Wrongful Dismissal in Ontario

If you are facing wrongful dismissal in Ontario, you might be wondering exactly what your rights are as an employee. Is your employer legally allowed to fire you? How much severance pay are you entitled to, if any? Have you been the victim of discrimination? Can you start a wrongful dismissal lawsuit and is it even worth it to do so?

First, it is important to know that generally employers and employees in Ontario have the right to end an employment contract for any legal reason. However, there are certain obligations your employer has to meet if they want to dismiss you from your position. Usually, an employer has to pay you out for a reasonable amount of time to find a new job, and some employees are entitled to reinstatement in extreme circumstances. To determine what those obligations are in your case, you first need to figure out whether you’ve been dismissed with or without cause.

Read on to find out about what wrongful dismissal is, what kind of compensation you might be owed, and what to do if you are in this situation. If you believe you have been wrongfully dismissed due to COVID-19, read more at Wrongful Dismissal in Ontario Due to COVID-19.

What is wrongful dismissal?

Wrongful dismissal, also known as wrongful termination, is used to refer to terminations where an employer did not give an employee proper notice or pay in lieu of notice. A termination is wrongful if your employer fires you without paying you your proper severance pay. More often than not, employees are not paid the termination pay to which they are entitled. As a result, many workers who have been terminated are entitled to additional compensation.

Termination without cause

In Ontario, your employer can terminate you for almost any business reason they wish. However, the power to terminate an employee without cause comes with an obligation to provide that employee with proper notice or pay in lieu of notice. A without cause termination is wrongful when the employee is not paid out the severance pay to which they are entitled. For example, if your employer doesn’t have a valid termination clause and your employer terminates your employment and pays you your Employment Standards Act minimums, the termination is wrongful because you are owed more severance pay than what they offered you.

The validity of a termination clause can only be determined by a lawyer. In our experience less than 10% of termination clauses are clearly valid from a legal standpoint. See our analysis at: Illegal Provisions Invalidate Contractual Severance Pay Limitations: Ontario Court of Appeal 2020.

Certain employees such as those in federally regulated sectors (banking, telecommunications, long haul trucking) and unionized employees have additional protections, for federally regulated employment read more: Canada Labour Code Employees.

Termination with cause

If an employee is terminated with cause in Ontario, they are not entitled to any severance pay. However, the bar for proving cause is very high: usually, it takes not just employee misconduct, but serious employee misconduct for cause to be demonstrated. Examples of serious misconduct include fraud, willful negligence, and sexual assault.

If you were terminated with cause and were not paid out severance, but you didn’t engage in that level of misconduct, you have been wrongfully terminated.  For example, if you show up late a few times and your employer fires you and puts “terminated with cause” on your employment letter or Record of Employment, you have likely not met the standard of misconduct required to be terminated with cause and have been wrongfully terminated.

Constructive dismissal

Constructive dismissal is when your employer makes a fundamental and unilateral change to your working conditions that amounts to a termination. For example, a significant cut in your hours, a significant pay cut, or a demotion.  In that case, almost by definition, your employer has not paid you your proper severance (as they are attempting to keep you employed despite the constructive dismissal) and the termination is wrongful.

What am I entitled to if I was wrongfully dismissed?

There is a misconception that when employees have been terminated, they are entitled to a week, or a month’s, pay per year of service. In fact, if you have been wrongfully terminated, you may be owed common law reasonable notice of termination. This is usually between 3 to 6 weeks per year of service, often to a minimum of 3 months and more than 24 months only in exceptional circumstances.

Common law notice is determined based on many of factors and it is best to speak with an employment lawyer to get a better idea of what the range might be in your case. See our articles on severance packages and severance pay for more information.

In addition to pay in lieu of notice, you may be entitled to other types of damages as well if your employer has mistreated you through the course of your termination.

How do I file a wrongful dismissal lawsuit?

One way to recover damages for a wrongful termination is to file an official claim against your employer. Retaining a lawyer is the best way to maximize your likelihood of success in the court system. A seasoned employment lawyer at Monkhouse Law will help you navigate the legal system, make persuasive arguments, increase your chance of winning, and resolve the issue faster. As part of the claim you would also ask for part of your legal fees to be covered.

The side that loses the court case usually pays at least some of the costs for the other side. This means that if you file a lawsuit without understanding the law, how to efficiently resolve the process, and what your obligations are, you might have to pay some — or even most — of the legal fees of your opponent. However, if you hire a lawyer and the case resolves then your past employer generally pay towards your legal fees.

While it may seem cheaper to simply “go at it alone” without the help of a lawyer, this increases your personal liability: filing a lawsuit incorrectly or based on misunderstood law exposes you to the risk of adverse cost awards. What companies are worried about is going to court, and given the complexity of the court system there is very little meaningful concern about an individual employee getting a strong court judgment against their past employer.

-Andrew Monkhouse, Founder of Monkhouse Law Employment Lawyers

Crucially, however, very few lawsuits go all the way to trial if employees are properly represented by reasonable parties. Often, a credible threat of litigation alone is enough to cause an employer to seriously engage in negotiations. An employment lawyer will be able to assess the situation and use their expertise and experience to help you determine the best way forward.

How long do I have to sue my company for wrongful dismissal?

Technically you have two years from when you are terminated to start a claim. There are statutes of limitations in Ontario that limit how long you have to start a lawsuit against an employer. However, at Monkhouse Law we find that employees who wait are disadvantaged as they lose documents and information that can be useful. They also might not take necessary precautions that a lawyer can advise them of which can lower their recovery.

As of March 16, 2020, the government suspended the running of all limitation periods until further notice as a result of the global COVID-19 pandemic. So, if you were terminated 6 months before March 16, 2020, the clock has stopped ticking until the government ends the suspension order. At that point, you would have 18 months to pursue legal action. If you were terminated after March 16, 2020 but before the end of the suspension order, your limitation period clock never started ticking to begin with. Therefore, come the end of the suspension order, you will have a full two years to start a legal claim about your termination.

How hard is it to prove wrongful dismissal?

Each situation is unique, so there is no single answer to this question. Generally, Ontario employment law is well established, so if both sides have reasonable and competent legal counsel, cases can be resolved relatively quickly within the first few months. This is because it is clear what the legal issue is and what kind of liabilities the parties have, leading to less need for litigation.

Cases can sometimes settle quickly once brought to the attention of an employer; it all depends on the parties and their legal counsel.

Litigation in the courts can take years. For this reason, it’s usually in the interests of both parties to resolve issues as quickly and reasonably as possible. Almost no cases go all the way to court: over 99% settle, meaning some sort of settlement agreement is reached through negotiation outside of the formal court system.

My experience has been that about 50% of cases settle within 3 months, 80% within 6 months and then an 80% drop off after that every 6 months of either settling or resolving in court.

3 months: 50% settled
6 months: 80% settled
12 months: 96% settled/resolved
18 months: 99.2% settled/resolved

-Andrew Monkhouse, Founder Monkhouse Law Employment Lawyers

Can I refuse to sign my termination letter?

Your employer cannot force you to sign any papers. Although some termination papers are just an acknowledgement of the termination, others can contain terms and conditions that limit your rights and entitlements. Regardless of the type of paper your employer is asking you to sign, never put your signature on a termination package without having it reviewed by a lawyer.

Generally, if you sign a contract, you may be bound to the terms of that contract, even if you didn’t take the time to read it or consult legal counsel before you signed it (although there are some indications that this may be beginning to change at the federal level).

You or your lawyer can ask for an extension of time before signing any sort of termination letter. During this time, seek legal advice and consult with a qualified employment lawyer or paralegal.

What do I do if I’ve been wrongfully dismissed?

  1. If you have been terminated, you should write down what happened in as much detail as possible with dates and names. Memories fade, so try to get things in writing while the events are fresh in your mind.
  2. Try to get your documents in order. Look around for your employment contract, your T4s, any emails or texts you may have about workplace issues, any performance reviews (good and bad) you were given, and other documentation. Documents, especially employment contracts, are extremely important in determining what you may be entitled to.
  3. Most importantly, you should seek the help of an employment lawyer as soon as possible. Most terminations packages are starting offers, not final offers, meaning most employees are entitled to more compensation than they are initially offered by their employers upon termination. There is a lot of incorrect information on the internet about this — the better informed you are, the better equipped you are to enforce your rights and get compensation.

Employment lawyers at Monkhouse Law specialize in wrongful termination and are experienced in negotiating and resolving employment law matters in your best interest. If you have been wrongfully terminated, call us today for a free 30 minute consultation.

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