Employment lawyers know that the law surrounding employee termination is complex, and employers often face confusing situations when handling employee issues. Without a clear and established just cause, employers typically owe an employee a severance package or notice in lieu. Understanding the standards in this area and the current state of the law is essential to avoid potential claims of wrongful dismissal in Alberta. Improper terminations can lead to avoidable headaches and costly legal battles. Let’s review some of the key facts to know to handle this situation appropriately.

Understanding the Standards of Just Cause

What counts as “just cause” in a termination situation? There are few black and white answers, as much depends on the specific circumstances surrounding the employee. The facts of the matter, the particular type of employment relationship, and the absence of progressive disciplinary measures can all impact whether a termination is for just cause. Remember, employers bear the burden of proof when it comes to claiming just cause, and you must have sufficient evidence to rebut challenges an employee may bring to dispute their termination.

Some of the elements that may rise to just cause, based on the facts, include:

• Sexual harassment
• Theft, fraud, or serious dishonesty
• Repeated insubordination, tardiness, or absenteeism
• Misrepresented qualifications
• Severe incompetence

Proven theft or fraud is typically a cause for immediate termination without warning, but even here, there could be circumstances that could lead to a different outcome.

What Doesn’t Count as Just Cause?

While there are many possible categories of just cause, there are also factors that an employer cannot use to justify terminating employment without severance. For example, if the employee conduct in question was previously condoned by the employer but is now seen as an issue, it still cannot be used as just cause. Similarly, employers cannot base a with-cause termination on temporary disabilities, illnesses, or conflicts of personality.

In the 2001 case McKinley vs BC Tel, the leading case on just cause termination, the Supreme Court of Canada held that there were two ways in which an employer could establish just cause. In the first, the employer would be required to show that the employee’s conduct was so egregious that it immediately broke the foundation of trust in the employer-employee relationship. Theft or fraud falls into this category. In the second path, an employer must establish that the employee was provided progressive discipline, sufficient warning, and knew that failure to change their behaviour would result in termination.

When scrutinizing terminations, courts take a close look at the nature of the alleged misconduct and its extent, along with the circumstances surrounding the misconduct. Courts must determine whether dismissal is the appropriate response and whether the misconduct was incompatible with the terms of the employment relationship. If the misconduct causes irreparable harm and the loss of trust between the employer and employee, just cause may arise.

Understanding Progressive Discipline

We’ve mentioned progressive discipline a few times, but what is that process? Progressive disciplinary action involves employers providing support and opportunities to employees who need to correct performance or conduct issues. This process requires an escalating series of actions. This may begin with a verbal warning, then a series of written warnings, and finally a last warning or temporary suspension.

If the employee still does not alter their behaviour, an employer may be able to proceed with a just cause termination. Except in cases where the behaviour was so severe as to make it untenable to continue employing the individual, progressive discipline is a requirement for virtually all terminations with just cause. It is vital to document these steps as they occur in order to create a paper trail demonstrating the efforts made toward progressive discipline.

The State of Current Case Law

It can be instructive to refer to recent court cases to see how termination cases have been handled and to develop a better understanding of how employers must behave to execute a termination in accordance with the law. Let’s consider a few.

Quong v. Lafarge Canada Inc. (2024)

In this case, the Alberta Court of King’s Bench upheld the employer’s dismissal of a long-term employee. The employee failed a drug test and subsequently refused to comply with the employer’s required substance abuse program. Upon analysis, the court deemed the employer’s policy to be reasonable, consistently enforced among employees, and well-publicized to all employees. The employee’s deliberate refusal, therefore, amounted to their repudiation of the employment contract, and thus termination without severance was justified.

Clark v. Syncrude Canada Ltd. (2014)

In this and several other significant cases, sexual harassment was found to constitute just cause for termination based on the facts of the matter. The employee’s harassing conduct was judged to be severe. The employer had clear and known policies about such behaviour. The employee’s behaviour served to undermine business relationships and thus irreparably broke the trust between employer and employee, meriting dismissal. In a similar case, a single act of grave sexual harassment (or racist behaviour) can rise to just cause for termination even without progressive discipline if the incident was egregious enough to immediately break trust or cause harm.

Cases Where Just Cause Wasn’t Established

In some instances, Alberta courts have found that certain isolated acts do not rise to the level of just cause. A single instance of verbal abuse, for example, without a prior or repetitive pattern of behaviour and in view of a good service record otherwise, is typically not just cause. Likewise, insubordination that the employer provoked or instances of misconduct without prior warnings also do not meet the standard.

Ensure Your Process Can Pass the Legal Test

Crafting employment agreements and policies that establish clear guidelines, straightforward progressive discipline processes and other guardrails for proper termination procedures is essential to mitigate potential claims of wrongful dismissal in Alberta. At Lypkie Henderson, our employment and labour lawyers have an experienced and deep understanding of this subject and the current case law in this area. Reach out to our team today to learn more about how to structure your policies in ways that withstand claims of wrongful dismissal and provide an actionable path to addressing problematic behaviour in the workplace.