Summary dismissal means the employer has just cause to terminate an employee without any notice or pay in lieu of notice. Summary dismissal is the death penalty in employment law. Therefore, summary dismissal is only appropriate where there is serious misconduct.
Normally, in Canada, employers can terminate an employee at any time so long as they provide notice or pay in lieu of notice of the termination. However, in the case of summary dismissal, employers do not have to provide notice of terminate or pay in lieu of such notice.
Essentially, in layman’s terms, a summary dismissal stands for the proposition that an employee’s serious misconduct disentitles him to any severance pay.
The Law Of Summary Dismissal
At common law, an employer only has the right to summarily dismiss an employee for “just cause”.
“Just cause” constitutes conduct that is incompatible with those duties that go to the “root” of the employee’s employment, and consequently fractures the employment relationship in such a way that the employer cannot be expected to provide the employee with a second chance: Leung v. Doppler Industries Inc.,  B.C.J. No. 690.
The employer bears the onus of demonstrating that just cause exists for the employee’s summary dismissal: Geluch v. Rosedale Golf Assn.,  O.J. No. 2740. The conduct at issue must be “serious” not “simple dissatisfaction with performance” or concerns about future conduct.
The most frequently cited definition of just cause is from Port Arthur Shipbuilding Co. v. Arthurs,  2 O.R. 49 at page 348:
 … If an employee has been guilty of serious misconduct, habitual neglect of duty, incompetence, or conduct incompatible with his duties, or prejudicial to the employer’s business, or if he has been guilty of wilful disobedience to the employer’s orders in a matter of substance, the law recognizes the employer’s right summarily to dismiss the delinquent employee.
Where the employer can establish that just cause exists, no notice or severance pay is required to dismiss the employee.
When Is Summary Dismissal Allowed?
As discussed above, summary dismissal is only permitted when there is “just cause”. Therefore, the test for summary dismissal is the test for just cause.
In determining whether an employee’s actions give rise to summary dismissal, the Supreme Court of Canada, in McKinley v. BC Tel, 2001 SCC 38, set out an analytical framework which requires a contextual approach in deciding whether an employer had just cause to summarily dismiss the employee:
- Determine the nature and extent of the misconduct;
- Consider the surrounding circumstances; and
- Decide whether termination for cause is proportionate to the misconduct.
Proportionality is a key aspect to this analysis. As Justice Iacobucci stated at paragraph 53 in McKinley:
-  Underlying the approach I propose is the principle of proportionality. An effective balance must be struck between the severity of an employee’s misconduct and the sanction imposed. The importance of this balance is better understood by considering the sense of identity and self-worth individuals frequently derive from their employment
And at paragraph 54 Justice Iacobucci stated:
-  Given this recognition of the integral nature of work to the lives and identities of individuals in our society, care must be taken in fashioning rules and principles of law which would enable the employment relationship to be terminated without notice. The importance of this is underscored by the power imbalance that this Court has recognized as ingrained in most facets of the employment relationship. In Wallace, both the majority and the dissenting opinions recognized that such relationships are typically characterized by unequal bargaining power, which places the employee in a vulnerable position vis-à-vis their employers. It was further acknowledged that such vulnerability remains in place, and becomes especially acute, at the time of dismissal.
What Are The Grounds Summary Dismissal?
Any misconduct that is detrimental to the employment relationship can technically be grounds for summary dismissal. The following are non-exhaustive examples of summary dismissal in Canada:
- Breach of fiduciary duty;
- Abuse of confidential information;
- Competition in conflict with the interests of the employer;
An employee’s willful disobedience of clear, reasonable, and lawful orders is grounds for summary dismissal: Stein v. British Columbia (Housing Management Commission),  B.C.J. No. 280. According to MacKinnon J. in Heyes v. First City Trust Co.,  B.C.J. No. 1529, at para. 15, the onus is on the employer in such cases:
 … to establish that there were acts wilfully carried out by the employee in defiance of clear and unequivocal instructions of a superior or refusal to carry out policies or procedures well known by the employee as being necessary in the fulfillment of the employer’s objectives.
Wilful disobedience must be distinguished from careless faults or minor errors, which can only be grounds for dismissal if the carelessness also amounts to incompetence: Dusconi v. Fujitsu-ICL Canada Inc. (1996), 19 C.C.E.L. (2d) 143, at paragraph 6.
An employer may dismiss an employee for incompetence as this amounts to a repudiation of the employment contract: Rowe v. Keg Restaurants Ltd.,  B.C.J. No. 13.
To dismiss an employee for incompetence, the employer must show, on balance, the following:
- The level of job performance that it required and that the level required was communicated to the employee.
- That it gave suitable instruction to the employee to enable him to meet the standard.
- That the employee was incapable of meeting the standard.
- That there had been a warning to the employee that failure to meet the standard would result in his dismissal (Van Houwe v. Intercontinental Packers Ltd. (1987), 59 Sask.R. 178 (Q.B.)).
- Breach of workplace policies;
- Insubordination; and
In Summary, employees may be “summarily dismissed” without any notice or pay in lieu of notice (i.e. severance) if the employer has just cause.
The question of whether an employer has just cause is a contextual one, which must consider all the circumstances of the alleged misconduct.
Jeff is a lawyer in Toronto who works for a technology startup. Jeff is a frequent lecturer on employment law and is the author of an employment law textbook and various trade journal articles. Jeff is interested in Canadian business, technology and law, and this blog is his platform to share his views and tips in those areas.