Why Wrongful Dismissal May Not Mean What You Think

Many downsized employees feel they were unjustly terminated, but in legal terms that refers to a specific situation.

Why Wrongful Dismissal May Not Mean What You Think

By Mark Swartz


There’s some confusion about what “wrongful dismissal” means. So here’s a simplified definition: it’s when an employee gets terminated without cause (that is, they haven’t been fired for cause), but there is not enough severance offered – or none at all.

These conditions may not always be clear-cut. For instance, there could be issues about how much severance is considered sufficient.

This article covers wrongful dismissal basics from an employee perspective. It can help make you more aware of your employee rights and options.


About Wrongful Dismissal

In Canada, an employer has the right to terminate an employee in one of two ways:
a) for cause without notice (getting fired), without payment of a severance package.
b) termination without cause, after giving the employee reasonable notice or payment of same.


Severance pay is money and benefits a downsized employee may be entitled to. It’s meant to provide financial support to ease transition from one place of work to another.


Complexity can arise in a wrongful dismissal because notice and severance are based on a number of factors. An employee’s age, years of service, probability of finding replacement employment, and character of employment, all figure into the equation.


Wrongful Dismissal Versus Constructive Dismissal

Some people mix up wrongful dismissal with constructive dismissal. The two phrases are actually related legal concepts, united under the category of unjust termination.


In wrongful dismissal the employee gets terminated, but isn’t offered enough severance. With constructive dismissal, the employee is not let go. However the terms of their employment are so altered by the employer it’s as if the employment contract has been shattered.


For Employees Under Federal Jurisdiction

Do you work for a bank, airline, federal government agency or crown corporation? If so, provisions for wrongful dismissal fall under Part III of the Canada Labour Code.


This covers all employees, managers excluded, who have completed at least 12 consecutive months of continuous employment with the same employer, and who are not covered by a collective agreement.


Employees under federal jurisdiction should respond quickly if they feel they’ve been wrongfully dismissed. They can request, in writing, a written statement from their employer giving the reasons for dismissal. The employer must reply within 15 days after the request is made.


The affected employee can file a complaint alleging unjust dismissal at any Labour Program office no later than 90 days from the date of the termination.


Private Sector Employees

Canada’s ESA (Employment Standards Act) allows for only minimum severance pay in a downsizing.


Private sector employees who are terminated without just cause may have certain added entitlements in common law (or other legislation). They ought to receive the continuation – or replacement cost – of all employee related benefits that they would have received had they been given reasonable notice.


These additional rights could amount to considerably more than the minimums provided by the ESA. However pursuing these claims generally involves taking the employer to court.


Legal Obligation Of Employee To Mitigate Damages

After submitting a claim for wrongful dismissal, the employee is obliged to mitigate damages. This simply means that they must try to find gainful employment, not sit idly by waiting for a Labour Board or court award.


Get Advice Before Signing Off

Since the amount of damages for wrongful dismissal varies by situation, anyone who has been dismissed without reasonable notice (or without pay in lieu of that notice), is wisely advised to seek affordable legal advice from an employment lawyer prior to signing a release, and before accepting the employer’s settlement offer.


It can be intimidating to challenge an employer that acts unfairly. Decide in advance if it’s worth the time and costs to do so.