"Work is one of the most fundamental aspects in a person's life, providing the individual with a means of financial support and, as importantly, a contributory role in society. A person's employment is an essential component of his or her sense of identity, self-worth and emotional well-being.

"Not only is work itself fundamental to an individual's identity, but the manner in which employment can be terminated is equally important."

McKinley v BC Tel 2001 SCC 38

Wrongful dismissal is the term lawyers use to refer to situations where an employee has been fired (dismissed) unfairly, unreasonably or without sufficient or just cause.

A 1989 case defined it as follows:

"In wrongful dismissal cases, the wrong suffered by the employee is the breach by the employer of the implied contract term to give reasonable notice before terminating the contract of employment. Damages are awarded to place the employee in the same position as he/she would have been had reasonable notice been given."

The first thing to consider is was the wrongfully dismissed person actually an employee?

Dismissal chalkboardFor example, if a person works on a sales commission basis and is not really under the direction of the person paying the sales commission, then that is not a employee-employer relationship. Those work contracts may be terminated more easily and the legal remedy of wrongful dismissal may not be of assistance (see a discussion of this in Employment Law: The Beginner's Guide as well as Severance Pay: How Much?).

In one landmark wrongful dismissal case, an Ontario Court of Appeal judge wrote:

"When an employer exercises no immediate control over the agent, but leaves him to be his own master (...) the relationship of master and servant does not exist and the contract may be terminated at will".

Historically, governments have been exempted from the common law wrongful dismissal ban but most provincial governments and the federal government have corrected that by passing laws which say that their employees can only be dismissed for good reason (i.e. just cause).

Quitting, which in law is called voluntary resignation, also prevents a person from claiming wrongful dismissal unless the resignation was somehow forced from the employee. For example, an employer might try to get a letter of resignation from an employee in exchange for the employee's last pay cheque and earned vacation pay; hardly a "voluntary" resignation.

It should also be clear that employers have a right to terminate workers. No one is automatically entitled to employment for life. A job may be properly terminated for reasons quite apart from performance. A good example of this is reorganization.

A typical notice period under provincial employment standards legislation is two weeks for employees with more than six months employment; three weeks for employment of greater than three years, and an additional week for each year in excess three to a maximum of eight weeks. Federal jurisdiction employees may have the benefit of separate legislation such as the Canada Labour Code.

What is reasonable notice?

The Courts rejected any "one month per year of service" rule of thumb in its 1960 leading case on this issue, Bardal v the Globe and Mail (24 DLR 2d 140):

"There can be no catalogue laid down as to what is reasonable notice in particular classes of cases. The reasonableness of the notice must be decided with reference to each particular case, having regard to the character of the employment, the length of service of the servant, the age of the servant and the availability of similar employment, having regard to the experience, training and qualifications of the servant."

An employer may decide to provide a severance payment instead of, in lieu of notice, giving the employee a cheque for the equivalent of the salary which would have been earned over the notice period.

The notice of dismissal must be specific and unequivocal.

For management or longterm employees, this severance pay can be quite substantial and take the form of several months pay or more, far in excess of the provincial employment standards legislation. For this reason, employers are well advised to have a definite severance pay policy accepted by all employees at the time of hiring.

A 1997 decision of the Supreme Court of Canada (Wallace v United Grain Growers 3 SCR 701) has allowed for an increase in the "normal" common law notice period where the employer has acted unfairly at the time of termination.

"In the course of dismissal employers ought to be candid, reasonable, honest and forthright with their employees and should refrain from engaging in conduct that is unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive.

"... bad faith or unfair dealing in the manner of dismissal ....ought to merit compensation by way of an addition to the notice period."

Examples of such unfair treatment may include:

  • Playing hard ball by making allegations of just cause where the there is no reasonable basis for doing so;
  • Failing to provide a letter of reference where the termination is without cause;
  • Failing to pay a sum which is clearly owing, such as an earned bonus or commission payment, or a sum due on termination under statute as a minimum entitlement;
  • Where the termination has been effected due to reasons which are contrary to the human rights legislation in effect, such as age, race, creed, religious belief, sexual preference etc.

A dismissed employee's fact set may often best lead to a human rights argument including the filing of a human rights complaint.

The list is not finite. Any action taken by the employer which may be seen to be unfair can allow for an increase in the common law notice period.

Even if the parties have entered into an agreement which fixes the severance sum, a court may override this agreement and increase the severance sum where such unfair actions are found.

Typically the increase in the notice period under this concept has led to compensatory damages, which require the employee to mitigate. However, in a recent Ontario Court of Appeal decision the court stated that it is open to argue that the increase in the severance sum may still be awarded, even where the employee has successfully mitigated by finding comparable alternate employment.

Where a fundamental change in the working relationship has been forced upon the employee, such as a demotion, loss of authority or responsibilities, transfer or substantial reduction in pay, this may allow the employee to argue that he was in effect dismissed. This is called constructive dismissal.

The Supreme Court confirmed this principle in a 1997 decision where the employer had altered the compensation structure. The test in this case was what the employee, branch manager of a real estate company in Montreal, reasonably anticipated his new income would be, where his employer (Farber v. Royal Trust 1 SCR 846) changed his compensation from a guaranteed base salary to a lower salary plus commission.

Even though the employee perhaps could have made more income under the altered scheme, the court determined that the actual later results achieved was not the correct test to apply in a case where compensation has been altered - but rather the reasonably expected future.

In dismissal for just cause cases, there is no notice required. It is always up to the employer to prove to the judge that the dismissal was for just cause. Some of the just cause reasons are:

  • Willful disobedience to clear instructions or known policies or procedures without reasonable excuse. Usually, the courts will not allow dismissal for a single, minor instance of willful disobedience unless it was of some significance.
  • Absenteeism or lateness: the facts of each case are vital. In some jobs, absenteeism is more damaging to the employer than in others, such as a hospital emergency room position. Under normal circumstances, the employer would be expected to formally warn the employee before proceeding with outright dismissal under this grounds, a procedure known as "progressive discipline".
  • Dishonesty. Honesty is an absolute requirement of all employees towards their employers. Courts have shown little sympathy for liars and thieves and employers do not have to progressively discipline a patently dishonest employee. In some cases, the courts have even found that silence is a lie where an employee intentionally withholds critical information from the employer. A recent Supreme Court of Canada decision has stated that not every act of dishonesty will automatically lead to a finding of just cause. Each case must be examined in a "contextual approach" to determine if the alleged wrongdoing is just cause for termination. (McKinley, op. cit.).
  • Intoxication which results in harm to the employer.
  • It has been established that alcoholism is a medical handicap as that term is defined in human rights legislation. An employer may not be able to terminate for this reason. The employer should take care and be sure that treatment is made available to such a person, where this addiction is admitted.
  • Insolence and insubordination. In one case, the judge said: "the right to order employees to carry out orders without extended debate and without a loss of respect is central to the role of management." If serious enough, one incident of insubordination would suffice to dismiss an employee and this is almost always the case where the insubordination is accompanied by violence.
  • Sexual harassment is defined as "unwelcome conduct of a sexual nature that detrimentally affects the work environment or leads to adverse job-related consequences for the victim". The degree to which this would constitute cause for dismissal would depend on the nature of the harassing actions, whether there was an opportunity to express the unwelcome nature of the behaviour and whether the behaviour then ceased.
  • Conflict of interest between the employer and conduct of the employee could lead to dismissal for cause depending on the severity of the conflict.

For most of the above cases, an employer would not be able to prove just cause if, by action or inaction, it condoned or forgave the conduct.

When a court decides that the dismissal has been unjust, a judgment requiring severance pay as high as two years salary is possible. This is to provide the dismissed employee with sufficient funding to find another job equal to the job lost.