Wrongful dismissal lawyer in Toronto.

Wrongful Dismissal in Ontario

What is wrongful dismissal?

Wrongful dismissal happens when an employer terminates your employment without giving you the proper amount of notice or pay in lieu of notice, that you're legally entitled to.

Termination with cause vs without cause

There are two very different ways an employer can end your employment, and the difference has a major impact on what you're owed.

Termination without cause

Most terminations are "without cause." This means the employer has decided to end the relationship for reasons unrelated to serious misconduct, such as restructuring, downsizing, a change in direction, "fit," or no stated reason at all. A termination without cause is usually lawful (provided it is not discriminatory), but it comes with a price: the employer must give you proper notice, or pay in lieu of notice (severance). If they don't, the dismissal is wrongful.

Termination with cause

A termination "with cause" (often called "just cause") is different. Here the employer alleges that the employee engaged in misconduct serious enough to justify dismissal with no notice and no severance at all. Because that outcome is so severe, courts have described dismissal for cause as the "capital punishment" of employment law, and the burden of proving it rests entirely on the employer.

That burden is heavy, and it is not met simply because an employer is unhappy or labels conduct as "cause." Courts assess the alleged misconduct in its full context, including how serious it really was, the employee's length of service and disciplinary record, whether the employer had clear policies and applied them consistently, and whether a lesser response such as a warning or suspension would have been more appropriate. Minor, isolated, or previously tolerated conduct rarely clears the bar.

Recent Ontario decisions show how demanding the standard is. In one case, a court upheld a just-cause dismissal, but only because the role was safety-sensitive, the employer had a clear and consistently enforced policy, and the employee had already received a warning. In another, an employer that accused a long-serving employee of "time theft" could not establish cause, and the court awarded 33 months of compensation, including additional damages for the employer's bad-faith conduct. When an employer alleges cause but cannot prove it, the dismissal becomes a wrongful dismissal, and you are generally entitled to the same notice or severance as if you had been let go without cause.

How much notice or severance are you owed?

There are two different standards, and employers frequently offer employees their absolute minimum entitlements.

Employment Standards minimums

The Ontario Employment Standards Act, 2000 (the "ESA") sets a minimum compensation formula of roughly 1 week of notice (or pay in lieu of notice) per year of service, capped at a maximum of 8 weeks' of compensation. This is commonly referred to as "termination pay". During this time, benefits coverage and any other form of compensation should continue, uninterrupted.

In addition, for employees who were let go from larger employers who have a payroll of at least $2.5M (typically when the employer has at least 50 employees), they can be entitled to an additional 1 week per year of pay in lieu of notice of termination, up to maximum of 26 weeks. This is commonly referred to as statutory "severance pay".

These minimum ESA payments and coverage are the absolute minimum payments and entitlements employers are required to extend. They are not a fair measure of what you're owed.

Common law reasonable notice

When commencing new employment or receiving a promotion, employers often request employees to sign an employment contract, which can include a termination clause, to limit an employee's severance entitlements to the ESA minimums.

Unless the termination clause is well drafted and enforceable, you are generally entitled to significantly more compensation, known as common law reasonable notice of dismissal. Throughout thousands of employment law court cases (known as "common law"), courts have routinely said that ESA minimums are not sufficient compensation to provide a bridge to an employee's next job, following a termination.

Instead, courts have the discretion to enhance a terminated employee's total compensation following their termination, by assessing factors such as their age, length of service, type of position, and other factors, to offer terminated employees a greater severance package, subject to the availability of replacement work.

In recent years, courts have awarded severance packages as high as 24-26 months of total compensation.

What counts toward your severance

• Base salary over the notice period
• Bonuses, commissions, and other variable pay
• Incentive pay, such as stock options and restricted stock units
• Pension and RRSP match
• Benefits continuation
• Other entitlements, such as car allowance

What to do if you've been dismissed

• Don't sign the termination letter right away. Signing typically forfeits your right to pursue an enhanced severance, even if the offer is well below what you're owed. The deadline is rarely as firm as it looks.
• Preserve your documents: your employment contract, offer letter, termination letter, pay stubs, bonus, benefits information, and any written correspondence leading up to your termination, can be crucial for your case.
• Keep a record of your job search. You have a duty to make reasonable efforts to find comparable work, and your entitlement is tied to how long that's likely to take.
• Get advice before the deadline. A short review will tell you whether the offer is fair and what room there is to negotiate.

How we help

We act for dismissed employees across the Greater Toronto Area and throughout Ontario and Canada. That work typically includes:

• Assessing your true entitlements under both the ESA and common law
• Reviewing your severance offer and testing whether your termination clause is enforceable
• Negotiating an improved package on your behalf
• Pursuing a claim through the courts where a fair resolution can't be reached

Because we also advise employers, we understand the strategy on the other side of the table, and put that insight to work for you. If your role, pay, or working conditions changed rather than ending outright, you may be dealing with constructive dismissal instead, which can also entitle you to a severance package and potentially other damages.