By Howard Levitt and Muneeza Sheikh
You can walk any employee to the door for any or no reason at all, but you must pay for it
Courts describe dismissal for cause as “the capital punishment of employment law.” Terminating for cause sends this message to the fired employee: Your conduct is so egregious, and caused such irreparable damage to the employment relationship that you are being fired without severance.
We have written about what qualifies as cause for many years. There are thousands of court decisions. Yet, we are still faced with the following two scenarios in our own practice: Employer clients who sometimes want to pull the “for cause” trigger without the requisite ammunition; and employee clients who are terminated by employers for cause allegations that were concocted — sloppily.
In both of those cases, our advice and warnings are the same: You can walk any employee to the door for any or no reason at all, but you must pay for it.
You cannot withhold someone’s entitlement to severance for that type of misconduct, unless you undertake vigorous progressive disciplinary measures. That means every time the incident arises, you document, investigate and warn accordingly. Where it happens continuously, the disciplinary file should contain those warnings in writing. Most importantly, the employee must know that being involved in the “it” again will get them fired for cause.
What we are finding, however, is that some employers are becoming sloppy and engaging in risky misconduct of their own. They pretend that there is cause when none exists. They pretend that an employee has done terrible things, when in fact those “terrible” things are not so terrible, and other employees are doing the same thing. While most employers prefer to use their profits to motivate their existing employees, you cannot refuse to pay people you fire because you would rather retain those profits for what are viewed as more productive purposes.
In one recent case we encountered, a senior employee was terminated with cause. He had an exemplary performance history and was being groomed for a promotion just before being fired.
Courts punish grossly irresponsible behaviour by awarding handsome punitive or bad faith damages against employers in public decisions. Irresponsibly destroying an employee’s professional persona by falsifying allegations and/or conducting a sloppy investigation qualifies.
The moral of this story: where you want to terminate for cause, do so in good faith and only after you are convinced (following the investigation — preferably by a skilled internal manager who understands the context and company culture) that the employee did what they are accused of and that it is indeed sufficiently egregious.