Red Flags and Roadblocks: When Terminating for Cause Isn't So Simple

Firing someone “for cause” might sound like a straightforward way to end a difficult employment relationship without severance pay. 

But here’s the reality: it’s rarely that simple—especially in Canada. 

In fact, trying to terminate for cause without meeting the strict legal threshold can backfire, leading to costly wrongful dismissal claims and reputational risk for your business. 

So, when can you terminate for cause? What red flags should you watch for? And why is the bar so high? 

Let’s break it down. 

What Does "For Cause" Really Mean? 

In simple terms, a termination “for cause” means the employee did something so serious that the employment relationship is considered irreparably broken—so much so that you no longer have to provide any notice or severance pay. 

Legally, it’s known as summary dismissal—and it’s reserved for the worst-case scenarios. 

We’re talking about: 

• Fraud or theft 

• Workplace violence or harassment 

• Serious dishonesty or insubordination 

• Repeated, documented misconduct despite warnings 

It’s not meant for poor performance, clashing personalities, or even one-time mistakes. Courts in Canada take this standard very seriously—and will almost always side with the employee unless the employer has a clear, well-documented case. 

The Red Flags (That Might Not Be Enough) 

Here are some common “cause” situations that often fall short: 

• An employee makes a major mistake → If it was unintentional or a one-off, it likely doesn’t qualify. 

• Performance hasn’t improved → You usually need a performance improvement plan (PIP) and multiple documented efforts to support the employee, but even then performance almost never meets the cause threshold.  

• There’s ongoing conflict with others → Unless it crosses into harassment or abuse (and you can prove it), it likely won’t meet the cause threshold. 

• They violated a policy → Only if the policy is clearly written, consistently enforced, and the employee knew the consequences. 

Even with progressive discipline, clear documentation, and warnings, it’s extremely risky to argue that cause exists in these situations.  

Real Talk: Courts Want You to Try First 

Judges often look at whether you gave the employee a chance to improve before jumping to termination. If you didn’t offer feedback, coaching, or a documented PIP, you may be out of luck. 

Even in serious situations, you might be expected to: 

• Issue a warning 

• Suspend the employee (paid or unpaid, depending on the situation) 

• Give them an opportunity to respond or correct the behaviour 

Only repeated misconduct or serious incidents with proven harm typically justify immediate dismissal without pay. 

The Risk of Getting It Wrong 

When employers terminate for cause without proper grounds, courts often find the termination was wrongful. That means: 

• You’ll owe common law severance (which can be 12–24 months in some cases) 

• You may owe additional damages for bad faith or breach of contract 

• Your legal costs can pile up—fast 

• You may damage your reputation as an employer 

It’s not worth the gamble. The courts will not accept “we thought it was cause” as a defense. 

A (Very Common) Case Example 

Let’s say you fire an employee for being “chronically late and unprofessional.” You’ve warned them verbally a few times but haven’t written anything down. On one particularly bad week, they no-show for an important meeting, and you decide enough is enough. 

You issue a termination letter citing “cause”—no severance, no notice. 

Here’s what will likely happen:  The employee sues for wrongful dismissal. Your verbal warnings aren’t considered sufficient and their unprofessionalism doesn’t meet the bar for a with cause termination.  The court finds there was no just cause and awards 12 months’ pay—plus legal costs. 

Suddenly, this termination costs way more than if you’d simply offered a fair severance package in the first place. 

How to Protect Your Business 

If you’re dealing with a potential cause situation, don’t go it alone. Here’s what we recommend: 

Document everything: Warnings, meetings, coaching efforts, and policy violations.

Apply policies consistently: Don’t treat one employee differently than another in similar situations.

Get advice early: Talk to an HR professional or lawyer before making a termination decision. 

Consider a without-cause termination: If the case isn’t rock-solid, it may be safer (and cheaper) to offer notice or severance and move on. 

In Summary 

Terminating for cause is possible—but it's rarely easy.  It requires careful documentation, legal insight, and clear-cut misconduct. Without it, you risk expensive legal claims and reputational damage. 

When in doubt, get help before you act. 

Need support navigating a tricky termination?  A&A Consulting helps small businesses make smart, compliant decisions that reduce risk and protect your culture. 

Book a free consult to talk through your situation. We’ll help you find the path forward—with clarity and confidence.