A termination of employment can occur when an employee’s contract ends for a variety of reasons, including a reduction in the company’s workforce (the employee is laid off), work performance, misconduct, resignation or an employee’s fixed-term contract expires, and the employer chooses not to renew the employment contract.

An employer may end the employment relationship for just cause (firing) where no working notice or pay in lieu of notice is provided, or unjust cause (without reason) where working notice or pay in lieu of notice must be provided according to the Employment Standards Act.

If no employment agreement exists between both parties or if the employment agreement is unenforceable, then by default a non-unionized employee in Ontario may be entitled to reasonable notice under Common Law by filing a claim. Common law notice is typically much greater than ESA minimum notice and varies based on individual factors such as length of employment, age, and the nature of the position. For an employer to limit their liability under Common Law it is important that an employment agreement be drafted properly to limit notice according to the Employment Standard Contract.

Wrongful Dismissal

A wrongful dismissal in Ontario occurs when an employee is terminated without cause, fired, or laid off by their employer and not provided sufficient reasonable notice or pay in lieu of notice. Pay in lieu of notice is commonly referred to as termination pay or severance pay.

Examples of a wrongful dismissal include:

  • An employer terminates an employee without cause and fails to provide the employee with sufficient reasonable notice.
  • An employer terminates an employee for just cause without evidence the employee’s conduct or behaviour was so serious in nature or extent, that it breached the employment agreement.

The term “wrongful dismissal” is often misinterpreted. It doesn’t mean that the employer’s decision to dismiss the employee was necessarily unlawful. Both employee and employer have the right to terminate their employment relationship without reason, as long as the employee is provided with sufficient reasonable notice.

In cases where an employee feels like they were wrongfully dismissed, they can commence litigation referred to as a wrongful dismissal action. This generally leads to the employee seeking monetary damages.

Constructive Dismissal

The term constructive dismissal refers to when an employer decides unilaterally to make significant changes to the already agreed upon essential terms of an employee’s employment contract and when the employee does not agree with these changes and resigns. In this instance, the employee has not resigned but has been dismissed. Since the employer has not officially dismissed the employee, this may result in the employee filing a claim for constructive dismissal.

An employee can take legal action for constructive dismissal against their employer, and the court must determine if the unilateral changes executed by the employer substantially transformed the essential terms of the employee’s contract of employment. To show this, a judge may ask whether, at the time the offer was made, a reasonable person in the same situation as the employee would feel the same way about the essential terms being changed.

No one likes to be told they are no longer needed at their place of employment. Such a decision can make both parties feel uneasy, which is why a termination must be done tactfully, smoothly, and fairly while following proper legislation to ensure the situation is above-all, lawful.

HR Enable has experience in terminations and dismissals. Our team can drastically reduce any risks to you and your company when conducting an employee termination. We also provide on-site services for clients relating to this matter. Give us a call to learn more.


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