After-acquired cause for dismissal

Validity of termination settlement when just cause discovered later
By Meghan McCreary
|Canadian Employment Law Today|Last Updated: 07/06/2016

Question: When can or can't after-acquired cause be used to reduce notice obligations?

Answer: An employer may dismiss an employee without just cause for any non-discriminatory reason, as long as it provides reasonable notice of the dismissal, or pay in lieu of notice. Sometimes a situation arises where an employer has dismissed an employee without cause, but then discovers after the dismissal that there was actually just cause to terminate the employment relationship.

The doctrine of “near cause,” which years ago was relied upon by employers to reduce notice obligations upon dismissal, is no longer accepted by Canadian courts. It's now “all or nothing:” the employer either has just cause and no obligation to give notice of dismissal, or it does not have cause and must honour its notice obligations. As such, if “after-acquired cause” is discovered after dismissal, it may be relied upon to entirely extinguish the requirement to provide notice or pay in lieu of notice, but it cannot be used to reduce notice obligations.