What is Wrongful Dismissal?
"Do I have a case for wrongful dismissal?" This page is one attempt to put together a, perhaps much-too-simplified, explanation of what “wrongful dismissal” under Ontario law means.
I will start with this caveat, explaining wrongful dismissal, and more to the point explaining the nuances of any one individual’s situation is simply not possible. My file opening sheet has twenty questions that I always ask, many of which lead to further examination. (For example, one item on my check list is “any possible violation of Human Rights legislation.”)
What Wrongful Dismissal Cases Are and Are Not About
A good starting point for this discussion is to explain what wrongful dismissal cases in Ontario are and are not about.
Let's start here: Firing an employee without any ‘good reason’ is not “wrongful dismissal” under Ontario employment law. Employers are generally permitted to fire employees at any time during the employment relationship, subject only to the requirement to provide "reasonable notice" - more on that in a second. An employee can be the absolute best employee ever and the employer can still legally let the person go. It may not be a wise business decision to let a top performer go, but it's legal.
Unless an employee works in "a federal work or undertaking", (some examples of which include employees of the federal government, banks, railroads, and airlines; see here Making Sense of the Division of Powers in Employment Standards Legislation for a complete review of that topic) or is covered by a collective agreement, and in most cases even if the employee is, (see for example this blog's summary of the right of federally regulated employers to terminate without cause: Terminations without Cause are not Automatically Unjust: Federal Court of Appeal) what wrongful dismissal cases are not about is getting the employee his or her job back. Very few wrongful dismissal cases result in reinstatement. Indeed under the Ontario Employment Standards Act, 2000, reinstatement is generally not even a remedy that a dismissed employee can seek. What that means is if you have been legitimately terminated in the ordinary course of business (see section 104 of the Employment Standards Act, 2000 and the comments in the next paragraph), you cannot sue for your job back.
There are a few, limited cases where the Ontario Ministry of Labour can order an employer to reinstate the employee. Generally, in order to be reinstated, there must be a finding that the employee was fired for exercising or attempt to exercise his or her legal rights under Ontario's Employment Standards Act, 2000, Occupational Health and Safety Act, Human Rights Code, or some other statute. Examples of exercising legal rights under the Employment Standards Act, 2000 include:
- taking maternity, pregnancy or parental leave;
- asking about your rights;
- asking your employer to obey the law;
- making an claim pursuant to the Employment Standards Act, 2000 against your employer; or
- giving information to an Employment Standards Officer who is investigating your employer.
So, if wrongful dismissal cases are not about getting one’s job back, what are they about? Money. Wrongful dismissal cases in Ontario are generally about one thing: getting a dismissed employee as much money as is appropriate to his or her circumstances.
One final, but very important point must be made before leaving this section: with very few exceptions (considered below) even though wrongful dismissal cases are exclusively about money, a dismissed employee does not get money simply because his or her employment was terminated without any good reason.
Defining Reasonable Notice
Let us start from the position that when someone thinks of “severance,” typically what he or she really means is “notice.” Although the Employment Standards Act, 2000 does specifically list both “notice” and “severance” as entitlements on termination of employment, reasonable notice of termination is what the court is typically more interested in.
With the exception of the payment of the minimum amounts prescribed by the Employment Standards Act, 2000, usually the difference between “notice” and “severance” is really just words. (For a full explanation of the difference between “notice” and “severance” see the post: Not All Employees are Entitled to Severance Pay.) When a dismissed employee says that he or she wants more “severance” on termination, and I say that what the employee really wants is more “notice of termination,” what we both agree upon is that what the employee really wants is more money – and whether we label that pot of money “notice,” “severance,” or anything else really does not matter at the end of the day.
As mentioned in the previous section, employers are generally permitted to fire employees at any time during the employment relationship, subject to the requirement to provide “reasonable notice.” Removing the quotation marks around “reasonable notice” in that statement and applying what I just said, here is the most accurate statement I can give of the state of the law in Ontario with respect to termination of employment:
Employers are generally permitted to fire employees at any time during the employment relationship, provided that: (a) they do not do so for an illegal reason; and (b) they give the employee the appropriate amount of time or money when they do so.
What is the appropriate amount of time or money? That depends on a host of factors…
The first question that I typically ask someone who has been fired is whether he or she had an employment agreement with his or her employer.
Employment agreements are important because they might determine the amount of notice to which an employee is entitled on termination. There are a number of factors the court must consider before deciding whether the agreement is, in fact, legally determinative of the amount of notice to which the employee is entitled, and those considerations are simply beyond the scope of this post. For some of the considerations a court will consider, have a look at our topic index on this subject, which is available by clicking this link: Topic Index: Terms in Employment Agreement.
What both employees and employers need to recognize is that simply because there is a contract, that does not always mean that the amount of severance set out in the contract is the amount of severance to which to the employee is entitled. In fact, it usually is not! Also, if the employee does not have a written employment agreement, that does not mean that there is not a contract.
The Minimums Prescribed by the Ontario Employment Standards Act, 2000
Regardless if the employee has a written employment agreement or not, with the exception of employees listed in section 2 of Ontario Regulation 288/01, all Ontario employees, who have been employed for at least three continuous months, are entitled to at least one week of notice per year worked, to a maximum of eight (8) weeks, or an equal payment of money instead. (This number increases in cases where the employer terminates the employment of 50 or more employees at the employer’s establishment in the same four-week period. For more information on mass layoffs see the post Hitting the “Target” with Mass Terminations.)
If the employee was employed by the employer for five years or more and either:
(a) the severance occurred because of a permanent discontinuance of all or part of the employer’s business at an establishment and the employee is one of 50 or more employees who have their employment relationship severed within a six-month period as a result; or
(b) the employer has a payroll of $2.5 million or more,
then the employee is also entitled to “severance.”
With respect to “severance,” provided that an employee is entitled to receive it, the employee is entitled to one week’s salary per year worked for his or her employer to a maximum of 26 weeks.
An employee cannot contract out of those requirements. Therefore, unless an employee falls within one of the exceptions enumerated in Ontario Regulation 288/01, all employees are entitled to at least those amounts on termination.
The failure to provide those minimum amounts would most certainly be “wrongful dismissal.”
Reasonable Notice under the Common Law
As you might infer, “minimums” are just that, minimums. Just as the Employment Standards Act, 2000 prescribes a minimum wage below which an employer may not deviate, the Employment Standards Act, 2000 termination provisions governing notice and severance set out only the minimums below which an employer cannot deviate. However, in the same way that many employees are entitled to more than minimum wage, most employees are also entitled to more than the minimum amounts of notice and severance prescribed by the Employment Standards Act, 2000.
We have now arrived at the heart of every wrongful dismissal case. What is “wrongful” about “wrongful dismissal” is the failure to provide sufficient reasonable notice of termination.
It is important to note that when someone speaks of “notice of termination,” conceptually that person is speaking in units of time. The idea behind notice of termination is: provided the dismissed employee has enough notice of the date upon which his or her employment will end, then with the exercise of reasonable efforts that employee should be able to find a new job before his or her employment at the old job ends, such that the employee will not suffer any loss of income. Accordingly, the question conceptually becomes: how long should it take this dismissed employee to find a new job, which is similar enough to the job from which he or she was dismissed?
The amount of notice to which a dismissed employee is entitled is a function of a number of factors. The factors most frequently recognized by Ontario courts were set out in a case decided in 1960, Bardal v. Globe & Mail,  OWN 253 (HCJ). Those factors are the following:
- the employee’s age;
- the length of time that the employee spent with the employer;
- the character of the employee's employment (i.e. the position held); and
- the availability of similar employment.
With respect to length of employment, readers would be prudent to note that the ‘rule’ that a dismissed employee is entitled to one month’s notice for every year of employment has been expressly and repeatedly rejected as a rule by the Ontario courts. (See, for example Minott v. O'Shanter Development Company Ltd., 1999 CanLII 3686 (ON CA)) A dismissed employee cannot simply take his or her length of service and multiply by one month in order to calculate his or her entitlement on termination. Nor should employers use such a formula. For example, I represented an employee who worked for his employer for only 51 weeks and was awarded four months of notice by the court. For a summary of that case see the post ONSC Awards Four Months Notice to Employee With Less Than One Year of Service.
As mentioned at the start of this post, the range of other factors that must be considered before arriving at a determination of the reasonable amount of notice available to any particular employee is simply too great to cover in one post.
The Duty to Mitigate Damages
If the above were not complicated enough, an employee’s entitlement to receive common law notice of termination is counterbalanced by the requirement of an employee to “mitigate his damages.” The scope of that duty is beyond the scope of this post, and better left to another: Explaining The Duty to Mitigate.
Reasonable Notice Not End of the Equation
Of course I must also point out that the calculation of a dismissed employee’s entitlement to reasonable notice is not the end of the equation either.
Employees terminated in contravention of the Ontario Human Rights Code may be entitled to additional remedies. (Click here for posts about human rights.)
Furthermore, employers that engage in especially bad behaviour with respect to the manner of dismissal may also be punished by the court for their conduct. (See my posts about manner of dismissal.)
All of which is to say that the amount of money to which a dismissed employee may be entitled following termination is complicated.
I would be happy to be of service to you with respect to this issue or any other labour and employment law question.