Wrongful dismissal occurs when an employee is dismissed from their position in a manner that violates the terms of their employment contract or the Employment Standards Code (the “Code”).
Wrongful dismissal can occur in several different forms. Employees are typically terminated from their employment in one of two ways:
(1) without cause; or
(2) with just cause.
A wrongful dismissal can arise in either scenario. However, if the employment relationship ends after a fixed-term contract, or upon the employee’s resignation or abandonment of their position, this generally cannot give rise to a wrongful dismissal claim. The one exception is “constructive dismissal”, which refers to a situation where the employee objects to a fundamental change to the terms of their employment and are therefore considered dismissed under the law.
It may surprise many people to learn that employers can legally dismiss workers without cause at any time and for any reason. The catch is that the employer must provide working notice or pay in lieu of notice upon termination (unless the employee is dismissed during the 3-month probationary period, in which case no notice is required).
Employers are prohibited from contracting out of the following minimum notice requirements under section 56 of the Code. These amounts are the bare minimum an employer is required to provide when dismissing employees without cause:
- If employed for more than 90 days but less than 2 years = one week notice
- If employed for more than 2 years but less than 4 years = two weeks’ notice
- If employed for more than 4 years but less than 6 years = four weeks’ notice
- If employed for more than 6 years but less than 8 years = five weeks’ notice
- If employed for more than 8 years but less than 10 years = six weeks’ notice
- If employed for more than 10 years = eight weeks’ notice
Many employees may also be entitled to reasonable notice at common law depending on the terms of their employment contract. Reasonable notice periods at common law are much greater than the minimum requirements under the Code and depend on a variety of factors, including the character of the employment, the length of service, the employee’s age, and the availability of similar employment, keeping in mind the experience, training, and qualifications of the employee. Courts will also examine previous decisions in similar cases to determine the applicable reasonable notice period in any given case.
Where an employee is dismissed for just cause, no notice is required. However, the legal test for just cause imposes a high standard. The employer bears the burden of proving they had just cause to dismiss the individual from their employment.
Whether an employer is justified in terminating an employee for just cause will be assessed in the context of the alleged misconduct. The legal test, coming from the Supreme Court of Canada’s decision in McKinley v BC Tel, asks whether the employee’s misconduct gave rise to a breakdown in the employment relationship.
While there are no hard and fast rules, the Supreme Court has set out examples of situations where the test for just cause will be met. If an employee breaches the faith that is inherent in the working relationship, violates an essential condition of the employment contract, or acts in a manner which is fundamentally inconsistent with their obligations to the employer, their dismissal will be justified.
Courts will take a contextual approach in determining whether the employee’s misconduct was serious enough to strike at the heart of the employment relationship. The nature and extent of the misconduct, as well as the surrounding circumstances, will be important factors. Courts will also be asked to determine whether dismissal is warranted as a proportionate response to the employee’s misconduct. A balance must be struck between the severity of the misconduct and the harshness of the sanction imposed.
Upon a successful claim for wrongful dismissal, a plaintiff may be awarded three kinds of damages. The first, and most common, is the notice period payment to which the employee is entitled. However, because the purpose of notice pay is bridge an employee to a new position, it is important to remember that employees have an obligation to mitigate their damages by searching for new employment. A failure to mitigate, or any income earned during the notice period, may result in deductions to the final notice award.
In rare cases, a plaintiff may also be entitled to aggravated or punitive damages. Aggravated damages are awarded in cases where the plaintiff was wrongfully terminated in a humiliating and emotionally distressing manner. Punitive damages are further reserved for rare instances where courts wish to punish employers for conduct that is overly egregious.
Litigating Wrongful Dismissal Claims
The potential strength of a wrongful dismissal claim is heavily dependent on the facts of each individual case as well as the specific terms of the employment agreement. If you need advice on how to bring or defend a claim for wrongful dismissal, including questions about common law reasonable notice, the standard for just cause, or potential damages, please contact our team of employment lawyers who can provide professional advice applicable to your situation.