If you have been dismissed from your job, you may be wondering whether your termination was wrongful and what compensation you may be entitled to receive.
In Ontario, employers can generally terminate non-unionized employees without cause, provided they comply with their legal obligations and do not violate human rights legislation or other employment laws. These obligations typically include providing proper notice or pay in lieu of notice, and sometimes additional compensation.
To understand what you may be owed, you first need to determine whether your employment was terminated with cause, without cause, or whether the situation may involve constructive dismissal.
Important: Accepting a severance or termination package, or signing a release, may affect your legal rights. Consider obtaining legal advice from an employment lawyer before agreeing to any termination documents.
Quick Links
- What is wrongful dismissal?
- Does wrongful dismissal mean my employer had no reason to fire me?
- Types of dismissal
- Do federally regulated employees have wrongful dismissal rights?
- What am I entitled to if I was wrongfully dismissed?
- How to start a wrongful dismissal claim in Ontario
- How do I file a wrongful dismissal lawsuit?
- How long do I have to sue my company for wrongful dismissal?
- How hard is it to prove wrongful dismissal?
- Can I refuse to sign my termination letter?
What is wrongful dismissal?
In Ontario, wrongful dismissal usually refers to a situation where an employer terminates an employee without providing proper notice, pay in lieu of notice, severance pay, or other compensation that the employee is legally entitled to receive.
In many cases, a dismissal becomes “wrongful” because the employer offers less than what the employee is legally owed under employment standards legislation, the employment contract, or the common law.
A termination may be wrongful if your employer ends your employment without paying your proper severance pay and related compensation, which can include salary, benefits, bonuses, commissions, and other entitlements depending on the circumstances.
Ontario’s Employment Standards Act guide on termination of employment explains minimum termination rules. However, employees may also have rights under their employment contract or under the common law, including rights to common law reasonable notice.
To understand whether your dismissal may be wrongful, it helps to start with the category of dismissal below.
Does wrongful dismissal mean my employer had no reason to fire me?
Not necessarily. Many people assume that wrongful dismissal means an employer had no reason to terminate them, or that the dismissal was unfair in the ordinary sense. In Ontario employment law, the legal meaning is usually much narrower.
For most non-unionized employees in Ontario, an employer can generally terminate employment without cause, provided they comply with their legal obligations and do not terminate the employee for an illegal reason, such as discrimination or reprisal.
Wrongful dismissal usually occurs when an employer fails to provide the employee with the notice, pay in lieu of notice, severance pay, or other compensation and contractual entitlements that the employee is legally owed.
In other words, wrongful dismissal is often about how the employment relationship was terminated, rather than whether the employer had the right to terminate it in the first place.
That said, if your employer alleges cause where none exists, discriminates against you on the basis of age, disability, sex, race, family status, or another protected ground, retaliates against you for exercising your legal rights, or otherwise violates employment laws, you may have additional legal claims beyond wrongful dismissal.
Learn more about human rights issues at work, reprisal in the workplace, and the protections available under Ontario’s Human Rights Code.
Types of Dismissal
Termination Without Cause
In Ontario, your employer can terminate you for many business reasons. However, the power to terminate an employee without cause comes with an obligation to provide proper notice or pay in lieu of notice, and sometimes additional compensation.
A termination without cause does not necessarily mean that an employee did anything wrong. Employers may decide to end an employment relationship because of restructuring, financial challenges, changing business needs, or other legitimate business reasons. However, employers must still comply with their legal obligations when doing so.
A “without cause” termination may be wrongful when the employee is not paid what they are actually entitled to. For example, if you are offered only Employment Standards Act minimums — but your contract does not validly limit your entitlements — you may be owed significantly more under common law.
Important: The validity of a termination clause can be highly technical and is often disputed. In our experience, many termination clauses are not enforceable. See: Illegal Provisions Invalidate Contractual Severance Pay Limitations: Ontario Court of Appeal 2020. You can also review the Supreme Court of Canada’s decision in Machtinger v. HOJ Industries Ltd., a leading case involving termination clauses and wrongful dismissal damages.
Note: Some employees fall under different rules, including certain federally regulated employees. Learn more here: Canada Labour Code Employees. You can also review the federal government’s information on termination under federal labour standards.
Learn more: See our complete guide to Termination Without Cause in Ontario, including ESA minimums, common law notice, severance pay, and recent court decisions.
Termination With Cause
If an employee is terminated with cause in Ontario, they are typically not entitled to notice or severance pay. However, the legal standard for proving cause is extremely high and usually requires serious or wilful misconduct.
Poor performance alone is not always enough to justify a for-cause dismissal. In many cases, employers must establish reasonable performance standards, provide warnings, and give employees an opportunity to improve before terminating for cause.
If your employer claimed “cause” but the facts do not support that high standard, your dismissal may ultimately be treated as a termination without cause, meaning you could still be entitled to notice, severance pay, or other compensation.
Learn more: Read our complete guide to Termination With Cause in Ontario.
Constructive Dismissal
Constructive dismissal occurs when an employer fundamentally changes an employee’s compensation, duties, work location, hours, or other important terms of employment without their consent, effectively forcing the employee to resign.
Constructive dismissal may also arise when an employer creates or allows a toxic, discriminatory, or intolerable work environment that makes continued employment unreasonable.
Although the employee resigns, the law may treat the resignation as a termination initiated by the employer. In those circumstances, the employee may be entitled to the same compensation that would be available in a wrongful dismissal claim.
Before resigning, it is important to obtain legal advice. In some situations, continuing to work without objecting to the changes may be viewed as accepting them.
Learn more: Read our complete guide to Constructive Dismissal in Ontario.
Do federally regulated employees have wrongful dismissal rights?
Employees who work in federally regulated industries are generally governed by the Canada Labour Code rather than Ontario’s Employment Standards Act. Federally regulated industries include banking, telecommunications, airlines, railways, and interprovincial transportation.
Different rules may apply to federally regulated employees. The Canada Labour Code includes special unjust dismissal protections that may allow eligible employees to challenge a termination and, in some cases, seek reinstatement to their position. These protections are different from the common law wrongful dismissal claims that most non-unionized employees in Ontario pursue.
Learn more: Read our guide to Unjust Dismissal: What You Need To Know.
What am I entitled to if I was wrongfully dismissed?
There is a misconception that employees are entitled to a week or a month of pay per year of service. In reality, compensation can be much more nuanced.
If you have been wrongfully dismissed, you may be owed common law reasonable notice, or pay in lieu. Common law notice is determined based on factors such as your age, length of service, position, and the availability of comparable employment. These are often referred to as the Bardal factors.
To learn more, see our guides on severance packages and severance pay. You can also use our Severance Pay Calculator as a starting point.
In some cases, you may also be entitled to additional damages depending on how the termination was handled and whether other legal issues are involved.
How to start a wrongful dismissal claim in Ontario
If you believe you have been wrongfully dismissed, it is important to take the right steps before responding to your employer or signing any termination documents. What you do early on can affect your ability to recover proper compensation.
- Gather your documents. Collect your employment contract, termination letter, severance offer, pay stubs, bonus or commission records, benefits information, workplace policies, and any relevant emails or messages.
- Review your termination package. Your employer’s first offer may not reflect your full legal entitlements. In Ontario, employees may be owed more than the minimum amounts set out under the Employment Standards Act.
- Do not sign immediately. Signing a release or severance package can limit your ability to claim additional compensation. Ask for time to review the offer before agreeing to anything.
- Speak with an employment lawyer. An employment lawyer can review your situation, assess whether your dismissal may be wrongful, and explain what compensation you may be entitled to receive.
- Negotiate where appropriate. Many wrongful dismissal matters are resolved through negotiation. A lawyer can help present your position and respond to your employer’s offer.
- Start a claim if necessary. If a fair resolution cannot be reached, you may need to start a legal claim against your former employer. Getting legal advice early can help protect your rights and avoid missed deadlines.
If you have been terminated from your employment, contact Monkhouse Law Employment Lawyers for a free 30-minute phone consultation before signing your severance package.
How do I file a wrongful dismissal lawsuit?
One way to recover damages for wrongful dismissal is to start a legal claim against your employer. Retaining an employment lawyer is often the best way to maximize your outcome and avoid missteps that can reduce recovery or increase risk.
An employment lawyer can help you assess the strength of your claim, calculate what may be owed, communicate with your employer, and negotiate for a fair settlement. Many cases resolve through negotiation without going to trial.
The Ontario government’s guide on wrongful dismissal explains that the Employment Standards Act (ESA) establishes minimum requirements for termination and severance pay, but some employees may have greater rights under the common law. It also notes that employees generally cannot sue for wrongful dismissal and file a claim with the Ministry of Labour for termination pay or severance pay arising from the same termination. Legal advice can help determine which option is most appropriate in your circumstances.
“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 most concerned about is going to court — and given the complexity of the court system, there is very little meaningful concern about an individual employee obtaining a strong court judgment against their former employer.”
— Andrew Monkhouse, Founder, Monkhouse Law Employment Lawyers
How long do I have to sue my company for wrongful dismissal?
In many cases, you have two years from the termination date to start a claim. There are also limitation periods in Ontario that can affect timing.
That said, waiting can create problems. Documents get lost, details get fuzzy, and practical leverage can change. Getting advice from an employment lawyer early is often beneficial.
How hard is it to prove wrongful dismissal?
Every case is different. Ontario employment law is well developed, and with competent counsel on both sides, many cases can be resolved without a trial. The timeline depends on the facts, documents, and the parties’ willingness to negotiate.
“Litigation in the courts can take years. For this reason, it is 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 form of settlement agreement is reached through negotiation outside of the formal court system.”
My experience has been that approximately 50% of cases settle within three months, 80% within six months, with a further significant drop-off every six months thereafter as matters resolve through settlement or 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 termination papers. Some documents are acknowledgements only, but others can include releases and terms that limit your rights. You or your lawyer can often request more time to review an offer before responding.
Practical rule: Do not sign a severance package or release without legal advice from an employment lawyer.
If you would like to learn more about how Monkhouse Law assists employees in wrongful dismissal matters, you can also review our Wrongful Dismissal Lawyer page, which explains our services for employees in Toronto, the Greater Toronto Area, and throughout Ontario.
If you have questions about your rights or your severance entitlements, book a free 30-minute phone consultation.