What Is Wrongful Dismissal?
In Ontario, wrongful dismissal occurs when an employer terminates an employee without providing adequate notice or pay in lieu of notice as required by law. It is important to understand that in Ontario, most employment is "at will" in the sense that employers can terminate employees without cause -- but they must provide proper notice or compensation when they do so.
Wrongful dismissal does not necessarily mean your employer fired you for an illegal reason (though that can also happen). It means your employer did not follow the legal requirements when ending your employment. This is a critical distinction that many workers, especially newcomers to Canada, do not fully understand.
Termination With Cause vs. Without Cause
Termination Without Cause
An employer in Ontario can fire you for almost any reason -- or no reason at all -- as long as they provide you with adequate notice or pay in lieu of notice. This is called termination without cause. It is perfectly legal, provided the employer meets their obligations regarding notice and severance.
Termination With Cause
Termination with cause (also called "just cause") is when an employer fires you for serious misconduct -- such as theft, fraud, insubordination, or repeated violations of company policy after warnings. When an employer has just cause, they are not required to provide any notice or pay in lieu of notice.
However, the legal threshold for just cause is extremely high in Ontario. Employers frequently claim they have just cause for termination when they do not. If your employer has fired you "for cause," you should seriously consider consulting with an employment lawyer to determine whether the claim of just cause is legitimate.
Your Entitlements Upon Termination
ESA Minimums
Under the Employment Standards Act, 2000 (ESA), your employer must provide you with minimum notice of termination based on your length of service, ranging from 1 week (for employment of less than 1 year) to 8 weeks (for employment of 8 years or more). Instead of working during the notice period, your employer can provide you with pay in lieu of notice.
If you qualify for severance pay under the ESA (you have worked for the employer for 5 or more years and the employer has a payroll of $2.5 million or more), you are entitled to one week of pay per year of service, up to a maximum of 26 weeks.
Common Law Reasonable Notice
Here is where things get very important: the ESA sets only the minimum standards. Under the common law (judge-made law developed through court decisions), you may be entitled to significantly more notice or pay in lieu of notice. This is often referred to as "reasonable notice."
The common law concept of reasonable notice takes into account several factors, commonly known as the Bardal factors (from the landmark case Bardal v. Globe & Mail Ltd.):
- Length of service: The longer you have worked for your employer, the more notice you are generally entitled to.
- Age: Older employees typically receive more notice because they may face greater difficulty finding comparable employment.
- Character of employment: Employees in senior, specialized, or managerial positions generally receive more notice.
- Availability of similar employment: If comparable jobs are scarce, you may be entitled to more notice.
Common law reasonable notice can be as high as 24 months of pay, and in exceptional circumstances, even more. Compare this to the ESA maximum of 8 weeks -- the difference can be enormous.
Warning Signs: How to Recognize Wrongful Dismissal
You may have been wrongfully dismissed if:
- Your employer terminated you without providing any notice or pay in lieu of notice.
- Your employer offered you only the ESA minimums when you may be entitled to more under common law.
- Your employer claimed just cause for your termination, but the reasons do not meet the legal threshold.
- Your employer pressured you to sign a release or settlement agreement immediately, without giving you time to seek legal advice.
- Your employer terminated you for a discriminatory reason (based on race, gender, disability, age, religion, etc.).
- Your employer terminated you in retaliation for exercising a legal right (such as filing a complaint, taking a leave of absence, or refusing unsafe work).
What to Do If You Think You Have Been Wrongfully Dismissed
1. Do Not Sign Anything Immediately
When you are terminated, your employer may present you with a severance package or release and ask you to sign it quickly -- sometimes on the spot. Do not sign anything without first consulting a lawyer. Once you sign a release, you may be giving up your right to pursue a wrongful dismissal claim. You are legally entitled to take time to review any documents and seek legal advice.
2. Review Your Employment Contract
If you have a written employment contract, review it carefully -- or have a lawyer review it. Your contract may contain a termination clause that limits your entitlements to the ESA minimums. However, many termination clauses in Ontario are unenforceable because they are poorly drafted or violate the ESA. A lawyer can tell you whether your termination clause is valid.
3. Document Everything
Keep a record of your termination, including any written communications (emails, letters, text messages) from your employer. Write down the details of any verbal conversations about your termination as soon as possible while your memory is fresh. Save copies of your pay stubs, employment contract, and any performance reviews.
4. Apply for Employment Insurance (EI)
If you have been terminated without cause, you should apply for Employment Insurance (EI) benefits through Service Canada as soon as possible. There is a waiting period, so applying early is important. Note that receiving EI does not prevent you from pursuing a wrongful dismissal claim.
5. Consult an Employment Lawyer
An employment lawyer can assess your situation, calculate your approximate entitlements under both the ESA and common law, and advise you on the best course of action. Many employment lawyers in Ontario offer free initial consultations and work on a contingency fee basis, meaning they only get paid if you receive a settlement or judgment.
How Much Could You Be Owed?
The amount you may be owed depends on your specific circumstances. Here is a simplified example to illustrate the potential difference between ESA minimums and common law entitlements:
Example: Maria, age 45, worked as a marketing manager for 10 years at a salary of $80,000 per year. She was terminated without cause.
- ESA notice: 8 weeks (maximum under the ESA) = approximately $12,308
- ESA severance: 10 weeks = approximately $15,385
- Total ESA entitlement: approximately $27,693
- Common law reasonable notice: Could range from 12 to 18 months = $80,000 to $120,000
As you can see, the difference between ESA minimums and common law entitlements can be substantial. This is why it is so important to consult a lawyer before accepting a severance package.
Time Limits
There are important time limits to be aware of:
- ESA complaint: You generally have 2 years from the date of the alleged violation to file a complaint with the Ministry of Labour.
- Common law wrongful dismissal claim: You generally have 2 years from the date of termination to file a lawsuit under the Ontario Limitations Act, 2002.
- Human rights complaint: You generally have 1 year from the date of the discriminatory act to file an application with the Human Rights Tribunal of Ontario.
Do not wait too long to take action. The sooner you seek legal advice, the better your chances of protecting your rights.
Special Note for Newcomers and Immigrant Workers
If you are a newcomer to Canada, you may feel especially vulnerable after losing your job -- particularly if your immigration status is tied to your employment (for example, if you hold a work permit). It is important to know that:
- Your employment rights are the same regardless of your immigration status.
- Your employer cannot threaten to have you deported or to cancel your work permit as a way to avoid their legal obligations.
- If your work permit is employer-specific, losing your job does not mean you must leave Canada immediately. You should seek immigration advice promptly to understand your options.
At Imigrando, we understand the unique challenges faced by immigrant workers. We can help you navigate both the employment law and immigration aspects of your situation. Do not hesitate to reach out for guidance.