As an employer, hiring and firing staff is all part of running a successful business. However, when terminating someone's employment - you have a duty to act legally.
Dismissing someone wrongfully is a violation of employment law and can lead to a breach of an employment contract.
In this guide, we'll discuss what wrongful dismissal is, how to ensure you terminate employment correctly, and how to avoid wrongful dismissal.
What is Wrongful Dismissal?
To put it simply, wrongful dismissal is when an employment relationship is terminated unlawfully. This is a breach of employment standards and should be avoided at all costs.
There are three ways a wrongful dismissal can take place in Canada, all three can lead to potential legal trouble and a claim made against you.
In order to protect against wrongful dismissal within your company, it's crucial you understand what makes a dismissal wrongful.
What are Common Examples of Wrongful Dismissal?
Under employment law, there are generally three main types of wrongful dismissal which you need to be aware of.
Termination With Just Cause
Termination for just cause is when employment is terminated for a legally sufficient reason, such as wilful misconduct.
As an employer, you must be able to prove you have just cause to end employment, and the reasons mustn't be alleged. This can make the dismissal wrongful.
Notice isn't required when dismissing an employee for just cause, but you do have to pay any compensation - such as the minimum amount of wages, vacation pay, and any bonuses owed.
Termination Without Cause
Termination without cause is when employment is ended for reasons that aren't related to workplace misconduct. Such as cost cutting, company restructuring or poor work performance.
To protect against wrongful dismissal claims, you must provide notice of termination or pay in lieu thereof.
Not Providing a Notice Period
The notice comes in two different forms: statutory notice and common law reasonable notice. Statutory is the very minimum employees must receive, with a reasonable notice period usually being a larger amount.
If you're looking to immediately terminate employment, you can also offer pay in lieu.
Pay in lieu of notice can either be paid in a lump sum payment or salary continuance.
The reasonable amount of notice that the employer owes should be clearly stated in the written employment contract.
Notice of termination can be provided by the employer as working notice or pay in lieu of notice. Working notice means the employee can work up until the day of termination.
Notice isn't required for the following reasons:
- If the employee is dismissed for just cause.
- If they're employed on a seasonal or temporary basis.
How Much Statutory Notice Are Employees Entitled to?
There's differing provincial legislation surrounding how much statutory notice must be given to employees when an employer seeks termination.
It's important you understand the rules for the province in which you're based when providing notice:
- If employed for less than three months: no notice.
- If employed for less than one year but more than three months: seven days.
- If employed for one year but less than three years: two weeks.
- If employed for three to eight years: one week’s notice for every year.
- If employed for eight years or more: eight weeks’ notice.
You may provide your employees with common law notice. This notice allows you to provide a longer notice period than what is set out by employment standards.
Whether an employee is entitled to a common law notice depends on whether they have an employment contract containing a valid termination clause.
Under the Employment Standards Act in Ontario, many employees are entitled to severance pay in addition to termination pay.
Who Qualifies for Severance Pay in Ontario?
Employees qualify for severance pay if they have been employed with the company for at least five years and the company has a global payroll of at least $2.5 million or have severed the employment of 50 or more employees in the past six months.
Employment laws are regulated by the British Columbia Employment Standards Act (ESA).
- If worked for three months or less: no notice required.
- If worked for more than three months but less than a year: seven days.
- If worked for more than a year but less than three years: two weeks.
- If employed for more than three years: three weeks, plus seven days of notice/pay after each additional year of employment (to a maximum of eight weeks).
The ESC in Alberta states you may end the employment by either providing termination pay, giving notice of termination – or a combination of both.
- If worked for less than 90 days: no notice.
- If worked for more than 90 days but less than two years: seven days.
- If worked for two years but less than four years: two weeks.
- If worked for four years but less than six years: four weeks.
- If worked for six years but less than eight years: five weeks.
- If worked for eight years but less than ten years: six weeks.
- If worked for ten years or more: eight weeks.
In Alberta, a termination notice period is null and void if the employee continues to work for the same employer after the termination date expires.
The Manitoba Employment Standards Code (ESC) states that for employment to be terminated, the amount of termination notice required depends on how long the employee worked for the company.
- If worked for less than 30 days: no notice.
- If worked for more than 30 days but less than a year: seven days.
- If worked for at least one year but less than three years: two weeks.
- If worked for three years but less than five years: four weeks.
- If worked for five years and less than ten years: six weeks.
- At least ten years: eight weeks.
As per the Saskatchewan Employment Act, employers must give reasonable notice if an employee has been continuously employed for at least 13 consecutive weeks.
If the employee has been employed for less than 13 consecutive weeks, they are not entitled to notice of termination or pay in-lieu thereof.
- If worked for more than 13 consecutive weeks, but less than one year: seven days.
- If worked for more than one year, but less than three years: two weeks.
- If worked for more than three years but less than five years: four weeks.
- If worked for more than five years but less than ten years: six weeks.
- If worked for more than ten years: eight weeks.
Employee's Rights on Wrongful Dismissal
You must be aware of your employee’s rights when terminating employment - failure to provide them with these can be a wrongful termination.
If an employee feels they've been wrongfully dismissed, they may contact an employment lawyer to help solve the conflict.
What Does Employment Law Say on Wrongful Dismissal for Federally Regulated Employees?
Under the Canada Labour Code, federally regulated employees are protected from wrongful dismissal, if the following criteria are met:
- Must not be a manager.
- Must have completed at least 12 months of continuous employment by the same employer.
- Must not be covered by a collective agreement or a collective bargaining agreement (please note Peninsula or BrightHR don't cover unionized workplaces).
As an employer, you have a right to consult with an employment lawyer if you feel the dismissal could result in a legal claim.
The employment lawyer will advise you on the next steps to take to best avoid legal action, and whether you may have to potentially pay compensation. You may also have to pay for any legal costs that are incurred.
Employment lawyers work to provide a negotiated settlement. They will take into account the following:
- Employee's length of employment.
- Any lost wages or benefits owed to the employee who has been wrongfully dismissed, such as vacation pay.
How to Protect Against Wrongful Dismissal
As an employer, you have a duty to treat your employees properly when you decide to terminate employment. The following are ways you can protect wrongfully dismissing employees:
- Stick to company policy surrounding termination.
- Ensure you stick to the employment contract signed by both employer and employee.
- Make sure you understand employment law for the jurisdiction you're based.
- Avoid false promises regarding wage growth and promotion.
As an employer, it's crucial you understand an employee’s rights surrounding constructive dismissal as well as wrongful dismissal.
What's Constructive Dismissal?
This type of termination is when an employee makes a decision to resign from their role following acts of bad faith from the employer.
Someone may be constructively dismissed from their role if:
- An employee refuses to commit an act that is illegal.
- Threats and suspensions from the employer.
- A unilateral reduction in salary, hours or benefits by the employer.
As well as avoiding constructive dismissal, you need to be aware of the amount of notice of termination you must give employees when you are looking to stop their employment.
Wrongful Dismissal and Unjust Dismissal Are Different
It's important you don't get mixed up and assume wrongful dismissal and unjust dismissal are the same things.
Unjust dismissals are associated with federally regulated employees. Under the Canada Labour Code, they provide a process for federally regulated employees to complain against a termination which they feel is unjust.
Federally regulated employees can seek reinstatement on top of a full severance package. However, they must have completed at least 12 months of continuous employment with the same employer (managers excluded).
Get Help With Wrongful Termination Today With BrightHR
It’s vital you understand how to act lawfully when terminating employment. Failure to treat your employees respectfully and provide the correct notice period could lead to a breach of employment law.
If you need assistance with wrongful termination, BrightHR has a handy tool that will make the whole process easier for you.