How to Deal with an Employee's Wrongful Dismissal in Ontario

How Are Wrongful Dismissal Cases Resolved in Ontario?

When it comes to termination of employment and wrongful dismissals, employment lawyers typically deal with a wide range of different scenarios. The following describe a few examples:

1. The “New Manager/Owner” Scenario:

The employee has been working for your employer for several years, and have had generally good performance. At some point, he begins reporting to a new manager, who seems to have a different management style than what what they were used to with the previous manager. Some disagreements occur over work-related tasks and, after some friction, the employer provides the employee with a termination letter advising his employment is being terminated “without cause,” along with a severance offer to consider accepting.

2. “Termination for Cause” Scenario:

Despite working with the employer for some time, there have been some recent issues with the employee’s work performance, including being placed on a “Performance Improvement Plan” intended to provide her time to improve. As a result, the company makes the decision to terminate her employment for “cause,” as a result of poor performance.

3. The “Terminated During Probation” Scenario:

The employee left a previous long-term job to join another company, relishing the opportunity of an importance career advancement (and a significant pay raise). After less than 3 months of working on the new job, she’s surprised to learn that her employer has terminated her employment during the “probation period” (which she is not even aware existed), claiming she is not a “good fit.”

4. The “Reprisal Termination” Scenario:

Due to some significant workplace bullying and harassment, an employee complains to the manager/human resources department about his experiences and them to assist in addressing the difficult situation. Or, alternatively, a female employee announces to her employer that she is currently pregnant and that she intended to commence maternity leave at some point in the future. Not long after, she’s advised that her employment is terminated due to a “business restructuring.”

What are the employee’s options?

The first prudent step for employees is to get legal advice by speaking with an experienced employment lawyer about their specific situation, and discussing their legal rights and options.

Depending on the facts of each case, one option the employment lawyer may be able to assist with is determining whether the employee has grounds to negotiate the terms of a severance package as a result of the termination of employment. But just as importantly, a consultation with an employment lawyer will allow the employee to understand not only the financial issue of termination and the severance package they may be entitled to, but also whether there are additional grounds for a claim of wrongful dismissal, unlawful reprisal or discrimination against the employer (or any other claims depending on the employee’s circumstances).

Reviewing and Negotiating a Severance Package

Assuming the main issue is the employee’s severance pay entitlements following the termination of employment (although in most cases, severance pay is not the only issue), the employment lawyer will negotiate the terms of a fair and appropriate employee severance package. If a negotiated severance package cannot be had, the employment lawyer can then discuss the option for the employee to pursue a wrongful dismissal claim against the employer.

How much severance pay is a terminated employee entitled to receive from the employer? That will depend on a few key factors that should be reviewed with an employment lawyer, including:

whether the employee has an employment contract with a termination clause that states how much severance pay the employee will be paid upon termination
if the employer argues the employee’s job was terminated “for cause” vs. “without cause”
common law factors (including the employee’s age, position, years of service, availability of similar employment, disability, pregnancy, etc.)

In Ontario, the overwhelming majority of termination of employment or wrongful dismissal cases are resolved long before they ever reach the inside of a court room – or, in the context of the COVID-19 pandemic, a “virtual” court room. Statistics show that approximately 96% all cases will settle (including wrongful dismissal, discrimination and constructive dismissal claims), which means that only about 4% of cases go all the way through trial.

What is a Severance Package?

As part of finalizing the termination of employment, employers usually provide a “termination letter” confirming the decision to end the employment relationship (e.g., the employee’s last day of work). In Ontario, the Employment Standards Act, 2000 requires the employer to provide a written termination letter (except employees who do not have at least 3 continuous months of employment). Apart from situations where the termination of employment is “for cause” (i.e.., if the employer can prove wilful misconduct, disobedience or wilful neglect of duty), the employer does not have to provide a reason why the employment is being terminated. Most importantly, the termination letter will also contain a severance offer for the employee to consider accepting (but generally only in cases where the termination of employment is “without cause”).

In addition, the employer will usually ask the employee to sign a legal release, which is an important document for the employer whereby the employee voluntarily agrees to forfeit (waive) any legal claims he/she may have against the former employer (e.g., termination of employment). In other words, by signing a legal release, the employee agrees to accept the severance offer in the termination letter and give up any legal right to seek additional compensation from the employer.

What can employees say to other people (e.g., co-workers) about the severance package they receive from an employer? Generally, there will be a term of “confidentiality,” requiring the employee to keep the terms of the settlement confidential or private (unless they agree to certain exceptions, such as to speak to immediate family to evaluate the severance package). This is common practice, since most employers do not want to set a precedent (example) to other employees in the workplace about how it has resolved similar workplace disputes, including severance payouts.

Some employees also attempt to negotiate, with the help of an employment lawyer, the terms of a reference letter and what to tell a future employer in a job interview about why he/she left the job. Typically, the most common reasons are redundancy or that the employee has simply decided to move on to another career opportunity.

What happens to the settlement agreement if the employee violates the confidentiality obligation? Once the a severance package has been signed, it becomes a legally binding document (contract), so if the employee does not follow its requirements, the employer may sue the employee breach of contact and seek damages for the employee to repay some (or all) of the payments in severance package received.

Whether you are an employee or an employer going through a termination of employment involving a severance package, it is prudent to speak with our employment lawyer to determine your legal rights and options.

Contact

It is important for both employers and employees to negotiate the terms of a termination of employment and severance package with the assistance of an employment lawyer, and to comply with negotiated terms of settlement. If you would like legal advice on your own situation as an employee (or an employer), please contact (647) 822-5492, or book a consultation today.

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