Every employee has an employment contract. A contract of employment exists even where there is no written employment agreement. The agreement of the employee to do certain work, and the agreement of the employer to pay for that work, amounts to a contract.
Wrongful dismissal (also known as wrongful termination) refers to a situation where an employer has terminated an employee’s contract of employment with no justifiable reason or notice.
Examples of wrongful dismissal are:
- dismissal without complying with a contractually mandated dismissal process, which might involve an escalating series of warning letters,
- dismissal for a wrongful cause where a dismissible action is falsely attributed to an employee;
- illegal discrimination, such as termination based on difficulties communicating in English, disability, race, religion, or place of origin;
- constructive dismissal where an employee is forced by an employer to accept a change in an employment contract or quit;
- a reduction in salary imposed unilaterally and without proper cause, or refusal to pay amounts owing under the employment contract, may also constitute constructive dismissal;
- where the end of employment is permanent and there is no intention to recall the employee, or there is no assurance of the job resuming, a dismissal has occurred, regardless if it is called termination, layoff or a leave of absence;
- where employment was terminated because a partnership voluntarily dissolved, without cause or notice;
- transfer of an employee to a subsidiary or related company may amount to dismissal by the first employer, depending on the terms of the employee’s contract.
An employee wrongfully dismissed is entitled to pay in lieu of notice. In that scenario, employers must pay damages equivalent to having kept the employee on during the notice period. In assessing the reasonable notice period for breach of an employment contract, courts apply a ‘rule of thumb’ that an employee should receive notice of one month for each year of service.
In some situations, a wrongfully dismissed employee may be entitled to receive additional damages for mental distress and damages aimed to punish and deter an employer. These damages are called “aggravated damages” and “punitive damages”, and both may be awarded if the facts are sufficient to support both claims.
Regardless of whether an employee is terminated with or without a reason, an employer must comply with the following obligations:
- deal with the employee’s outstanding pension requirements;
- pay all outstanding wages and vacation pay;
- deliver the completed “Record of Employment” to the government, and a copy to the employee.
At Landy Marr Kats LLP, we will help you to receive monetary compensation as a result of a wrongful dismissal.