[The information on this page applies only to non-unionized employees in Ontario, working in provincially regulated industries. It is for informational purposes only and is not legal advice, which cannot be given without consideration of your individual circumstances.]
What is wrongful dismissal?
Many employees may believe that wrongful dismissal is when an employer dismisses them for the wrong reasons. However, generally, an employer can terminate an employee for any reason or no reason, provided that that reason does not contravene legislation such as the Human Rights Code.
However, employees cannot usually be terminated without notice or pay in lieu of notice, unless that employee has engaged in serious misconduct. So, a wrongful dismissal is one that does not respect an employee’s legal rights upon termination, such as the right to notice of termination.
How much compensation can I receive for a wrongful dismissal?
The amount of notice an employee is owed on termination, and thus an amount they may claim in an action for wrongful dismissal, is based on the two primary sources of law that govern an employment relationship:
- The Employment Standards Act (ESA)
- The employment contract and the common law
The ESA is the law that sets employments standards in Ontario. Under that law, employees who have been continuously employed for at least three months are entitled to notice in the amount of one week per year or partial year of service, up to a maximum of 8 weeks’ pay. If you have worked for your employer for at least five years, and your employer meets other requirements, you may also be entitled to severance pay under the ESA in the amount of one week per year of service up to 26 weeks of severance pay.
This is the minimum termination pay to which an employee is entitled. However, many employees may be entitled to greater amounts either under their employment contract or the common law.
The employee’s contract might spell out how much notice is owed. Where it does not, courts will consider several factors, such as:
- Length of service;
- Character of employment; and
- Availability of similar employment
Applying these factors, courts determine an employee’s entitlement to “reasonable notice” that approximates the amount of time an employee would need to find new employment. This amount is generally capped at 24 months, though in exceptional circumstances, courts will go higher. An employment lawyer can help determine what your reasonable notice period may be.
Depending on the circumstances of your termination, you may be entitled to other compensation for a wrongful dismissal, including damages for bad faith in the manner of dismissal or punitive damages.
My contract says I am limited to ESA minimums. Is that all I can get?
Possibly. The answer to this question depends on the specific words in your contract. If the termination clause in your contract is valid and limits your entitlements to ESA minimums, that may be all your employer is required to give you. However, many employment contracts contain invalid termination clauses.
For example, some employment contracts state that an employee can be dismissed for “just cause” without the obligation to give notice. Courts have ruled that these clauses are invalid because they would deprive employees of notice under the ESA for “just cause”, even though the ESA requires a higher standard to terminate an employee without notice. In those situations, the whole termination clause is deemed invalid, even if an employee is terminated without cause. An employment lawyer can help interpret your contract and determine if you have a valid termination clause.
Am I entitled to benefits during my notice period?em
Under the ESA, benefits must be continued during the notice period. During the common law notice period, benefits must also be continued, unless the contract clearly states otherwise.
Do I need to look for work after a wrongful dismissal?
Yes. While your entitlements under the ESA are not dependent on you looking for work, any entitlements under your contract or the common law are subject to your duty to mitigate, which means you have to look for work and, if you find work, your damages will be reduced. However, if you negotiate a lump sum severance package, you may not have to worry about mitigation.
Do I need to sign a release to obtain a severance package?
If your employment is terminated and the employer only offers the minimum entitlements under the ESA, you are not required to sign a release. Employers cannot withhold statutory termination pay until you sign a release. However, if an employer is offering you more than what the ESA requires, they will often ask you to sign a release, committing that you won’t take any legal action against them. Employees are encouraged to review a severance package with a lawyer before signing, to make sure that the compensation is in line with what they are entitled to and to make sure the package is not depriving them of any legal rights.
What should I do if I’ve been wrongfully dismissed?
If your rights under the ESA have been violated, you can enforce them through an online complaint to the Ministry of Labour. This can help you get termination pay, severance pay, and any unpaid wages. However, the Ministry of Labour cannot enforce any other rights an employee may have, including reasonable notice under the common law, human rights damages, or damages for bad faith in the manner of dismissal.
An employment lawyer can help you assess the compensation you may be owed and negotiate a termination package with your employer. If a settlement cannot be reached, a lawyer can help you file a lawsuit to enforce your rights in court.
Our Experience with Wrongful Dismissal
The employment lawyers at RavenLaw LLP have advised and represented countless workers in claims for wrongful dismissal throughout Ontario. If you believe that you have been wrongfully dismissed, feel free to contact our employment lawyers at RavenLaw LLP to assess the viability of your wrongful dismissal claim, and to navigate the options towards the resolution you are seeking.