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In most cases, employers have the right to end an employment relationship at any time.

In exchange for this flexibility, employers are expected to meet certain obligations on dismissal, including by providing the employee with sufficient notice, pay in lieu of notice, or some combination, to support them financially in finding another job.

Employers are also expected to not dismiss or fire an employee for any reason that relates to human rights and/or concerns relating to harassment or workplace health and safety.

Wrongful dismissal describes a circumstance in which an employer terminates an employee improperly without providing sufficient notice, or the equivalent compensation in place of notice. Wrongful dismissal can also occur when an employee has not been treated in a manner consistent with the laws relating to good faith and fair dealings.

Wrongful dismissal claims are one of the most common employment-related legal issues faced by both employees and employers, and as such, dismissed employees are encouraged to reach out to experienced employment law counsel to assess the fairness of their dismissal.

Wrongful Dismissal and Employee Entitlements

Most employees are unaware of their legal entitlements following the termination of their employment, and as such, in most cases, employees are generally eligible to receive a more substantial termination package than what is initially presented by the former employer.

Termination Without Cause

A termination without cause may result in a wrongful dismissal when an employee does not receive the proper amount of notice or pay in lieu of notice, or applicable severance pay as prescribed under the applicable employment standards legislation, employment contract, or common law. 

Termination With Cause

In Ontario, employees who are dismissed on a “for cause” basis are generally not entitled to receive notice or pay in lieu of notice for the termination of their employment. To justify a just cause termination, an employer will likely be required to demonstrate that the employee engaged in serious misconduct, which is often a high threshold to satisfy.

Where an employer cannot legally establish grounds for just cause dismissal, and demonstrate that the employee engaged in serious misconduct, the employee will be deemed to have been wrongfully dismissed, meaning they can be entitled to substantial support to find another job, in addition to potential other damages, such as that relating to bad faith treatment.

Constructive Dismissal

Constructive dismissal generally occurs when an employer makes a unilateral and fundamental change to the conditions of an employee’s employment and/or acts in a manner that is inconsistent with the intention to be bound by the employment contract that it would be unreasonable for the employee to continue their employment.

While an employer has not formally dismissed an employee, they may be deemed to have acted in a manner that negates the employment contract and/or creates an untenable working situation for the employee, and therefore, the employee is permitted to treat the constructive dismissal as a termination.

Since employers will generally take the position that the employee voluntarily left their employment, and therefore resigned, if a court agrees that the individual has been wrongfully dismissed, then they will be entitled to termination pay (and potentially additional general damages).

What are my entitlements upon wrongful dismissal? 

An employee who does not receive enough notice or pay in lieu of notice can either try to negotiate with the employer or, alternatively, file a claim for wrongful dismissal to recover damages for wrongful dismissal.

The amount of notice or pay in lieu of notice owed to a terminated employee will depend on a number of factors. For example, in assessing an employee’s entitlements, the analysis will generally begin with determining whether the terminated employee had a valid and enforceable employment contract with their employer.

Employment agreements are generally the starting point for an analysis of entitlements for a dismissed employee.  This is because an employment contract may limit an employee’s rights to termination pay, including severance and common law notice.

Where an employment contract, and any enclosed clause relating to termination, are found to be valid and enforceable, an employee’s rights are generally limited to what is prescribed under the applicable employment standards legislation, such as the Ontario Employment Standards Act (the “ESA”). In Ontario, the ESA prescribes an amount of notice that is dependent on the length of service of an employee, to a maximum of eight (8) weeks’ notice. The ESA also provides for severance payments, which can go up to 26 weeks, depending on the size of the employer and the employee’s years of service.

Where termination clauses are found to be invalid and unenforceable, the common law, which is based on court decisions, will generally prevail and will almost always provide the dismissed employee with far greater notice than what is described under the ESA.

What are the Key Takeaways?

Employees have the right to be treated fairly both during employment and after termination. Unless your employment is being terminated for cause, you are generally entitled to notice of termination, pay in lieu of notice, or some combination of to support you financially while you transition to new employment.

An employer’s obligations under employment standards legislation represent the minimum obligations only, and dismissed employees are encouraged to reach out to experienced employment law counsel to review their employment contracts and termination packages to assess whether they are being fairly compensated upon dismissal and, where they are not, to secure the additional payments, including potentially general damages for bad faith treatment.

If you believe that you have been wrongfully dismissed and you are seeking legal advice on the proposed severance package, please contact Toronto employment lawyers, Sultan Lawyers, at 416-214-5111 or via email to mlahert@sultanlawyers.com.


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