If followed, a recent Ontario case could result in the elimination of many specific penalty clauses in employment contracts. A specific penalty clause states that if an employee engages in a specific behaviour then the employee agrees s/he can be terminated for just cause without any notice or termination pay in lieu of this notice.
In Render v ThyssenKrupp Elevator (Canada) Limited Group, the Ontario Court of Appeal clarified the threshold to establish willful misconduct under the Ontario Employment Standards Act, 2000 and provided guidance on how sexual harassment should be assessed in the workplace. Importantly, the Court found that while a single incident of inappropriate touching did not amount to willful misconduct as it was not preplanned, the employee's dismissal for cause was a proportionate response.
Terminating an employee is tough. The conversation in which the employer provides the employee with notice of termination can be awkward. Given how difficult terminations are, for both the employer and the employee, courts hold employers "to an obligation of good faith and fair dealing in the manner of dismissal."