When Does an Employee Lose Entitlement to Notice of Termination and Termination Pay?


Under the Employment Standards Act, 2000, 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 is not entitled to notice of termination or termination pay.

In Hallmark Housing Services Inc., 2013 Can LII 14638, the Ontario Labour Relations Board considered when an employee would lose their right to notice of termination and explained how an employer could show that an employee’s conduct was so bad that it met this stringent test. 

The case involved an employer’s application for review of an order to pay $1,166.88 in termination pay.  At the hearing, the employer argued that the employee had engaged in wilful conduct within the meaning of the Act by performing his duties poorly, being habitually late, and demonstrating a lack of effort in the performance of his work.  The Board also heard evidence that the employer had met with the employee on several occasions and that the employee had been issued a number of Progressive Discipline Notes with respect to his behaviour.  The Board stated that to deny an employee termination pay, the employer has the burden to prove (on a balance of probabilities) that the employee engaged in behaviour that constitutes wilful misconduct, disobedience, or wilful neglect of duty that was not trivial and not condoned by the employer.

In considering this issue, the Board applied principles from VME Equipment of Canada Ltd. (Re), [1992] O.E.S.A.D. No. 230, noting that there are two general categories of serious misconduct.  The first category is comprised of single acts including insubordination, theft, dishonesty, and physical violence against other employees. These single acts, may on their own, meet the requisite standard of seriousness.

The second category of acts is comprised of less serious, repetitive forms of misconduct.  Repetitive forms of misconduct will only meet the required standard of seriousness if the employer has explained after each occurrence that the conduct was not acceptable and that if continued would result in termination and despite these warnings there is a culminating incident.  

In addition to proving that the misconduct is serious, the employer must show that the conduct complained of is 'wilful'. Careless, thoughtless, heedless, or inadvertent conduct will not meet the standard. The employee must have been “bad in purpose.”  In Hallmark, the Board held that the employee had engaged in a pattern of wilful misconduct, disobedience and wilful neglect of duty that was not trivial and was not condoned by the employer.  It appears that a key factor in this case was the discipline record kept by the employer showing repeated warnings that dismissal would occur if the behaviour continued.   

The Hallmark decision provides a clear and current articulation of the principles applicable to the wilful misconduct exception under the Act. It should be considered by employers who are contemplating terminating their employees without payment for a notice period and should be read in supplement to the Board’s earlier decision Wal-Mart Canada Corp v. Gray, 2002 CanLII 31452. 

From Hallmark, it is clear that an employee who has been warned would want to show at a hearing that she or he showed a desire to change such that it was not intentional repetition of misconduct and an employer should keep good records of repetitive warnings including that further repetition will lead to termination. 


Topics:  Canada, Hiring & Firing, Notice Requirements, Termination

Published In: Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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