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A recent Ontario Superior Court of Justice (“the court”) decision in Tagg Industries v. Rieder, serves as a sobering reminder of the high threshold employers must meet in order to terminate an employee’s employment for cause.

The Employment Agreement

The employee in this case, Rieder, was hired by an employer, Tagg, in 2014 pursuant to a written employment contract. In 2015 Rieder signed a new employment contract and Tagg gave Rieder a $40,000.00 loan in exchange for Rieder signing a promissory note. Tagg and Rieder agreed that the loan would be forgiven in 2016 on the day Rieder was deemed entitled to a $40,000.00 bonus.

Terminated With or Without Cause?

Tagg terminated Rieder’s employment for cause a month prior to Rieder being entitled to receive the $40,000.00 bonus. In terminating Rieder’s employment for cause, Tagg stated, in part, that Rieder had stored pornography on a company-issued laptop.

However, in their communications with Rieder, Tagg failed to indicate that Rieder was being terminated for cause. Instead, Tagg’s president initially told Rieder that he was being terminated without cause. Further, Rieder’s termination letter stated that Rieder was entitled to receive one weeks’ notice of the termination of his employment pursuant to the Ontario Employment Standards Act, 2000.

Tagg subsequently sued Rieder for the amount of the loan. Rieder countersued Tagg for wrongful dismissal.

Court Rules Employee was Wrongfully Dismissed

The Court dismissed Tagg’s claim and awarded Rieder $14,583.33 in damages for wrongful dismissal, while denying Tagg’s claim for a return of the loan.

In coming to its decision, the Court found that Tagg had failed to properly inform Rieder that his employment was being terminated for cause, noting that if Tagg had intended to rely on cause for Rieder’s termination it should have advised him of such rather than leaving him to guess as to the reason for his dismissal.

The Court also found that Tagg had failed to tender admissible evidence to prove that an IT worker had found a large amount of pornography on Rieder’s work-issued laptop. The Court went on to reason that even if admissible evidence has been available to the Court, the fact that Rieder had pornography on his laptop would not amount to cause for the termination of Rieder’s employment particularly in light of the fact that there was no suggestion Rieder looked at or downloaded pornography at work, created a hostile working environment, or that the pornographic material was illegal in nature.

Takeaway for Employers

This case highlights the high threshold that must be met in order to substantiate an assertion of cause for the termination of employment in Ontario and emphasizes that employers must provide very clear reasons for dismissal to an employee if they are terminating that employee’s employment for cause.

Employers should also be aware that finding pornography on an employee’s company-issued laptop may not always amount to cause for termination of employment. Employees should be sure to assess each case on the facts and seek out legal counsel when necessary to determine if there may be cause for termination of an employee’s employment.

Employers should specifically ensure, if they are going to rely on cause for the termination of an employee’s employment, that:

  • the misconduct forming the basis for the termination for cause is of such a degree that it “irreparably damages the trust essential to the employment relationship”;
  • the misconduct has been properly documented; and
  • they act promptly and inform the employee of the reasons being relied upon to assert cause for the termination.

If you require more information or have questions relating to the above, please contact the Toronto employment lawyers at Sultan Lawyers by telephone at 416-214-5111, by email, or by filling out the form below.


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