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Wrongfully
Dismissed - or About to Be?
An
Introduction
to the Law
of Wrongful Dismissal
Introduction
Problems
in the Workplace?
Dismissal
without Cause
Dismissal
with Cause
Constructive
Dismissal or Rightful Resignation
How is
Reasonable Notice determined?
Compensation
in Wrongful Dismissal cases
Bad
Faith by the Employer upon Termination
The
Employee’s duty to seek re-employment
Employment
Standards legislation in Ontario
The
Ontario Human Rights Code
The Information on
this page is © 2004-2007,Garry J. Wise and Wise Law Office. It is
intended for information purposes only and may not be reproduced
without written consent. It is not a substitute for legal advice
and may not be relied on as such. The reader is expressly
advised and cautioned to consult with a qualified Employment Lawyer
for information and advice regarding the reader's specific
circumstances
Introduction Termination
of your employment can be highly disturbing and unsettling. The
modern workplace is often an important cornerstone in one's emotional and
social well-being. Along with the financial upheaval and
hardship that often flows from the loss of a job, an improper termination
of employment may also be a source of great personal anxiety, discomfort
and distress. The law
has long recognized the importance of protecting employees from arbitrary
and unfair action by employers, and seeks to balance the difference in
power between employer and employee by ensuring that employees' basic
rights are observed and that appropriate remedies and compensation are
available to wrongfully dismissed employees. The
information below provides a general primer as to many of the typical
concerns and questions our clients have when they consult us about
employment law concerns in non-unionized workplaces. Legal advice,
however, is required in any circumstance where your employment position
has been terminated or where you believe your job may in be
jeopardy. If
you have been wrongfully dismissed or have a serious concern regarding
your employment, the employment lawyers at WISE
LAW
OFFICE
may be consulted by telephone at
(416) 972-1800 or by email without
fee or obligation Email
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Law
Enquiry Back
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Problems
in the Workplace?Certain
signs may be telling you that something is not right at your workplace.
Each of these circumstances
may foreshadow problems ahead. While there is no way of knowing
exactly what the future will bring, it is possible to arm yourself with
basic knowledge of your rights and entitlements, long before your
concerns may regrettably be proven justified.
We hope that this article will
be of assistance if you are having problems in your workplace. We
also stress the importance of obtaining qualified legal advice
early. If a serious workplace problem appears to be
looming, it can be very useful to consult with an Employment Lawyer.
With legal advice and guidance, you can ensure you act most advantageously
as your workplace issues develop.
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Dismissal
without causeMost
terminations of employment in Ontario are "without cause."
That means the employer has ended the employment even though there are no
grounds or justification at law entitling termination with
cause. In
non-unionized workplaces, Ontario employers generally do have the right to
hire and fire employees as they see fit. That discretion is subject only
to observation of Ontario Human Rights Code and other,
specific statutory restrictions, including certain aspects of workplace safety
legislation. Where an
employer wishes to terminate employment, and no grounds exist for doing
so, an employer is required to give reasonable notice of termination to an
employee. Where reasonable notice is not given, an employer is
required to provide reasonable compensation, including benefits, to
the terminated employee in lieu of
notice. Where an employer fails to provide such compensation,
or seeks to provide inadequate compensation, an employee's legal rights
may be enforced by proceeding with a claim for compensation for wrongful
dismissal. Most wrongful dismissal claims can be
resolved through negotiations. In some cases, however, Court action
is required. Even where legal proceedings are commenced, many cases
can be resolved at an early stage, before a Trial is required. The
compensation an employer is required to pay is based on the salary, benefits and bonuses the
employee would have received during the period of reasonable notice
that the employee ought to have received from the employer prior to
termination. Rather
than immediate termination, an employer may provide adequate "working
notice," or notice to an employee that employment will terminate on a
reasonable, fixed date in the future. In such circumstances, an
employee's entitlement upon termination may be restricted to statutory
termination payment required under Employment Standards legislation. If
reasonable "working notice" has been given, there will be no
entitlement, of course, to pay in lieu of that notice. Whether
a "working notice" period is of deemed to be of reasonable
duration will depend on a number of factors, including the employee's
length of service, age, education, position held, seniority, and
likelihood of obtaining similar employment in the future. If the
"working notice" was inadequate, a wrongful dismissal claim may
still be proper. Available
remedies upon wrongful dismissal are:
or pay in lieu of
reasonable notice, if
terminated from an employment position without just cause or reasonable
notice.
As well, The Ontario
Employment Standards Act sets out the minimum
termination pay and severance pay an employe r
is required to provide, if
an employee is dismissed without cause or notice;
Damages
and restitution may also
be awarded under the Ontario Human Rights Code,
for loss or injury caused due to discrimination by the employer or
other
person at the workplace in contravention of the Code. Under the Code, reinstatement
of employment may also be ordered;
Finally,
those employed in industries governed by federal legislation, including
banking and intraprovincial transport, may also have additional
entitlements and remedies under the Canada Labour Code, which
provides for compensation and reinstatement where an employee has been
unjustly dismissed
Upon termination of employment
without cause, an employer must, at a minimum, provide any statutory
payments to the employee which are required under Employment Standards
legislation. An employer must also deliver an accurate Record of
Employment (R.O.E.) to the employee within five (5) days of termination. An
employee who has additional entitlements to notice, or pay in lieu of
notice, may receive a "severance package" or proposal from an employer
to pay
additional compensation. Usually, an employer will require that a
release be signed by the employee prior to payment of any further
compensation. Often,
very short time-periods or deadlines are given for the employee to
consider the employer's proposal. Legal
advice is critical, where any such proposal has been advanced by the
employer. It is essential prior to the execution of a release by the
employee. Often,
such proposals are mere invitations by the employer to negotiate
reasonable compensation terms. A much
improved "severance package" will often be achieved through
negotiations on your behalf by your lawyer.
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Dismissal
with causeIn
very limited, rare circumstances, employment may properly be terminated for
cause without any prior notice to the employee. In such
cases, the terminated employee has no claim to compensation or
severance.
It
is very difficult for employers to prove "just cause" for
termination of employment.Generally,
where an employer has concerns based on an employee's performance or even
misconduct, the employer must warn or advise the employee of the specific
concerns requiring attention, and the employer must further grant
reasonable opportunity to the employee to remedy and improve performance
or conduct in the areas of concern. If
no improvement or change is demonstrated after a prolonged period and the
presentation of repeated warnings, usually in written form, an employer
may consider whether grounds present for termination of employment with
cause. As
well, in rare circumstances of gross misconduct, grounds may also
present for immediate termination with cause. Examples of such
circumstances could include serious theft or fraud, blatant and
gross negligence, serious and intentional dereliction of employment
duties, or fundamental breach of specific, critical term of an employment
contract. Legal advice is required in assessing whether
adequate grounds for
termination
with cause present in any such circumstance.
If the circumstances do not justify lawful termination for cause,
working notice or financial compensation must be provided to the employee if
the position is to be terminated, even if performance has been
unsatisfactory. An
employer may also, in some circumstances, have lawful grounds to take
reasonable disciplinary steps, such as short suspensions to redress
employee misconduct. In
short, it is difficult to establish just cause for termination in a
court proceeding, unless written warnings have been provided and adequate
opportunity for improvement has been provided. In most cases,
reasonable notice is required.
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Constructive Dismissal or Rightful Resignation
It
is lawful, in extreme and difficult situations, for an employee to claim that
an
employment position
has effectively
come to an end,
even where there has been no actual termination.
In such cases, an employee has
been constructively dismissed, and may be entitled to resign while
still maintaining all entitlements to compensation from the employer.
Constructive
dismissal may occur where a unilateral and fundamental change is imposed
by the employer on the duties or responsibilities of the employment,
including the removal of important responsibilities and functions, so that
the employee has effectively been demoted to a lesser
position. Such constructive dismissal may occur even in the
absence of a reduction in salary, compensation or benefits.
Constructive
dismissal may also occur where continuation of the employment has
reasonably become untenable to the employee due to persistent and serious
harassment or discrimination, a major change in working conditions,
location of employment or terms of employment, or a unilateral,
reduction in the terms of
compensation
paid to the employee.
In such
circumstances, an employee may have the right to treat the job as
terminated, even where the employer has no specific intention to terminate
or end the employment.
An
employee who has been constructively dismissed has the same entitlements
to salary in lieu of notice, statutory severance and termination payment,
and such additional compensation which would have been available had he or
she been dismissed without cause
Legal
advice is essential prior to alleging constructive dismissal in any
specific case. There is no "rule of thumb" as to when an
employee has been constructively dismissed. A claim of constructive
dismissal is not without risk, and should be made only after thorough
consideration of the circumstances with a qualified employment lawyer.
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How is
"reasonable notice" determined?The
required amount of "reasonable
notice" is determined on the individual facts of each case, based on
factors including the terminated employee's age, length of
service and
seniority, the nature
of the employment position, and the
circumstances of
the employee's hiring
and termination.
Justi
The "classic"
statement of factors to be considered in determining reasonable notice was
made by Mr. Justice McRuer in the 1963 case of Bardal v. Globe
and Mail Ltd.
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 qualification of the
servant.
There is no "rule of thumb" as to
the calculation of notice entitlements upon a
wrongful dismissal. Typically, an experienced, senior manager may be entitled
notice in the range of one month of notice for each year of service.
An entry level,
junior employee's entitlement may be somewhat reduced. In
some cases, however, a short-term employment that ends preemptively may give rise
to a considerable notice period that may even exceed the duration of
the actual employment.
It is unusual
for more than two
years' notice to be deemed reasonable, irrespective of the
duration of employment,
except in the most compelling of circumstances. Inducement
to leave stable prior employment Inducement is another factor considered by the courts in determining the reasonable notice period for a wrongfully dismissed employee.
An employee
who is terminated
without
cause from a relatively
new position after being induced to leave an
earlier, stable position may be entitled to an extended
notice period that includes
consideration of the time employed in the
prior
position:
“In my opinion, such inducements are properly included among the considerations which tend to lengthen the amount of notice required....
there is a need to safeguard the employee's reliance and expectation interests in inducement situations. I note, however, that not all inducements carry equal weight when determining the appropriate period of notice. The significance of the inducement in question will vary with the circumstances of the particular case and its effect, if any, on the notice period is a matter best left to the discretion of the trial judge.”
-
Justice Iacobucci,
Supreme Court of Canada, Wallace v. United Grain Growers Limited For
an inducement to affect the applicable period of reasonable notice, it must
exceed the ordinary level of persuasion utilized by a typical, recruiting
employer, and rise beyond the level of encouragement inherent in any
ordinary hiring process. A
notice period may be increased
where specific promises,
beyond the ordinary, have been made by an employer or recruiter as to future career advancement,
expected increases in responsibility,
long-term job security and or higher compensation with the new organization,
particularly if employment is terminated
after a short period of time. The
representations of "headhunters" or professional recruiters on
behalf of prospective employers may also be considered in determining
whether inducement has been a factor. In
considering the notice period applicable, a court will enquire as to
whether there was any inducement, what degree of inducement was exercised,
and the degree to which the inducement influenced the employee's decision
to leave the prior employment position. Where the employee has been actively looking for a
new position, however, inducement may become a less compelling factor. Similarly,
in McCulloch v. IPlatform Inc.,
the Ontario Superior Court held that no inducement had occurred, even
where employment was terminated after only four months, due to
restructuring. In McCulloch, an
employee had pursued
a new position for significantly greater pay in the absence of specific
promises from the employer regarding future prospects. Justice
Echlin referred to the employee as a
"willing seducee"
and declined to extend the notice period on the basis of inducement. Employment
agreementsEmployment
agreements often provide for a specified period of notice, or pay in lieu
of notice, to be provided upon a termination of employment without
cause. Upon a termination, it is necessary to determine at the
outset whether any such agreement is applicable. Employment
agreements are not always
legally enforceable. This is particularly the case with respect to
employment agreements which are entered into after employment has already
commenced, upon the employer's insistence. Where an employment
agreement includes any provision that purports to limit the employee's
notice or severance entitlements upon termination, it is essential to
obtain immediate advice from a qualified employment lawyer. Employment
agreements that purport to limit severance entitlements may also be
challenged following termination on the basis of ambiguity,
unconscionability, or on the basis that they have become outdated due to
position changes or promotions subsequent to the agreement. Summary
- Reasonable NoticeMany
factors must be considered in arriving at a determination of the
reasonable notice period applicable to a specific circumstance, and
qualified legal advice is generally
necessary to assist in this making this
determination.Email
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Compensation
in
Wrongful Dismissal Claims
Compensation in wrongful dismissal claims is determined
with
regard to the reasonable notice the employee was entitled to
receive, but did not receive, upon termination. Reasonable notice is assessed with
reference to an employee's age, position, length of service, education,
seniority and other relevant factors.
Depending on circumstances, in wrongful dismissal claims, damages
are often calculated in
the range of one month's salary and benefits,
in lieu of
notice, for every year of an employee's service, together with
additional compensation for job-search expenses. In
certain circumstances, reasonable notice can well exceed this
range.
Damages may also be affected by the circumstances of hiring. As an
example, damages may increase if an employee was, at the time of hiring,
induced to vacate secure, long term employment in order to assume
the new, ill-fated position.
If the conduct of the employer at the time of
termination was grossly improper
or in bad faith,
a "reasonable notice" period may be extended and additional compensation may be awarded.
At
WISE
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OFFICE ,
we seek comprehensive
compensation for our clients in wrongful dismissal claims, including:
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Bad Faith by the Employer upon Termination
Canadian Courts regularly provide increased compensation
to employees who have been wrongfully dismissed, where the employer's
conduct at the time of termination was in conducted in bad faith or
dishonestly, in a manner that caused public embarrassment, or was
otherwise callous, shocking, or in blatant disregard of the employee's
dignity and well-being. In such cases, the Court will
extend the period of notice applicable by a further, reasonable period
of time. Below, you will find an excerpt from the leading Supreme
Court of Canada decision on this issue.
...The point at which the employment relationship
ruptures is the time when the employee is most vulnerable and hence,
most in need of protection. In recognition of this need, the law
ought to encourage conduct that minimizes the damage and dislocation
(both economic and personal) that result from dismissal. ... I note
that the loss of one's job is always a traumatic event. However,
when termination is accompanied by acts of bad faith in the manner
of discharge, the results can be especially devastating. In my
opinion, to ensure that employees receive adequate protection,
employers ought to be held to an obligation of good faith and fair
dealing in the manner of dismissal, the breach of which will be
compensated for by adding to the length of the notice period.
"... The obligation of good faith and fair dealing is incapable
of precise definition. However, at a minimum, I believe that 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.
Mr.
Justice Iacobucci in Wallace v. United Grain Growers Ltd.,
October, 1997
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The Employee's Duty to Mitigate
by Seeking Re-employment
Under Ontario
Law, a terminated employee is required to
make reasonable and diligent effort to secure re-employment after
a dismissal. In wrongful dismissal actions, damages may be reduced if such efforts are not proven.
The is duty to seek re-employment relates to the
employee's duty to mitigate damages.
The employer's liability to pay damages for wrongful
dismissal during a notice period is reduced by any income the employee
receives (or ought to have received) during the notice period.
The duty to seek re-employment may be further
complicated if an employment contract has been signed which contains a
restrictive covenant such as a non-competition agreement or
non-solicitation agreement. The enforceability of such agreements
is often questionable, and advice is required from a qualified
employment lawyer as to the limitations, if any imposed by such
provisions.
If a terminated employee does not seek a new position,
a Court can impute income to the employee, based on the amount
the Court believes the employee would have earned, had a reasonable
job search been undertaken. A Court may on that basis reduce
or limit the notice monies payable by the employer.
Reasonable re-employment options are not limited to
job-search. In certain circumstances, returning to school or
starting a new business have been held to be reasonable mitigation, as
well. The test seems to be whether reasonable, adequate and
active steps have been taken to move toward a return to the workforce
on a reasonable basis
As a result, in wrongful dismissal cases, Plaintiffs
are almost always required to show evidence of their job search
activity.
It is accordingly essential that complete records be maintained of
all job-search activity following dismissal:
-
Maintain a log of all phone calls and messages to prospective
employers
-
Keep copies of all advertisements answered
-
Keep copies of all letters sent and received in connection with
your job search
-
Maintain a contact record of networking efforts and events
attended
-
Keeps receipts for all costs you incur in job-search activities,
including postage costs, costs of any training sessions,
outplacement services or vocational assessments undertaken.
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Employment
Standards Legislation in Ontario
Wrongful dismissal claims are pursued by way of negotiation and
through Ontario's court system. An employee's entitlement to damages
for wrongful dismissal may greatly exceed the minimum benefits payable
under the Employment Standards Act.
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NOTE:
If you have been dismissed, it is strongly advised that you
seek legal advice regarding your entitlements prior to
filing a claim under Ontario's Employment Standards Act.
You cannot start
a court action against your employer for wrongful dismissal if
you have already filed an Employment Standards Claim with the
Ministry for the same termination, unless your claim is
withdrawn within two weeks of filing it.
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Minimum
Statutory Benefits
Payable under Ontario's Employment Standards Act
Under the Act, these statutory minimum termination benefits are
must be provided upon a termination without notice or cause:
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Length
of Employment
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Notice
period or Termination pay
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Less
than 3 months:
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0
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3
months, but under 1 year:
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1
week
|
|
1
year, but under 3 years:
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2
weeks
|
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3
years, but under 4 years:
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3
weeks
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4
years, but under 5 years:
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4
weeks
|
|
5
years, but under 6 years:
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5
weeks
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6
years, but under 7 years:
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6
weeks
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7
years, but under 8 years:
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7
weeks
|
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8
years or more:
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8
weeks
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Severance pay under the
Ontario Employment Standards Act
In addition to statutory
notice requirements, and the requirement of payment of salary in lieu of
notice, Ontario employees in certain circumstances may be entitled to
payment of Severance Pay, under the Act.
Severance pay must be provided
to an employee who:
-
has worked for the
employer for five or more years (including all time spent by the
employee in employment with the employer, whether continuous or
not and whether active or not), and,
Statutory severance pay in
these circumstances is approximately one further week of ordinary per year
of service . The maximum severance
entitlement under the Act is an amount equal to the employee’s
regular wages for a regular work week for 26 weeks.
The statutory severance benefit is calculated specifically
by multiplying the employee's regular wages (excluding overtime) for a
regular work week by the sum of:
Severance pay must be paid
within seven days after termination of employment or on the next regular
pay day, whichever is later, unless the employee agrees to a longer-term
payment schedule.
Entitlements under common law
for damages for wrongful dismissal may dramatically exceed the minimum
statutory entitlements described in this section. We recommend that
legal advice be obtained whenever a severance proposal is provided by an
employer.
Other Provisions in the Employment
Standards Act
The Act regulates and
enforces many
aspects of workplace law, including vacation and overtime pay, pregnancy
and parental lave, Public Holiday entitlements and payroll
issues.
The Employment Standards
Information Centre may be reached at 416-326-7160 or toll- free at
1-800-531-5551, for further information.
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The Ontario
Human Rights Code
The Ontario
Human Rights Code provides as follows
Employment
5. (1) Every
person has a right to equal treatment with respect to employment without
discrimination because of race, ancestry, place of origin, colour,
ethnic origin, citizenship, creed, sex, sexual orientation, age, record
of offences, marital status, same-sex partnership status, family status
or disability.
Harassment in
employment
(2) Every
person who is an employee has a right to freedom from harassment in the
workplace by the employer or agent of the employer or by another
employee because of race, ancestry, place of origin, colour, ethnic
origin, citizenship, creed, age, record of offences, marital status,
same-sex partnership status, family status or disability.
The
Code also provides for a process of dispute resolution and hearing by
Tribunal in circumstances where its provisions are alleged to have been
contravened in workplaces and elsewhere.
The
Tribunal is empowered to make mandatory orders to require compliance with
the Act. Orders may be made for reinstatement of employment where an
employee has been terminated in contravention of the Code.
As
well, the Tribunal may also make an Order requiring restitution, including
monetary compensation, for loss arising out of Code
infringement.
Where
the infringement has been engaged in willfully or recklessly, monetary
compensation may include an award, not exceeding $10,000.00, for damages
for mental anguish.
Ontario
Human Rights Code complaints generally must be commenced within six
months of the offending actions.
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The reader
is expressly advised and cautioned to consult with a qualified
Toronto Employment Lawyer or Wrongful Dismissal lawyer for advice regarding the reader's specific circumstances.
This information is not
applicable to any specific case, and is intended for information purposes only. It is not a substitute
for legal advice and may not be relied on as such.© 2004-2007,Garry J. Wise and Wise
Law Office, Toronto, Ontario, Canada. This information may not be
reproduced without consent in writing
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