General Principles

The Ontario Court of Appeal described the circumstances when an employee may be terminated for just cause in its seminal decision Port Arthur Shipbuilding Co.1 finding that an employee may be terminated for cause if he or she is “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 analytical approach used by a court when determining whether an employer has just cause to dismiss an employee was set out in McKinley v. BC Tel.,2 a decision of the Supreme Court of Canada.  In McKinley, the Court held that courts should apply a “contextual” approach when assessing whether an employer has cause to terminate an employee’s employment.  It is a fact-based inquiry.  Although McKinley considered the case of an employee dismissed for dishonesty, subsequent decisions have applied the reasoning to all cases where an employer has alleged that it has cause to dismiss an employee.

Justice Iacobucci, writing for the Court in McKinley, described the contextual approach at paragraphs 48 and 49 as follows:

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