How Serious Must Employee Misconduct Be For Just Cause Termination?
It Takes Serious Misconduct to Constitute As Just Cause For Termination of An Employee. What Is Just Cause Is a Flexible Concept That Requires a Review of What Wrong Was Done and How Proportional the Wrong Was In the Full Context of the Employment Relationship.
Understanding When Employee Misconduct Constitutes As Just Cause to Terminate Without the Usual Statutory Notice
When the conduct of an employee is so severe as to warrant a just cause dismissal, generally, the employee loses various rights such as termination pay in lieu-of-notice, benefits, bonuses, among other things. A just cause dismissal may also affect access to Employment Insurance benefits that would otherwise provide a period of compensation to a terminated employee.
What Conduct Constitutes As Just Cause
The sudden loss of employment, with a corresponding sudden loss of income and other losses that arise from a just cause dismissal are presumed to result in significant hardships for an employee; and accordingly, the law requires that the misconduct of an employee be significantly wrongful before constituting as a just cause for immediate termination with the accompanying losses.
Requires Contextual Approach
In the review of whether employee misconduct rises to the level of just cause, in the Supreme Court case of McKinley v. BC Tel,  2 S.C.R. 161, it was said that the misconduct review should involve a contextual approach. Specifically, the Supreme Court stated:
53 Underlying the approach I propose is the principle of proportionality. An effective balance must be struck between the severity of an employee’s misconduct and the sanction imposed. The importance of this balance is better understood by considering the sense of identity and self-worth individuals frequently derive from their employment, a concept that was explored in Reference Re Public Service Employee Relations Act (Alta.), 1987 CanLII 88 (SCC),  1 S.C.R. 313, where Dickson C.J. (writing in dissent) stated at p. 368:
Work is one of the most fundamental aspects in a person's life, providing the individual with a means of financial support and, as importantly, a contributory role in society. A person's employment is an essential component of his or her sense of identity, self‑worth and emotional well‑being.
This passage was subsequently cited with approval by this Court in Machtinger v. HOJ Industries Ltd., 1992 CanLII 102 (SCC),  1 S.C.R. 986, at p. 1002, and in Wallace, supra, at para. 95. In Wallace, the majority added to this notion by stating that not only is work itself fundamental to an individual's identity, but “the manner in which employment can be terminated is equally important”.
54 Given this recognition of the integral nature of work to the lives and identities of individuals in our society, care must be taken in fashioning rules and principles of law which would enable the employment relationship to be terminated without notice. The importance of this is underscored by the power imbalance that this Court has recognized as ingrained in most facets of the employment relationship. In Wallace, both the majority and dissenting opinions recognized that such relationships are typically characterized by unequal bargaining power, which places employees in a vulnerable position vis-à-vis their employers. It was further acknowledged that such vulnerability remains in place, and becomes especially acute, at the time of dismissal.
55 In light of these considerations, I have serious difficulty with the absolute, unqualified rule that the Court of Appeal endorsed in this case. Pursuant to its reasoning, an employer would be entitled to dismiss an employee for just cause for a single act of dishonesty, however minor. As a result, the consequences of dishonesty would remain the same, irrespective of whether the impugned behaviour was sufficiently egregious to violate or undermine the obligations and faith inherent to the employment relationship.
56 Such an approach could foster results that are both unreasonable and unjust. Absent an analysis of the surrounding circumstances of the alleged misconduct, its level of seriousness, and the extent to which it impacted upon the employment relationship, dismissal on a ground as morally disreputable as “dishonesty” might well have an overly harsh and far-reaching impact for employees. In addition, allowing termination for cause wherever an employee’s conduct can be labelled “dishonest” would further unjustly augment the power employers wield within the employment relationship.
57 Based on the foregoing considerations, I favour an analytical framework that examines each case on its own particular facts and circumstances, and considers the nature and seriousness of the dishonesty in order to assess whether it is reconcilable with sustaining the employment relationship. Such an approach mitigates the possibility that an employee will be unduly punished by the strict application of an unequivocal rule that equates all forms of dishonest behaviour with just cause for dismissal. At the same time, it would properly emphasize that dishonesty going to the core of the employment relationship carries the potential to warrant dismissal for just cause.
As explained within the McKinley case, an must be able to show that an employee engaged in significant misconduct before alleging that the misconduct warrants a just cause dismissal. Interestingly, considering that the McKinley case is more than twenty (20) years-old, employers still commonly allege just cause for relatively minor misconduct by an employee.
For example, in the case of Ram v. The Michael Lacombe Group Inc. operating as Burger King, 2017 BCSC 212 an employee was terminated for, alleged, just cause when an apparent misunderstanding arose in permission granted to the employee to take a fish sandwich. The Burger King franchise, as the employer, took the position that the employee was granted permission to take only a fish sandwich. The employee argued that the understanding was to take a fish sandwich meal, being the full combo meal comprising the sandwich, soda, and fries. Incredibly, after twenty-four (24) years working at various Burger King locations, including five (5) years with The Michael Lacombe Inc. franchise, a legal battle ensued over whether a just cause dismissal was warranted as against Ms. Ram for what was, if truly a theft rather than a reasonable misunderstanding, a theft of a soda and fries worth a dollar at best. In determining that the Burger King franchise over-reacted and that a just cause dismissal was extreme and unwarranted, the Court said:
 As explained above, where an employer alleges theft as justification for dismissal without notice, it is necessary for the employer to prove not only that the theft actually occurred but also that the specific nature of the misconduct in the specific circumstances warrants dismissal. It is necessary to consider whether dismissal is a proportionate sanction given the seriousness of the misconduct. This principle of proportionality reflects the importance of work to individuals in our society and, in particular, the sense of identity and self-worth individuals derive from their employment.
 Even if the defendant had established Ms. Ram's conduct in taking the fries and drink was intentionally dishonest, in this case I would not have found that dismissal was a proportionate sanction. In the specific circumstances of this case, the taking of an order of fries and a drink when authorized only to take a sandwich would not cause an irreparable breakdown in the employment relationship.
 Mr. Mohammed did not consider the particular circumstances or make any assessment of the actual seriousness of Ms. Ram's conduct before deciding to terminate her employment. He claimed that he did not do so because it is necessary to ensure that employees know that taking food without authorization will not be tolerated. However, his failure to take any steps to address overserving incidents is inconsistent with the view that theft of food always warrants dismissal. On his own evidence, he continued to consider Ms. Ram to be an excellent employee even after Ms. Palting told him about the overserving. He even claimed that he would have helped Ms. Ram find alternative work after the termination, which indicates that he did not actually think Ms. Ram's conduct was so egregious as to irreparably undermine the relationship.
 In Roe v. British Columbia Ferry Services Ltd., 2015 BCCA 1, the Court of Appeal allowed an appeal by an employer where the trial judge concluded that the employee's misconduct in knowingly giving complimentary food and beverage vouchers to his daughter's volleyball team without prior authorization did not amount to just cause for dismissal. The Court of Appeal held, at para. 37, that the trial judge failed to apply the contextual approach mandated by McKinley in assessing whether the employee's misconduct irreconcilably undermined the employment relationship and ordered a new trial. In doing so, the Court of Appeal emphasized that the value of the vouchers was of little consequence and the misconduct ought to have been considered in the context of the high standard expected of the employee in question given the responsibilities and trust attached to his senior management position, the core values of integrity and honesty expressed in his employment contract, and the deliberate concealment of his actions.
 This case is different from Roe in several material respects. Here, the value of the food in question was even less than the value of the food vouchers in issue in Roe. More importantly, Mr. Roe was a senior management employee, with a relatively short tenure, whose responsibilities included handling and reconciling large amounts of cash, acting as a role model and mentor to other staff, and whose misconduct was premeditated and actively concealed. In contrast, Ms. Ram was a low-level employee with very limited responsibility and no mentoring or supervisory role, who made no attempt to conceal her actions, who had no formal record of discipline, and who had worked successfully with Mr. Mohammed for more than two decades.
 As already indicated, the defendant was self-represented. No submissions were advanced on its behalf to the effect that the theft of the fries and the drink, when considered in the context of the three previous incidents of overserving, justified the conclusion that the employment relationship between the defendant and Ms. Ram was irreparably broken down by the theft of the fries and the drink. Nevertheless, I have considered whether the cumulative effect of this misconduct would have justified dismissal.
 In Ogden v. Canadian Imperial Bank of Commerce, 2015 BCCA 175 at paras. 25–33 and 51, the Court of Appeal explained the two ways that cumulative misconduct can influence the determination of whether a defendant has established just cause. First, where an employee has committed more than one act of misconduct, the cumulative effect may justify dismissal even where dismissal would be disproportionate in relation to each individual incident on its own. That is not in issue here because, as I have found, Mr. Mohammed's decision to terminate Ms. Ram was based on the single incident that occurred on December 27, 2013. However, the impact of the second type of cumulative misconduct remains to be considered. This is where a single incident of misconduct is alleged to be grounds for summary dismissal when considered in the context of a discipline history that includes previous incidents of similar misconduct. In my view, the three prior incidents of overserving could not be characterized as a "discipline history" sufficient to justify the conclusion that the employment relationship was irreparably undermined by the single incident of theft on December 27 (assuming the defendant had established that theft). This is because Mr. Mohammed acknowledged that he did not consider the overserving incidents to be serious at all and Ms. Ram was not subjected to any kind of formal discipline as a result of them.
 There is no doubt that it is important to the defendant that its employees abide by its policies concerning the taking and consumption of food items. There is no doubt that the defendant's employees should not take food without authorization. However, it is my view that given the absence of any evidence of premeditation or attempted concealment, the absence of any formal discipline history, Ms. Ram's excellent and lengthy record working with Mr. Mohammed, the nature of her position, and her economic vulnerability as a 55-year-old woman with little education who had worked as a fast food cook for 24 years, summary dismissal would not be a proportionate sanction even when considered in the context of the overserving incidents. The defendant's objective of making clear that the breach of its employee food policies will not be tolerated could have been achieved with a less serious sanction, such as a formal letter of reprimand that expressly warned Ms. Ram that any repetition of this kind of conduct could justify dismissal. Accordingly, even if the defendant had established that Ms. Ram intended to steal the fries and drink, in the circumstances of this case that would not amount to just cause for summary dismissal.
Except in genuinely serious circumstances, a dismissal involving allegations of just cause will be difficult for an employer to maintain. Furthermore, the onus will be upon the employer to prove that just cause for termination existed. A just cause allegation will be difficult for the employer to sustain even in cases where:
- An employee as disobedient; Chaba v. Ensign Drilling Inc., 2002 ABPC 131);
- An employee was dishonest; McKinley v. BC Tel,  2 S.C.R. 161);
- An Employee was insubordinate; Henry v. Foxco Ltd., 2004 NBCA 22);
- An employee was intoxicated; Ditchburn v. Landis & Gyr Powers Ltd., 1997 CanLII 1500);
- An employee was poorly performing; Jazarevic v. Schaeffler Canada Inc., 2010 ONSC 2491); and
- An employee was accused of time theft; Bouma v. Flex-N-Gate Canada Co., 2004 CanLII 66311).
Termination Pay Requirement
Employers often attempt to include a clause within employment contracts, sometimes containing specific examples, of what will be deemed as just cause and thereby warrant immediate dismissal without notice and without termination pay requirements. An employer that does so risks facing a wrongful dismissal case and, if the employer attempted to limit termination pay requirements to something other than reasonable notice per the common law, then the employer risks all termination clauses within the entire contract becoming null and void. This interpretation and application of the law was made clear by the Court of Appeal in the cases of Rahman v. Cannon Design Architecture Inc., 2022 ONCA 451, wherein it was said:
 The Operative Just Cause Provision states that no notice or payment will be given if there is just cause to terminate. For ease of reference, I set out that clause again:
CannonDesign maintains the right to terminate your employment at any time and without notice or payment in lieu thereof, if you engage in conduct that constitutes just cause for summary dismissal.
 However, ESA notice and termination pay must be given for all terminations, even those for just cause, except for “prescribed employees”: ESA, s. 55. The disentitlement provision is found in the ESA regulation Termination and Severance of Employment, O. Reg. 288/01. Section 2(1) of the regulation provides:
3. An employee who has been guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.
 The wilful misconduct standard requires evidence that the employee was “being bad on purpose”: Render v. ThyssenKrupp Elevator (Canada) Limited, 2022 ONCA 310, at para. 79, citing Plester v. Polyone Canada Inc., 2011 ONSC 6068, 2012 C.L.L.C. 210-022, aff’d 2013 ONCA 47, 2013 C.L.L.C. 210-015. For example, in Oosterbosch v. FAG Aerospace Inc., 2011 ONSC 1538, 2011 C.L.L.C. 210-019, the court awarded damages for ESA notice and severance after holding that the employer had just cause to terminate the employee for persistent carelessness that did not meet the wilful misconduct standard.
 There is nothing in the Operative Just Cause Provision that limits its scope to just cause terminations for wilful misconduct. On its plain wording, the Operative Just Cause Provision gives CannonDesign the right to terminate Ms. Rahman’s employment without notice or payment, for conduct that constitutes just cause alone. That means the Operative Just Clause Provision contravenes the ESA and s. 5 renders it void. Section 5 provides that no employer shall contract out of an employment standard and any such contracting out is void.
 This court has repeatedly held that if a termination provision in an employment contract violates the ESA – such as a “no notice if just cause” provision – all the termination provisions in the contract are invalid. See, for example, Waksdale v. Swegon North America Inc., 2020 ONCA 391, 446 D.L.R. (4th) 725, at para. 10, leave to appeal refused,  S.C.C.A. No. 292; Rossman v. Canadian Solar Inc., 2019 ONCA 992, 444 D.L.R. (4th) 131, at para. 18. In Waksdale, as in the present appeal, the employer had not purported to terminate the employee for just cause. However, the just cause provision in the employment contract violated the ESA. The invalidity of the just cause provision rendered the other termination provisions unenforceable: Waksdale, at para. 10.
 Accordingly, the termination provisions in the Employment Contracts are void and cannot be relied upon by the Respondents.
Interestingly, the Rahman case was without an allegation of just cause and the only purpose of reviewing the just cause issue arose from allegations that contract clauses limiting common law termination pay requirements were null and void due to the wording of the, otherwise irrelevant, just cause clause.
The decision to terminate an employee based on a just cause allegation is a serious concern. An employer that takes such a position should be ready to show misconduct proportionately inappropriate to the employment relationship.