Termination With Cause: So… You Want to Fire Someone?

There’s a moment most small business owners hit at some point. An employee does something… not so great.

Maybe they:

• Messed up something super important

• Had a bad attitude with a client

• Ignored your instructions (again)

• Said something that went against policy

And the immediate reaction is: “That’s it. We’re firing them with cause.”

We get it. Truly.

But “with cause” is actually a very high bar. Like, way higher than you think. And getting it wrong? That’s where things can get expensive.

What “termination with cause” actually means

Firing someone “with cause” means:

👉 You are terminating them with zero notice and zero severance.

Which is why the legal system treats it very seriously. In Canada, this is often called “just cause”. And it’s typically reserved for very serious things like:

• Theft or fraud

• Serious harassment or violence

• Repeated misconduct after multiple clear warnings

Not:

• Poor performance

• Having a bad attitude

• One-off mistakes (even if they’re painful)

The biggest misconception (and why it causes problems)

Most employers think: “The employee did something wrong = we have cause.”

In reality, it’s more like: “Can we prove this behaviour was serious enough to justify immediate termination with absolutely no compensation?”

That’s a completely different question, with a much higher bar. And in most cases, the answer is… no.

So, basically: cause is rare. Like, really rare.

Even in situations where the employee clearly messed up, courts will often say: “Did you give them a chance to fix it?" This is where something called progressive discipline comes in.

Progressive discipline (aka: the step everyone skips)

If you’re trying to rely on termination with cause in Canada, courts expect to see a very clear pattern.

Usually something like:

• Clear feedback

• Verbal warning

• Written warning

• Final warning or performance plan

• Only then... termination

This is what’s called progressive discipline. And to be clear, this isn’t just a “with cause” thing.

👉 This is best practice for any termination. You basically never want an employee sitting in a termination meeting thinking: “Huh… this is the first I’m hearing of this?”

But here’s the reality

Most small businesses don’t do this perfectly. Actually… most don’t even come close.

We see things like:

• Feedback being hinted at, but never clearly said

• Managers avoiding those tough conversations

• Little to no documentation

• Issues building quietly until something “big” happens

And then suddenly: “Okay, now we want to terminate with cause.”

From a business perspective, that feels justified. But from a legal perspective, it can look like:

• You didn’t address the issue early

• The employee wasn’t given a fair chance

• The termination may be masking another reason

That’s where disputes start...

“But this was really bad…”

Totally fair. There are situations where cause is appropriate. But the question isn’t just: “Was this bad?”

It’s: “Was this bad enough that no reasonable employer would continue the employment relationship, even with warnings?”

What happens if you get it wrong?

This is the part that matters most. If you terminate with cause and it doesn’t hold up:

👉 You still owe severance

👉 Often way more than you would have paid upfront

👉 Plus legal costs, time, and a lot of stress

When someone is terminated with cause, they get nothing. So they’re much more likely to challenge it. And courts look at these cases very closely because of that. Plus if there’s any doubt at all, things often lean in the employee’s favour.

So the attempt to “save money” can backfire pretty quickly.

Quick note on Canada vs. U.S.

🇨🇦 Canada

Cause = very strict, high threshold. If you don’t meet it, you owe notice or severance, often more than expected.

🇺🇸 United States

You’ll hear “at-will employment,” which gives more flexibility. But even there, “with cause” still matters when it comes to:

• Risk of wrongful termination claims

• Discrimination or retaliation issues

• Internal consistency and documentation

So while it may seem easier than Canada, it’s still not a free-for-all. And in the U.S., employees are generally more likely to pursue legal claims when something feels off.

What to do instead

If you’re dealing with a tough employee situation:

1. Pause before calling it “cause”

This one decision can change everything financially and legally.

2. Document what’s actually happening

Not in a scary HR way. Just simply jot down what happened, when, and what was communicated.

3. Give clear, direct feedback

A lot of issues come down to: “The employee didn’t realize how serious it was.”

4. Use warnings (when appropriate)

Even one or two well-communicated warnings can significantly reduce your risk.

5. Consider a without cause exit instead

⚠️ Honestly, sometimes the cleanest, lowest-risk option is to simply end the relationship respectfully and move on. Even if it means paying some severance.

The bottom line on termination with cause in Canada

“With cause” feels like the obvious answer when someone screws up.

But in reality: it’s the exception, not the rule.

And using it incorrectly is one of the fastest ways to create a bigger problem than the one you started with.

If you’re in the middle of one of these situations

That “what do we do with this person?” moment? That’s exactly where many of our clients are when they reach out.

We can help you:

• sanity check whether cause is actually on the table

• understand your risk

• and choose the cleanest path forward

Without making it overly complicated. Feel free to reach out today to chat it through.