Defining “Cause” Too Broadly Invalidates CIBC’s Termination Provisions

An employment contract cannot deprive an employee of minimum statutory entitlements merely by defining “cause” more broadly than the law permits.

That principle defeated CIBC’s termination provisions in Ghazvini v. Canadian Imperial Bank of Commerce, 2026 ONCA 766, released October 29, 2026.

The employees had been dismissed without cause. Nevertheless, the defective definition governing dismissal for cause rendered the termination provisions unenforceable as a whole, leaving the employees entitled to common law reasonable notice.

The Contractual Definition

CIBC’s agreement permitted dismissal without notice or pay in lieu for “Cause.” Its definition included dishonesty, fraud, breach of trust, unsatisfactory performance, breach of its Code, failure to maintain required qualifications, unsatisfactory pre-employment screening, inaccurate hiring information and breach of any other employment term.

The provision also included acts or omissions recognized as cause under applicable law. It then denied notice, termination pay, severance and other damages where contractual cause existed.

The difficulty was that the listed events did not necessarily establish just cause under the Canada Labour Code.

The Statutory Standard Controls

The Code requires notice unless dismissal is for just cause. Although the statute does not define that expression, its meaning is supplied by the law, not by an employer’s contractual label.

At paragraph 6, the Court cited the author’s Wrongful Dismissal, § 5:1, for the principle that just cause involves misconduct going to the root of the employment relationship.

An employer cannot avoid minimum standards by declaring that lesser misconduct constitutes cause and then attaching a complete forfeiture of statutory entitlements to that definition.

Dishonesty Is Not Automatically Just Cause

The Court’s example at paragraph 9 was dishonesty.

Dishonesty may justify summary dismissal, but it does not invariably do so. Under McKinley v. BC Tel, 2001 SCC 38, the circumstances and seriousness of the conduct must be assessed.

CIBC’s wording was broad enough to capture dishonest conduct falling short of that threshold.

The same concern arises where a contract treats unsatisfactory performance or any breach of an employment term as automatically eliminating statutory rights. Those circumstances may warrant corrective action or termination, but they do not necessarily justify dismissal without minimum statutory payments.

The distinction is between conduct that permits an employer to end employment and conduct sufficiently serious to eliminate the employee’s statutory termination entitlements.

Listing Lawful Cause Did Not Cure the Broader Definition

At paragraph 10, the Court considered the inclusion of acts or omissions recognized as cause under applicable law.

That reference did not confine the entire definition to the legal standard. It appeared within an inclusive list that contemplated additional grounds for dismissal without entitlements.

The drafting therefore expanded the grounds on which CIBC purported to deny statutory protection, rather than making statutory just cause a condition of that denial.

Why the Clause in Baker Survived

The Court distinguished Baker v. Van Dolder’s Home Team Inc., 2026 ONCA 568.

In Baker, an overly inclusive cause provision nevertheless preserved minimum statutory compensation and entitlements. The employee could therefore be dismissed for contractual cause without necessarily losing amounts required by legislation.

CIBC’s cause provision contained no equivalent protection. It expressly denied those entitlements.

The lesson is not that every contractual definition of cause is prohibited. An employer may identify conduct warranting termination. It must not attach a loss of minimum statutory rights unless the applicable statutory exception is actually satisfied.

General Compliance Language Was Insufficient

CIBC also relied on a separate legislative-compliance provision.

At paragraph 13, the Court upheld the conclusion that this provision did not cure the breach, citing Rossman v. Canadian Solar Inc., 2019 ONCA 992.

The distinction from Baker is important. Specific wording preserving minimum entitlements within the cause arrangement succeeded there. CIBC’s separate compliance provision did not repair its express denial.

The agreement must be assessed as drafted. A general statement of legislative compliance is not necessarily an answer to a specific provision authorizing a contrary result.

The Employees Were Dismissed Without Cause

CIBC had not relied on cause when dismissing these employees. That did not make the defective provision irrelevant.

At paragraph 5, the Court expressly applied Waksdale v. Swegon North America Inc., 2020 ONCA 391 to federally regulated employment agreements. It rejected CIBC’s argument that the approach was confined to provincially regulated employment.

The termination provisions had to be assessed as a whole. Because the cause provision breached minimum standards, the contractual termination limitation failed.

The Court therefore did not need to decide whether the without-cause provision would have been independently enforceable.

Drafting Considerations

The safest approach is to connect any denial of statutory entitlements directly to the applicable statutory threshold.

If an agreement identifies misconduct that may lead to termination, it should distinguish that managerial right from the separate question of whether notice, termination pay, severance or other minimum entitlements remain payable.

A list of misconduct should not make every listed event an automatic basis for forfeiture. If contractual cause is defined more broadly than statutory just cause, minimum statutory entitlements must remain protected.

Ghazvini illustrates the consequence of overlooking that distinction. A definition intended to strengthen the employer’s position instead defeated its contractual limitation on common law notice—even in a dismissal where cause was never alleged.