Putting aside company layoffs for a moment, there are two basic types of dismissal in the workplace: termination for cause and dismissal without cause.
Regardless of the reasons for being fired given to you by your employer, if you’ve been dismissed from a workplace within the last two years, speak with a leading employment lawyer in Toronto. As you’ll soon discover, the reasons for instant dismissal with cause and your rights to severance pay at termination are not straightforward. You need the advice of an expert to ensure that you weren’t wrongfully dismissed or constructively dismissed, and that you’re not leaving money on the table when you need it most.
Please note that the following information is based on Ontario’s Employment Standards Act, which regulates most jobs in this province. Employees who work in federally-regulated industries are protected by the minimum employment entitlements in the Canada Labour Code. These sectors include telecommunications, banking and national and international travel.
There are also provincially-regulated professions that are exempt from the ESA, such as those in emergency services, manufacturing and hospitality, that have special rules in the ESA. As with all employment-related entitlements, if your employment contract or collective bargaining agreement contains greater benefits than the ESA (they can’t be less), they become your legal minimum entitlements.
Disclaimer: The information in this guide and everywhere else on this website is for general information only and is not intended to provide legal advice of any kind. No lawyer-client relationship is created by accessing or otherwise using Ertl Lawyers’ website or by communicating with a lawyer or staff member. If you need legal advice, contact us at Ertl Lawyers. We’re more than happy to speak with you.
Workplace Dismissal Laws Regarding Dismissal Without Cause & Wrongful Dismissal
It’s essential to note that employers cannot terminate employees based on discriminatory reasons, such as race, gender, age or disability. Workplace discrimination (not just termination) is a serious matter that can lead to substantial compensation under the Ontario Human Rights Code.
Otherwise, employers in Ontario have the right to terminate employees without cause, provided they give the employee notice of termination before they are dismissed or pay them what they would have earned in lieu of notice.
As long as you’ve been with an employer for at least three months, you’re legally entitled to a minimum of one week’s notice (or pay) for every year of service (the ESA minimum entitlement is capped at 8 weeks’ notice.)
In addition to notice or pay in lieu of notice, employees who are terminated without cause may also be entitled to severance pay in Ontario, depending on their length of service and other ESA qualifiers. ESA minimums are that an employee with at least 5 years of service is owed a week’s severance pay for every year of service to a 26-week maximum.
You may be entitled to significantly more than the minimum notice/pay in lieu of notice and/or severance pay based on the wording of your employment contract, with a severance package meant to compensate you for the amount of time it will reasonably take for you to find a comparable job. In these circumstances, a severance package would be calculated by considering several personal factors, such as the employee’s service with the employer, their age, their position and the availability of similar work.
This is why you should always consult an employment lawyer either before signing an employment contract or after being dismissed from a job, as termination and/or severance are a necessity to help you bridge the financial gap between jobs.
The Legal Definition of Wrongful Dismissal in the Workplace
A termination without cause is classified as ‘wrongful’ when, according to wrongful dismissal laws in Ontario, an employer terminates an employee without providing the proper notice or pay in lieu of notice or when an employer unilaterally breaches the employment contract in a substantial way, causing the employee to quit (known as “constructive dismissal” more on that below.) It does not necessarily refer to the circumstance leading up to your dismissal.
In cases of wrongful dismissal, an employee is generally entitled to severance and/or pay in lieu of notice they should have been paid; however, they may be entitled to further compensation depending on the circumstances of their termination.
This is just another example of the importance of consulting an employment lawyer after termination.
Termination With Cause – Reasons Used for Immediate Dismissal
Termination with cause, sometimes known as immediate dismissal, is the termination of employment that is often due to a serious breach of an employment contract.
If an employee is terminated with cause, or quits, they are not entitled to any notice or severance pay, and they may not qualify for Employment Insurance (EI).
Because of this, termination with cause is considered a serious matter that should only be used in cases of serious misconduct or breach of the employment contract. Employers must follow strict guidelines to ensure that the termination with cause is justified.
In Ontario, there are various reasons for which an employer can terminate an employee with cause. The dismissal can be immediate if an employee commits acts of dishonesty and misconduct which can include:
- Theft, fraud and falsification of company records.
- Violence and harassment of coworkers.
- Insubordination, i.e., refusing to follow instructions of a supervisor.
- Disruptive behaviour that threatens the safety of others or the smooth operation of the business.
Even in these situations, however, the employer must also conduct a thorough investigation to ensure that there is sufficient evidence to support the termination with cause.
Other reasons for termination with cause in Ontario are often related to performance and can include the following:
- Repeated absenteeism or lateness.
- Not meeting performance standards.
- Poor quality of work.
- Late work, not meeting deadlines.
It is important to note that before an employer can terminate an employee with cause for these, or similar performance-related issues, they must first provide the employee with an opportunity to correct their performance issues, respond to the allegations against them, and the employer must document all steps taken and the employee’s responses.
This is often done through a performance improvement plan (PIP); however, PIPs are also often used to create grounds for a termination with cause when they don’t exist so that an employer can avoid paying severance to an employee when they wish to sever the employment relationship.
Using Performance Improvement Plans to Create Grounds for Dismissal in the Workplace
Performance Improvement Plans (PIPs) are supposed to be used by employers to help employees address unsatisfactory work. PIPs should be designed so that employees can identify areas where they need to improve and provide them with:
- An action plan for achieving desired results, which can include a progressive timeline of incremental improvements until the expected goals are reached.
- Access to resources to help the employee achieve milestones, such as training, additional personnel, tools, counselling, etc.
- Ongoing support as necessary.
In situations where a PIP is warranted and an employee fails to meet the expectations outlined in a PIP, it may provide grounds for dismissal with cause.
There are situations, however, when a performance improvement plan is merely a tool designed to create a paper trail to justify an improper dismissal for cause.
Signs of a sham PIP can include:
- Assessment of the employee’s performance is untrue, deceptive, ambiguous or founded on intangibles that cannot be quantified.
- Desired outcomes include generic goals like “improve work quality” or “increase sales,” which are general or immeasurable.
- No positive aspects of an employee’s performance are mentioned in any documentation of their job performance, including assessments preceding and following the PIP.
- Work responsibilities listed in the PIP are not in the employee’s job description, and/or no instruction was given to enable them to be completed.
- The employee and management have never previously addressed the performance criteria mentioned in the PIP.
- Either the deadline for completing the PIP’s objectives or the goals themselves are unreasonable.
Always consult an employment lawyer if your employer places you on a PIP, even if you feel it’s appropriate in the circumstances. Considering the potential consequences, you need the advice of an expert whose duty is your protection in the workplace.
Know Your Rights – How Employers Skirt Workplace Dismissal Laws Through Constructive Dismissal
Constructive dismissal is a legal concept that arises when an employer makes significant changes to an employee’s job without their consent or advance warning, and the changes would be seen as a fundamental breach of the employment contract. The employee must also show that they did not accept the changes and that they resigned as a result.
Similar to PIPs, employers at times constructively dismiss an employee as a way to avoid paying them a severance package termination and possibly severance.
Some examples of constructive dismissal include:
- A demotion that, even if the salary remains the same, results in a decrease in respect, position, obligations, potential promotions, or loss of real or perceived leadership.
- A major change in your working hours.
- Modifying who reports to you and to whom you report, i.e., your reporting responsibilities.
- Failing to pay bonuses, commissions or your full wages.
- Removing bonuses and benefits.
- Requiring you to take a leave of absence or suspending you from work without compensation.
The preceding list is not all-inclusive, and each case is unique; a minor detail can make or break a claim of intentional discharge. If your employer changes the terms of your employment, seek out an employment lawyer before quitting for advice on how to protect your rights, as simply quitting may result in your losing out on a severance package, even if you feel you were constructively dismissed.