Employment Law/Wrongful Dismissal

What is Wrongful Dismissal?

Generally an employer has the right to dismiss an employee. What the law does regulate, however, is the notice (advanced warning) that an employer has to give an employee. Wrongful dismissal is when an employee has been dismissed without receiving adequate notice from his or her employer. Failure to give adequate notice entitles the employee to sue for damages.

The Notice

The Labour Standards Code

The Labour Standards Code provides certain minimums of notice for employees that have been dismissed without just cause. They are:

1. One weeks' written notice for an employee whose employment is less than two years;
2. Two weeks' written notice if the employment is from two years to five;
3. Four weeks' notice if the employment is from five to ten years; and
4. Eight weeks' written notice if the employment is ten years or more.

These notice periods are enforceable by orders of the Labour Standards Board acting upon a complaint by an employee who has been dismissed. It is important to remember they are only minimum awards. An employee can also sue in the courts, where the notice awards are generally higher.

What notice should you receive if you have been dismissed or if you are an employer what notice are you required to give?

The answer to this depends on many factors. A major consideration is whether an employer has just cause to dismiss an employee. Otherwise, the following are the usual factors that determine the employers notice period or the right of an employee to notice.

Categories of employees

Employees hired for an indefinite term.

An employee is hired for an indefinite term if there is no specific agreement as to how long the employee will be employed.

In these circumstances, the law states that employers are required to give the employee "reasonable notice of his or her dismissal". There are many factors that go into determining what is in fact reasonable notice. These factors include the length of employment, the seniority of the employee, the type of job and the age of employee. A general rule of thumb (not applicable in all cases) is an employee is entitled to one months notice for every year of employment with an employer. Again, this will vary depending on the circumstances. In particular:

1. A new employee will be entitled to more than one month per year. For example, a new senior manager will likely be entitled to six months notice. A new line employee, one month at least.
2. The age of the employee is also relevant. In particular, a more senior employee (i.e. 55 years of age or older), will be entitled to a longer notice period. The idea behind this is that it will be more difficult for an older individual to obtain other employment after being dismissed.
3. The more senior the job, the longer the notice period the employee is entitled to. Generally a manager or executive will be entitled to more notice than administrative staff or a line employee.
4. A long term employee is often entitled to less than one month per year. For example, it is very rare for a 20 year employee to be entitled to 20 months notice.

Employers and employees can agree in advance what notice of dismissal is required. This is often written into an employment contract. If you are about to take a job and have concerns about this, it may be in your interests to negotiate this. On the other hand, if you are an employer and have concerns about having to pay an extended amount of severance in lieu of a notice period, this might be something in which to deal with upon hiring of a specific employee.

Probationary Employees

A probationary employee is a new employee that has just been hired with the understanding that the new employee is on probation for a period of time. During this period of time the employer will be evaluating the employee's suitability. After the probationary period is up, the employer can decide the employee is not suitable and dismiss the employee without notice. On the other hand though, if the employer delays making the decision beyond the probationary period, the employee will no longer be a probationary employee and would be entitled to notice.

Contract Employees

A person employed via contract is hired for a specific period of time or a specific task. The employment will end when the time period or task ends. The employer will have no obligation to give any further notice.

If the employer wants to dismiss the employee prior to the end of the agreed time period, the employee will potentially be entitled to salary for what the employee would have earned for the balance of the term of the contract.

Notice of Dismissal

Notice is defined as the advance warning that a person is about to be dismissed from his or her job. It is however unusual for an employer to give actual notice of an impending dismissal. This is because employers often have concern that became an employee will know that his/her job will be ending the employee will be unlikely to work as diligently as they know there is no future for them with the specific company. Accordingly, it is most common that a dismissed employee be given money equal to what they would have earned during the notice period. For example, if the reasonable notice for the particular employee would be five months, the employer can dismiss the employee immediately and would pay the equivalent of five months salary and often money equal to any benefits the employee would have also received during this time frame. On the other hand, if the employer were to actually give five months notice that the job was ending, the employee's job would end after the 5 months and the employee would not be entitled to any more from the employer.

You have been dismissed, your duty to mitigate.

A duty to mitigate means that you have to make reasonable efforts to obtain alternate equivalent employment. An employee may be entitled to compensation for the employer's failure to give notice of dismissal, however, one just cannot sit back and do nothing for the notice period and expect to have a legitimate claim for the total amount of salary and benefits for that notice period.

If you make efforts to obtain a similar job at a similar wage and are unsuccessful within that notice period, you will have a claim for the loss of salary and benefits for the notice period. If you make no effort to obtain alternate equivalent employment, the courts will usually reduce the amount you are entitled to by reducing the notice period at the time that the court would think that you should have been able to get a new job if you had been trying. If an employee gets a new job within the notice period, usually the court will reduce the employee's claim by salary and benefits earned during the notice period.

If you are an employer, be aware that if an employee actually gets a new job immediately after the dismissal, there generally is no claim as the employee has suffered no loss because he or she has completely mitigated that loss.

What may constitute just cause?

If an employer has just cause, it can immediately dismiss an employee. An employer has the burden to prove just cause if the employee claims he or she has been wrongfully dismissed.

There are however some events which have generally been found to constitute just cause on when merely happening once. These include theft, competing with the employer, violence or extreme insubordination.

Without any event noted above, generally just cause will only exist if there has been a series of lesser infractions and the employee has been warned each time that such infractions are unacceptable and may eventually lead to dismissal. For example, an employee that is routinely late for work or rude to co-workers, etc.. Generally the employee should be warned verbally progressively leading up to warnings in writing that will express that if the behaviour continues, the employee will be dismissed.

Constructive Dismissal

Constructive Dismissal is when one is not necessarily fired from his or her position but changes are requested to the extent that one can claim the change is tantamount to being dismissed. Such changes would involve one being given a demotion without reasonable or grounds or in some cases, being requested to move to another location and or accept work involving a lesser skill set or responsibility than the employee previously enjoyed.

If you are an employer and you are requesting an employee make such a change, you may want to be mindful of the law regarding constructive dismissal. Often reasonable accommodations can be made with the employee to minimize the chances of the employee claiming he or she has been constructively dismissed.

If you are an employee and your employer unilaterally requests that you change jobs within the company, and this represents a demotion of sorts, it may be considered a constructive dismissal situation. In such circumstances, you should consult with a lawyer about your options. If you have been with the company long enough to be considered a tenured employee, you may not have to accept such move. On the other hand, if you do accept such move, it is possible you can negotiate a favourable compensation package.

Can incompetence be grounds for dismissal?

Incompetence can be viewed as just cause in certain circumstances. In order to justify this as dismissal, the employee must be fully explained how his/her performance has not met required standards. The employee must also be given a reasonable opportunity to improve.

I've been dismissed, can I be reinstated? I've dismissed and employee and they want to be reinstated; is this possible?

There are exceptions to the general rule that employers always have the right to dismiss employees provided the proper notice is given. In particular:

1. Where an employee is a 10 year plus employee. In this case, the Labour Standards Board can order reinstatement if the job position still exists;
2. If the employment is governed by a collective agreement. If so, and arbitrator can order reinstatement in certain circumstances;
3. If the employee is deemed to be dismissed for grounds prohibited by the Human Rights Act, in particular race, religion, age, etc.. The Human Rights Tribunal can order reinstatement in these circumstances.

If you have been dismissed and you do not think the reasons are valid or if you are an employer concerned about how to best go about dealing with an employee you want to terminate, please call us for a consultation. Auld Allen has represented both employers and employees we are happy to provide advice so that the best course of action can be determined.