Being dismissed from a job can be stressful and confusing, particularly when an employee is unsure whether their employer has followed the law or provided appropriate compensation. In Ontario, employees may have rights under the Employment Standards Act, 2000 (ESA), their employment contract and the common law.
The term “wrongful dismissal” has a specific legal meaning. It generally refers to a situation where an employer terminates an employee’s employment in breach of the employment contract or applicable legal requirements. It does not simply mean that an employee believes the termination was unfair.
Understanding the difference between wrongful dismissal, termination without cause and the minimum standards established by Ontario’s employment legislation can help employees determine what questions they may need to address after losing their job.
What Is Wrongful Dismissal
Wrongful dismissal generally occurs when an employer terminates an employee without providing the notice or compensation required under the employee’s employment contract or applicable common-law principles.
An employer may have the ability to terminate an employee without alleging misconduct. However, the employer may still have obligations regarding notice or compensation.
The amount an employee may be entitled to can depend on several factors, including the terms of the employment contract, length of employment, position, compensation, age and other circumstances.
A wrongful dismissal claim is therefore not necessarily about whether an employee deserved to lose their job. It is often about whether the employer provided the compensation or notice required when ending the employment relationship.
Is Being Fired Without Cause Wrongful Dismissal
Being dismissed without cause does not automatically mean that an employer has committed wrongful dismissal.
Ontario employers can generally terminate employment without alleging cause, provided they comply with applicable contractual and legal obligations. In many cases, the dispute concerns whether the employee received the appropriate notice or compensation.
An employee who is dismissed without cause may receive working notice, termination pay or another form of compensation. The employee’s employment contract can also play an important role in determining what the employer is required to provide.
If the employer provides less than the employee is legally entitled to receive, the circumstances may give rise to a wrongful dismissal claim.
What Is Termination for Cause
Termination for cause is different from termination without cause.
When an employer alleges that an employee was terminated for cause, the employer is generally asserting that the employee’s conduct was serious enough to justify ending the employment without providing the notice or compensation that would otherwise be required.
Examples of conduct that an employer might rely upon can include serious misconduct, dishonesty, insubordination or other significant breaches of the employment relationship.
However, an employer’s decision to characterize a termination as “for cause” does not necessarily mean that the employee has no entitlement to compensation. Whether cause was properly established can depend on the facts and circumstances.
Employees who have been terminated for cause and believe the allegation is incorrect may wish to obtain legal advice before accepting the employer’s position.
How Employment Contracts Affect Wrongful Dismissal
An employee’s employment contract can be one of the most important documents in a wrongful dismissal dispute.
Some employment contracts contain termination clauses that attempt to limit an employee’s entitlement when employment ends. The wording of these clauses can be important because an unenforceable provision may not have the legal effect the employer intended.
Employment contracts can also contain provisions addressing compensation, bonuses, commissions, benefits, probationary periods and other terms that may become relevant after termination.
Employees should therefore keep a copy of their employment agreement and any amendments they received during their employment. A lawyer reviewing a potential wrongful dismissal claim will often need to examine these documents.
What Is Common Law Reasonable Notice
When an enforceable contractual termination provision does not determine an employee’s entitlement, common-law reasonable notice may become relevant.
Reasonable notice is not calculated using a single formula. Courts can consider a range of circumstances when determining an appropriate notice period.
Factors that may be relevant include:
The employee’s length of service
The employee’s age
The nature and seniority of the position
The employee’s compensation
The availability of comparable employment
The circumstances of the employment relationship
These factors are sometimes discussed as part of the Bardal factors, based on the Ontario case law concerning reasonable notice.
Because the appropriate notice period depends on the circumstances, employees should be cautious about relying on simple online formulas that claim to determine an exact entitlement.
Statutory Notice and Common Law Notice
Ontario’s ESA establishes minimum employment standards, including minimum notice requirements in many termination situations.
Common-law reasonable notice can potentially provide a greater entitlement than the statutory minimum. However, the interaction between the ESA, an employment contract and common-law principles can be complicated.
An employer may offer an amount based on the minimum requirements of the ESA, while an employee may have questions about whether their contract or common-law rights provide for more.
This is one reason why the amount written in a termination letter should not necessarily be assumed to represent the employee’s complete legal entitlement.
What Happens to Benefits After a Dismissal
Compensation following dismissal may involve more than salary or wages.
Employees may have questions about health and dental benefits, insurance coverage, pension contributions, bonuses, commissions, vacation pay and other components of their compensation.
The treatment of these benefits can depend on the employment agreement, applicable legislation, the employer’s policies and the circumstances of the termination.
An employee reviewing a termination package should therefore consider the entire compensation arrangement rather than looking only at the proposed lump-sum payment.
What Should You Do After Being Wrongfully Dismissed
Employees who believe they have been wrongfully dismissed should consider taking several practical steps.
First, keep copies of important employment documents. These may include the employment contract, amendments, termination letter, pay statements, bonus information, performance reviews and relevant correspondence.
Second, carefully review any termination or severance package provided by the employer. Pay attention to proposed payments, benefits, deadlines and any release that the employer asks you to sign.
Third, avoid signing a release before understanding its terms. A release may limit an employee’s ability to pursue additional compensation or other legal claims.
Finally, consider obtaining legal advice promptly if you are uncertain about your rights. Employment-related claims can be subject to deadlines, and waiting too long may affect an employee’s options.
Can You Negotiate After a Wrongful Dismissal
In some situations, employees and employers can resolve a termination dispute through negotiation.
An employer may provide an initial termination or severance offer, and an employee may have grounds to seek different terms depending on their potential legal entitlement and the circumstances of the termination.
The strength of a negotiation can depend on factors such as the employee’s contract, length of service, compensation, position, age and potential common-law entitlement.
Before negotiating, an employee should understand what they may be giving up by accepting the employer’s proposal. This can help them make a more informed decision about whether the offer should be accepted, rejected or negotiated.
How Much Is a Wrongful Dismissal Claim Worth
There is no single amount that applies to every wrongful dismissal claim.
Potential compensation can depend on the employee’s contractual rights, common-law reasonable notice, statutory minimums and the specific circumstances surrounding the termination.
An employee’s salary is only one factor. Benefits, bonuses, commissions and other forms of compensation may also be relevant.
For this reason, online calculators or rules of thumb should be treated as general information rather than a definitive assessment of an individual’s legal entitlement.
Can You Be Fired Without Warning in Ontario
An employer may be able to terminate an employee without providing advance working notice, but that does not necessarily mean the employee is entitled to no compensation.
Depending on the circumstances, an employer may provide termination pay instead of having the employee work through a notice period.
The amount required can depend on the ESA, the employment contract and potentially common-law principles.
An employee who is told to leave immediately should therefore obtain the termination documents and determine what compensation is being offered before assuming that the employer’s decision is legally sufficient.
Wrongful Dismissal and Constructive Dismissal
Wrongful dismissal and constructive dismissal are related but distinct concepts.
Wrongful dismissal generally concerns an employer ending the employment relationship in breach of the employee’s contractual or legal rights.
Constructive dismissal can arise in circumstances where the employer does not expressly terminate the employee but makes a significant unilateral change to the employment relationship, or otherwise creates circumstances that may legally amount to a dismissal.
Examples can potentially include significant changes to compensation, duties or other fundamental terms of employment.
Constructive dismissal cases can be particularly fact-specific. An employee should be cautious about resigning in response to a workplace change without first understanding the potential legal consequences.
Frequently Asked Questions About Wrongful Dismissal in Ontario
What qualifies as wrongful dismissal in Ontario?
Wrongful dismissal generally involves an employer ending an employment relationship without providing the notice or compensation required under the applicable employment contract or common-law principles.
Whether a particular termination is wrongful depends on the employee’s circumstances and the terms governing the employment relationship.
Can you sue your employer for wrongful dismissal?
An employee may have legal options when an employer has failed to provide the compensation or notice required by law or contract. The appropriate course of action depends on the circumstances.
Some employment disputes are resolved through negotiation or other forms of settlement rather than proceeding to court.
How long do you have to make a wrongful dismissal claim in Ontario?
Employment-related claims can be subject to limitation periods and other deadlines. The applicable deadline can depend on the type of claim and the circumstances.
Employees who believe they may have a wrongful dismissal claim should avoid assuming that they have unlimited time to take action.
Can an employer fire you without cause in Ontario?
An employer can generally terminate employment without alleging misconduct, subject to applicable contractual and legal obligations.
A termination without cause may still require the employer to provide appropriate notice or compensation.
Can an employer fire you for no reason?
An employer does not necessarily have to provide an employee with a detailed explanation for a termination without cause. However, the employer may still have obligations to provide notice or compensation.
There are also circumstances in which a termination may be unlawful for reasons unrelated to notice, such as prohibited discrimination or reprisal.
What if my employer says I was fired for cause?
If an employer says an employee was terminated for cause, the employer is taking the position that serious misconduct or another legally sufficient reason justified the termination without the notice or compensation that might otherwise apply.
Employees who disagree with the allegation should consider obtaining legal advice before accepting the employer’s position or signing a release.
Should I sign a termination agreement?
Employees should carefully review any termination agreement or release before signing it. Signing can affect an employee’s ability to pursue additional compensation or other legal claims.
If you are uncertain about what you are being asked to sign, consider having the document reviewed by an employment lawyer.
Can I negotiate my termination package?
In some circumstances, a termination package can be negotiated. Whether negotiation is appropriate depends on the employee’s potential legal entitlements and the circumstances of the termination.
An employee should understand the potential value of their claim before deciding whether to accept or negotiate an offer.
Get Advice About a Potential Wrongful Dismissal
Losing your job can create significant financial and professional uncertainty. Understanding the terms of your termination and the compensation being offered can help you make informed decisions about what to do next.
EmploymentLawyerToronto.ca provides employment law information and legal services for employees dealing with workplace issues in Ontario. If you have been dismissed and have questions about your termination, employment contract or severance package, consider speaking with an employment lawyer about your circumstances.
This page provides general information about Ontario employment law and is not legal advice. Employment law can depend on the specific facts of each situation.