Wrongful dismissal claims are one of the most common employment-related legal issues employers will face. A termination must be carefully undertaken and should not be carried out without guidance from a knowledgeable employment lawyer. Proceeding without the proper advice can significantly increase an employer’s legal and financial risks and can result in a wrongful dismissal claim from a departing employee.
If you are thinking of terminating an employee or ending a contractual relationship with a freelancer or other contractor, contact the Toronto employment lawyers at Sultan Lawyers. We have many years of collective experience advising employers of all sizes and across all sectors about their obligations during the termination process. With our help, you can ensure you are complying with the law, minimizing your risk, and protecting yourself and your organization from potential legal disputes stemming from a termination.
Provincially-regulated employers in Ontario are subject to the provisions of the Employment Standards Act. Different legislation applies to federally-regulated employers (banking, radio and television, telecommunications, and similar). The Act provides legal protection to employees and outlines various obligations that an employer must comply with during a termination.
The most important obligations that an employer must meet during a termination are those related to notice, termination, and severance pay.
Unless an employee is being terminated for cause, or an employee can be considered an independent contractor, employees who have been terminated are entitled to notice of termination (or pay in lieu of that notice, i.e. termination pay). The amount of notice required will depend on the length of time the employee worked for the organization and is calculated as follows:
| Length of Employment | Notice Required |
| Less than 1 year | 1 week |
| 1 year but less than 3 years | 2 weeks |
| 3 years but less than 4 years | 3 weeks |
| 4 years but less than 5 years | 4 weeks |
| 5 years but less than 6 years | 5 weeks |
| 6 years but less than 7 years | 6 weeks |
| 7 years but less than 8 years | 7 weeks |
| 8 years or more | 8 weeks |
These obligations under the Act represent only the minimum notice or pay that an employer must provide a departing employee. The common law (i.e. history of court decisions) recognizes that departing employees are generally entitled to far more notice than this minimum legislated amount and have often awarded much longer notice.
A carefully worded employment contract can limit an employer’s financial obligation towards a terminated employer while still providing that employee with a fair termination package or notice.
In certain circumstances, employers must also provide terminated employees with severance pay, in addition to termination pay. This is only applicable where the terminated employee had worked for the employer for at least five years, and where the employer has an annual payroll of at least $2.5 million.
Severance pay is based on the number of years and months an employee was employed, up to a maximum of 26 weeks’ pay. It can often exceed termination pay.
In addition to ensuring that a terminated employee is provided with sufficient notice of termination, pay in lieu of that notice, and severance, employers must also consider many other factors when letting someone go.
Where an employer acts in bad faith while carrying out a termination, the departing employee may be entitled to damages (i.e. a financial award) in addition to any termination pay or severance pay owing to them.
Bad faith by an employer can include dismissing someone in an unprofessional manner, misrepresenting the reason for the employee’s departure, attacking the departing employee’s reputation before, during or following the dismissal, or wrongfully accusing an employee of serious misconduct and dismissing them for cause.
Bad faith damages can be significant. Employers are advised to always contact an employment lawyer before carrying out a termination to ensure that it is done the right way and to minimize any potential financial liability.
In some cases, serious misconduct by an employee can be grounds to terminate them for cause. In such cases, an employer is not obligated to provide the departing employee with any notice of termination, termination pay, severance pay, or other compensation.
Misconduct by an employee that can result in a just cause dismissal includes:
Dismissing someone for cause will more often than not result in a wrongful dismissal claim. Employers considering a just cause termination should always consult with an employment lawyer before taking any action.
At Sultan Lawyers in Toronto, our forward-thinking and strategic employment lawyers regularly advise employers across the province on best practices in carrying out a termination. We are relied upon by a wide range of Canadian and global companies to provide strategic advice, and, where necessary, a vigorous defence of our clients’ interest to ensure that they are protected. We help employers ensure a departing employee receives everything they are legally entitled to while managing an employer’s risk and limiting their liability. Contact us online or at 416-214-5111 for a consultation.
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