion on which the machinist was observed removing company-owned hand tools from the facility at the end of a shift. The report indicates that a supervisor spoke with the machinist the following day and that the tools were returned, but no disciplinary action was taken and no further notation appears in the file until the current incident.

The general manager has made clear that he views the machinist's recent refusal and public criticism of the plant manager as the final straw. He has instructed the human resources manager to schedule a termination meeting for early next week and to prepare a termination letter citing cause. The company has no formal progressive discipline policy in its employee handbook, though its standard practice has been to address performance and conduct issues through verbal and written warnings before resorting to termination. The machinist has no employment contract and is entitled to common law notice if terminated without cause. His annual salary is approximately $72,000, and he is 47 years old with no post-secondary education, having worked exclusively in manufacturing throughout his career.

Condonation: How Employer Inaction Destroys a Cause Position

The doctrine of condonation represents one of the most significant yet underappreciated legal pitfalls facing Canadian employers who discover employee misconduct. At its core, condonation occurs when an employer, having learned of conduct that would otherwise justify termination for cause, continues the employment relationship without taking meaningful disciplinary action within a reasonable time. Through this continuation, the employer is deemed to have forgiven or waived the misconduct, permanently losing the right to rely upon that conduct as grounds for dismissal. The principle operates as a form of estoppel, preventing employers from stockpiling instances of misconduct to deploy strategically at some later date when termination becomes convenient for other reasons. Canadian courts have consistently held that employers must act with reasonable promptness when responding to employee misconduct, and failure to do so can transform what would have been a valid cause termination into a wrongful dismissal entitling the employee to significant damages.

The legal foundation for condonation rests in the common law principles governing the employment relationship across most Canadian provinces, including British Columbia, Alberta, Saskatchewan, Ontario, and the Atlantic provinces. The doctrine reflects the broader principle that employment is a continuing relationship requiring ongoing mutual obligations of good faith and fair dealing. When an employer discovers misconduct but continues to accept the employee's services, provide regular compensation, and otherwise treat the employment relationship as ongoing, the law presumes that the employer has elected to treat the conduct as insufficient to warrant termination. This presumption arises because employees are entitled to reasonable certainty about their employment status, and it would be fundamentally unfair to allow employers to hold misconduct in reserve as a perpetual threat. In Quebec, while the Civil Code of Quebec governs employment relationships rather than common law, similar principles apply through the requirement of good faith in contractual relationships established under articles 6, 7, and 1375 of the Civil Code of Quebec, as of the date of authorship. Quebec employers who tolerate misconduct may similarly find themselves unable to subsequently rely upon that conduct to justify termination, as the principle of good faith requires parties to act consistently and not to exercise rights in a manner that is excessive or unreasonable given their prior conduct.

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