What Is A Wrongful Dismissal?
A wrongful dismissal is simple; it is a termination in breach of the employment contract.
All employees have an employment contract even if there is no written agreement. Where there is no written contract, an implied employment contract is formed.
The most important part of an employment contract is the termination clause, which states how much “notice” (a.k.a. “severance”) an employee is entitled to when they are terminated.
Read: What is Notice?
If there is no written employment contract or if there is no termination clause in the employment contract, then an implied obligation to give “reasonable notice” is inserted into the contract/relationship.
If an employer terminates an employee without giving the proper notice as per the termination clause or if the employer fails to give “reasonable” notice if there is no termination clause, then it is a breach of the contract, and, therefore, it is a wrongful dismissal.
To be clear, it is not a wrongful dismissal if an employer fails to provide a good enough reason to terminate an employee or anything like that. It would only be a wrongful dismissal if the employer breached the employment contract vis a vis notice of termination.
How To Know If There Is A Wrongful Dismissal?
To check whether someone has been wrongfully dismissed, an employer has to check their employment contract. If they have a termination clause that has some formula about some amount of notice of termination, and the employer failed to provide at least that amount, then it is a wrongful dismissal. If the employer provided the employee the notice amount promised for in the termination clause, then it is not a wrongful dismissal.
If the employee has no termination clause or no employment contract at all, or if the termination clause is void, then the employee needs to check how much “reasonable notice” they ought to have received. After all, if there is no enforceable termination clause or no employment contract, then the obligation to give “reasonable notice” is implied upon the employer.
How Much Reasonable Notice Is An Employee Owed?
The calculation of reasonable notice is based on the “common law”, which are “precedents”, or similar cases from Canadian courts.
Calculating common law reasonable notice is an art, not a science. There is no formula. It is not true that employees are usually awarded 1-month of reasonable notice for every year of service. In reality, some employees get much more than one month’ reasonable notice for every year of service (i.e. short term employees), and some get less (i.e. long term employees).
Calculating reasonable notice revolves around one key issue: how much time will it take the terminated employee to find comparable employment? Judges usually answer this question by examining four non-exhaustive factors from a famous case called Bardal:
- the character of employment;
- the length of service;
- age; and
- the availability of similar employment while having regard to experience, training and qualifications.
Therefore, reasonable notice can vary widely depending on the circumstances. For example, a senior manager at a bank, who worked for the bank for her entire career, who is 60 years old, and whose high-level skills only apply to positions at just a few other banks would receive the maximum amount of reasonable – around 24 months. This is because the manager can’t find comparable employment, considering:
- any job less than senior manager would be inappropriate;
- her long service with a single employer has tainted her;
- her age is a barrier for the long-term plans of another employer; and
- and there are few similar employers in the country, so her pool of target employers would be tiny.
On the contrary, a high school student working as a cook at a fast-food restaurant would only get a month or so of reasonable notice because he could find new, comparable employment quickly.
A lawyer who offers free consultations can quickly estimate how much reasonable notice an employee is entitled to.
When Is It A Wrongful Dismissal?
If the employee calculates how much reasonable notice they are owed, and the employer fails to provide that amount of reasonable notice, it is a wrongful dismissal.
It is also a wrongful dismissal if the employer failed to provide exactly the same income, benefits and other entitlements over the reasonable notice period. For example, it could be a wrongful dismissal if the employer only gave the employee reasonable notice of salary but no commissions or health benefits over the same period. Employees must be given the same compensation they would have expected to receive had they worked the reasonable notice period unless a valid termination clause says otherwise.
Wrongful Dismissal: Examples
What If There Is A Disagreement About Reasonable Notice?
If the employer and the employee do not agree with each other about how much reasonable notice is appropriate, then the employee would launch a “wrongful dismissal lawsuit”, which is a lawsuit asking a judge to determine the amount of notice owed.
In a wrongful dismissal lawsuit, the employee’s lawyer will argue that the employee is entitled to more notice based on specific case law in favour of the employee. In contrast, the employer will argue that the employee is entitled to a lesser amount of notice based on case law in favour of the employer’s position.
What About Just Cause?
Employers do not need to provide any notice to employees terminated with just cause. However, if the employer is wrong, and there is no just cause, then the employee would be entitled to notice, and because the employer failed to give any notice, it would be a wrongful dismissal. If there is a disagreement about whether just cause exists, then the employee would launch a wrongful dismissal lawsuit, arguing (1) that the allegations do not amount to just cause and (2) how much notice ought to have been paid accordingly.
To be clear, unless there is a just cause allegation, then a wrongful dismissal lawsuit will, generally, not deal with the circumstances of the termination. The only issue will be the calculation of reasonable notice.
Jeff is a lawyer in Toronto who works for a technology startup. Jeff is a frequent lecturer on employment law and is the author of an employment law textbook and various trade journal articles. Jeff is interested in Canadian business, technology and law, and this blog is his platform to share his views and tips in those areas.