What You Should Know about Wrongful Dismissal and Progressive Discipline

What Exactly is a “Wrongful Dismissal” and “Termination for Cause”?

Wrongful dismissal is a term often used in Ontario employment law to describe a situation in which an employee is terminated from their job without just cause, or alternatively, without being given the appropriate notice of termination (or severance package). When this happens, the employee may have grounds for a legal claim against their former employer. Understanding wrongful dismissal is essential for both employees and employers in Ontario, as it can have significant legal and financial consequences.

In Ontario, the Employment Standards Act, the common law, and various court decisions help to define what constitutes a wrongful dismissal. In this article, we dive into the key factors that determine whether a dismissal is wrongful and how employees can pursue compensation for it.

What Constitutes Wrongful Dismissal in Ontario?

In Ontario, wrongful dismissal occurs when an employee is terminated without proper cause, without adequate notice, or without the appropriate severance package. There are several different scenarios where wrongful dismissal claims can arise:

1. Termination Without Just Cause: Under Ontario employment law, employers are required to provide reasonable notice of termination, or otherwise, pay in lieu of notice when terminating an employee, unless it can prove it had just cause to terminate employment without doing so.  The concept of “just cause” typically refers to serious misconduct, such as theft, violence, or significant breaches of company policy. However, if there is no just cause for the termination, the employee must be provided with either a notice period or compensation in the form of a severance package.

2. Failure to Provide Minimum Statutory Termination Pay and Severance Pay: Under the Employment Standards Act, employees who have been employed for at least three months are entitled to written notice of termination or pay in lieu of notice. The amount of notice or severance pay required depends on the length of the employee’s service. If an employee is terminated without sufficient notice or pay in lieu, this constitutes wrongful dismissal. In addition to notice, employees may be entitled to severance pay if they meet certain conditions outlined in the employment legislation. One of the exceptions under the employment legislation where employers may not have to provide these basic statutory minimums are if the employer can prove the employee was “guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.”

• Constructive Dismissal: The concept of a constructive dismissal refers to situations where an employee involuntarily resigns due to their employer’s actions, such as changing the terms of their employment contract or creating a hostile work environment. In such cases, the resignation may still be considered a dismissal, and the employee may have grounds for a wrongful dismissal claim. However, these cases are very risky to employees and should only be handled through the guidance of an experienced Ontario employment lawyer (as it could result in the employee forfeiting their legal rights and entitlements, including to a severance package).

The Concept of Progressive Discipline in Wrongful Dismissal Cases

In many cases, the courts have found that progressive discipline is implicit in the concept of “just cause”, meaning that employers are generally required to take a progressive or corrective approach to discipline before resorting to the ultimate penalty of termination for just cause – especially if they have an internal policy requiring as much.

In Ontario, progressive discipline is a key concept in employment law, especially in wrongful dismissal cases. Employers are expected to follow a fair and reasonable process when dealing with employee misconduct or performance issues. Failing to do so may lead to wrongful dismissal claims. Progressive discipline ensures that employees are given opportunities to correct their behavior before more severe actions, such as termination, are taken. In this blog, we’ll explore the role of progressive discipline in wrongful dismissal cases under Ontario employment law and how both employees and employers can navigate these situations.

What is Progressive Discipline?

Progressive discipline is a system of discipline that allows employers to address employee performance or behavioural issues in a structured and escalating manner. The goal of progressive discipline is not to immediately terminate an employee but to offer a fair process for improvement and warnings (sometimes even conducting a fair and appropriate investigation into wrongdoing, if the situations calls for it). The key idea is to provide employees with a chance to correct their actions before facing serious consequences like dismissal.

The stages of progressive discipline typically include:

1. Verbal Warning: The employee is informed about the issue and provided with an opportunity to improve. This step is usually informal but documented.
2. Written Warning: If the behaviour continues, the employer issues a formal written warning outlining the issue and the potential consequences of further misconduct.
3. Suspension: If the problem persists, the employee may be suspended without pay. This suspension serves as a clear indication of the severity of the issue.
4. Termination: As a last resort, if the employee fails to improve, the employer may proceed with termination.

How Does Progressive Discipline Relate to Wrongful Dismissal?

Progressive discipline plays a vital role in wrongful dismissal cases because it demonstrates that the employer gave the employee an opportunity to correct their behaviour before taking extreme measures like termination. Under Ontario employment law, if an employer dismisses an employee without following a progressive discipline process – especially when the dismissal is not for just cause – the employee may have grounds to file a wrongful dismissal claim.

As discussed above, a wrongful dismissal occurs when an employee is terminated without reasonable notice, severance, or just cause. If the employer failed to provide an opportunity for improvement through progressive discipline or did not follow the proper procedures, the employee might be entitled to compensation for wrongful dismissal.

Progressive Discipline and Just Cause for Termination

When faced with an employee challenging a decision to terminate their employment in a wrongful dismissal claim, one of the main defenses employers may use to justify a dismissal is just cause (serious misconduct). In order to convince a judge that it had just cause, an employer in many cases must show that it followed progressive discipline before making the final decision to terminate employment, which is a key factor in determining whether just cause exists.

Ontario courts generally require that employers attempt progressive discipline before proceeding with termination for performance or behavioral issues, except in cases of severe misconduct. If the employer fails to implement progressive discipline and moves directly to termination, the court may find that the dismissal was wrongful.

For instance, if an employee is terminated for repeated tardiness, and the employer did not provide any warnings or an opportunity for improvement, the termination may be deemed wrongful. Progressive discipline ensures that employees are informed of issues, given a chance to rectify them, and understand the consequences if they fail to improve. Likewise, employers must be mindful of their human rights obligations to employees (workplace accommodations for disabilities) under the Ontario Human Rights Code, which can lead to discrimination claims.

How Employers Can Help Minimize the Risk of Wrongful Dismissal Claims

To avoid wrongful dismissal claims, employers should ensure that they follow progressive discipline procedures carefully and consistently. Here are some best practices:

1. Document Everything: All steps in the progressive discipline process, including verbal and written warnings, should be well-documented. This provides evidence that the employee was given multiple (and meaningful) opportunities to improve and was aware of the potential consequences.

2. Be Clear (and Realistic) about Expectations: Employers should clearly outline performance and behaviour expectations for employees, as well as the disciplinary process, in employment contracts or employee handbooks. Employees need to understand what is expected of them and the consequences for failure to meet those expectations, which should be realistic, fair and set in good faith.

3. Provide Support and Training: Offer employees the opportunity to improve through training, coaching, or mentorship programs. A supportive approach demonstrates the employer’s willingness to help the employee succeed before resorting to termination.

4. Follow Company Policies: Employers should have a well-established progressive discipline policy and apply it consistently. Any deviation from this policy can make it difficult for the employer to justify the termination if a wrongful dismissal claim arises.

Steps to Take If You Believe You Have Been Wrongfully Dismissed

If you believe you have been wrongfully dismissed, it is important to take a few initial steps. First, document the termination and keep all important documents, including a of the events leading up to your dismissal, any communications with your employer, your employment contract, and termination letter. Second, review your employment contract to ensure you understand the disciplinary procedures and any terms related to dismissal outlined in your contract. Thirdly, consult with an experienced employment lawyer in Ontario who can help you understand your rights and guide you through the process of pursuing a claim for wrongful dismissal.