Swearing at the Boss Can End Your Severance: Ontario Court of Appeal Upholds Just Cause in Warkentin

Selling your business and staying on as an employee is a common arrangement, and it is also a common source of conflict. In late October 2026, the Court of Appeal for Ontario dismissed just such a case, 2551965 Ontario Ltd. v. Warkentin, 2026 ONCA 763, upholding a just-cause dismissal of a founder who became an employee after selling his brokerage. The decision is a practical lesson in what just cause means, when a delay in firing becomes condonation, and how expensive a lost wrongful dismissal case can get.

What happened

Harold Warkentin founded Cabin Country Realty Ltd. in Kenora, Ontario around 1990. He sold the business in December 2016 for $200,000, subject to adjustments, and the purchaser agreed to keep employing him as a real estate agent on an 80 percent commission basis. The trial decision, 2024 ONSC 4876, sets out what went wrong.

In April 2017, a dispute arose over a property listing. Mr. Warkentin drove to the office and, as the trial judge found, opened the confrontation by swearing at the new owner and threatening to hit him if he ever spoke to him that way again. When directed to apologize the next day, he did not. The trial judge, Justice F.B. Fitzpatrick, also found that Mr. Warkentin left insulting comments about colleagues in the brokerage's internal database, describing them as unprofessional and inappropriate, and that he arranged for a client's listing to go to a competing brokerage while misleading the client about who was representing him.

The employer did not fire him right away. It terminated his employment in October 2017, roughly six months after the April confrontation.

What the courts decided

The employee sued for wrongful dismissal. He lost at trial, and the Court of Appeal has now dismissed his appeal.

The trial judge applied the well-established three-step analysis from the Dowling and Hucsko line of cases: look at the nature and extent of the misconduct, consider the employee and the employment relationship, and ask whether the misconduct is reconcilable with continued employment. Justice Fitzpatrick concluded that the threats, the insulting workplace communications, and the conduct around the competing listing amounted to an irreparable breakdown of the relationship.

Two points from the appeal matter most to everyday readers.

First, the Court of Appeal rejected the argument that the employer condoned the misconduct by waiting until October to act. Ordinarily, an employer that knows about serious misconduct and keeps the employee on for a considerable time risks being found to have accepted it. Here, the roughly six-month delay was reasonable in context: it was the first sales season under the new ownership, the employee's continued involvement mattered to the business, and there were further incidents in the meantime, including the database comments and the competing-listing transaction.

Second, the Court rejected the argument that a separate culminating incident was required before termination. Even if one were needed, the Court found there was one: at the October meeting, before being terminated, the employee acknowledged that the parties no longer trusted one another.

The trial judge also found the conduct amounted to wilful misconduct or wilful neglect of duty within the meaning of the Employment Standards Act regulation, which affects statutory entitlements. As a result, the wrongful dismissal claim failed entirely.

The practical rules to take away

• Swearing at your manager once, in isolation, does not automatically create just cause. Neither court adopted such a rule. Context decides, including the employee's role, the history, and the pattern of conduct.
• A pattern matters more than a single outburst. In Warkentin, the threat, the refusal to apologize, the database insults, and the competing-listing conduct added up.
• Delay is not automatically condonation. An employer may be able to explain a delay by business context and ongoing incidents, though each case turns on its facts.
• Just cause is a high bar. Where an employer cannot prove it, the employee is generally entitled to reasonable notice. Here, the trial judge assessed the notice period at three months, but awarded nothing because just cause was made out.
• Litigation risk is real. The employee was ordered to pay $80,657.12 in trial costs (2024 ONSC 6662) after rejecting settlement offers of $100,000 and later $110,000, and the Court of Appeal added $15,000 in costs of the appeal.

What this means for you

If you are an employee, the message is that conduct, not title, defines the employment relationship. Selling your business means accepting that someone else is now in charge, and a court may treat abuse, threats, and working against your employer as grounds to lose both common law notice and statutory entitlements.

If you are an employer, Warkentin is a reminder to document incidents as they happen, to consider context before terminating, and to understand that a delay can be explained but rarely forgotten. What a court may accept in one case it may reject in another.

Neither decision guarantees any outcome in a different workplace dispute. Every case turns on its own facts, its own evidence, and the applicable notice rules.

If you are facing a termination for cause, or you are an employer dealing with serious workplace misconduct, JSR Immigration and Legals can assess your situation. See our employment law services page, or contact us at (647) 286-4266 or info@jsrlegals.ca.

This post is general information, not legal advice, as of November 2, 2026. For advice on a specific matter, please contact JSR Legals.

Sources

• 2551965 Ontario Ltd. v. Warkentin, 2026 ONCA 763 (CanLII): https://www.canlii.org/en/on/onca/doc/2026/2026onca763/2026onca763.html
• 2551965 Ontario Ltd. v. Warkentin, 2024 ONSC 4876 (CanLII): https://www.canlii.org/en/on/onsc/doc/2024/2024onsc4876/2024onsc4876.html
• Employment Standards Act, 2000 (e-Laws): https://www.ontario.ca/laws/statute/00e19

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