Terminating the Employment Relationship
The employment relationship may be terminated for various reasons including frustration, resignations, abandonment, etc. However, the most common way that the employment relationship is brought to an end is when the employer terminates the employment contract for “just cause” or “without cause”.
A termination for “just cause” occurs when the employee has done something which gives rise to a breakdown in the employment relationship, such as stealing or dishonesty. When the employee has engaged in such behaviour and it amounts to "just cause", then the employee may not be entitled to any termination pay. However, not all cases of dishonesty or misconduct in the workplace will automatically rise to the level of “just cause". When an employer improperly alleges that it had just cause, but did not, then the employee is said to have been wrongfully dismissed from their employment.
A termination “without cause” may occur at anytime and for essentially any reason (provided it is not done for discriminatory or bad faith reasons). However, where the employer decides to terminate the employee on a “without cause” basis it must ensure that it (a) complies with its obligations under the Employment Standards Act, 2000, (b) complies with its obligations pursuant to any written employment agreement, and (c) considers what reasonable notice it must pay or provide to the employee in the absence of any clause which limits such legal entitlements. When an employer fails to properly pay the employee what they are legally entitled to, then the employee is again deemed to have been wrongfully dismissed from their employment.
Employment Standards Act, 2000
The Employment Standards Act, 2000 applies to provincially regulated employers and provides certain minimum entitlements to Ontario employee's when their employment is terminated without cause. An employee who has been employed continuously with the employer for three months or more is entitled to be given advanced written notice of their termination or pay in lieu thereof, based on their length of service with the employer.
In addition to notice, employees who have been employed for 5 years or more may be entitled to severance pay under the Employment Standards Act, 2000 if:
the severance occurred because of a permanent discontinuance of all or part of the employer’s business at an establishment and the employee is one of 50 or more employees who have their employment severed within a 6-month period as a result; or
the employer’s payroll for all of its Ontario employees is $2.5 million or more.
Severance pay is calculated based upon 1 week’s regular wages for each year of completed employment up to a maximum of 26 weeks.
Common Law Reasonable Notice
When an employee has been wrongfully dismissed, they may be entitled to common law “reasonable notice”. Common law reasonable notice is, essentially, a court's determination of how much advanced notice an employer should have given the employee that their employment was going to be terminated.
The factors that our courts typically look at are: the employee's age, years of service, character of employment, and the availability of alternative work. The ultimate range or period of notice that courts award varies greatly, with a very rough range being somewhere between 2-4 weeks of notice per year of service.
If you or your business requires legal advice with respect to a wrongful dismissal action, we would be pleased to speak with you and ask that you please contact us today.