This article is intended to offer general advice with respect to the termination of your employment, commonly referred to as wrongful dismissal or wrongful termination. Readers should seek legal advice on particular issues that concern them.
If you have an employment law issue or question, feel free to contact us. If you have been asked to sign a release or have been offered a severance package and would like legal advice regarding your rights then please contact us by email.
What is Wrongful Dismissal? The following article provides a general overview of wrongful dismissal law in Alberta. The information provided is not applicable to unionized employees and may not apply to employees who work for a federally regulated employer.
Termination of Employment
In general, an employer is permitted to terminate employment without just cause, provided they give an employee reasonable notice or compensation instead of reasonable notice. An exception to this is if an employer has violated an employee’s human rights or violated certain parts of the Employment Standards Act (i.e. failure to reinstate an employee after pregnancy leave). Employees who work for a federally regulated employer, such as a bank or airline may have a statutory protection against unjust dismissal, even if notice is given.
Reasonable Notice
There is an implied term in every contract of employment that an employer will provide an employee with reasonable notice of termination. This presumption may be rebutted with a valid and enforceable termination clause (this will be expanded on below). Absent an enforceable and valid termination clause, an employer must provide an employee with reasonable advance notice of termination or payment in an amount equivalent to all salary and benefits that would have been earned by the employee during the reasonable notice period. The ‘wrongful’ in wrongful dismissal, refers to the failure of an employer to provide an employee with reasonable notice and does not refer to the dismissal itself.
A common point of contention in most wrongful dismissal disputes is usually in determining the length of the reasonable notice period and what employee benefits should be included during this period. Although permissible, it is unlikely that an employee will be given “working notice”, as many employers opt to, and prefer to provide terminated employees with compensation in lieu of actual working notice. This is largely because employers do not want to continue to have a terminated employee in their employ that may have little incentive to be productive and may hold some animosity towards them as a result of their termination. If an employee has been given working notice, the employer has an obligation to continue to employ the employee in their similar capacity and provide them with the same compensation. An employer cannot unilaterally change the employees’ roles, responsibilities, and compensation in a substantial way during the working notice period.
The Employment Standards Code only provides minimum notice periods. An employee can be entitled to a notice period beyond the statutory minimum, depending on a number of factors which the courts will consider in determining the appropriate notice period. These factors include: length of employment; training and experience required to fill the position; responsibility attached to the position; availability of equivalent alternative employment; employee’s relevant education, training and experience; the employee’s age; and if there was inducement to leave another job.
Strategy
Since embarking on a lawsuit for wrongful dismissal is a voluntary exercise, there are some calculations that need to be made before you start a claim for damages for wrongful dismissal. You do not want to spend thousands of dollars chasing an illusory claim.
If you have a claim that you want to pursue, or you want to know if you have a good claim, please email me at sean@oneillaw.ca giving me the details of your circumstances. Who did you work for? How long did you work there? What was your job? How much money did you make? What were the circumstances surrounding your dismissal? I will keep everything in confidence., and will get back to you very quickly.
Below you will find a more detailed discussion of some of the issues that may arise.
Constructive Dismissal
As a general rule, employees who quit their employment are not entitled to compensation from their employer. However the exception to this general rule is where an employee quits because their employer unilaterally and fundamentally changed the conditions of employment. The law classifies such situations as a ‘constructive dismissal’. In other words, the employer did not directly dismiss the employee but the employer changed the job so completely that the employment contract was effectively at an end. This distinction is significant, because if an employee voluntarily quits, their employer would not be legally obliged (unless agreed to otherwise between the parties) to pay the employee compensation. If, however, the employee is constructively dismissed, the effect is the same as if the employer had wrongfully dismissed the employee (i.e. not provided reasonable notice or just cause). With constructive dismissal, the employee is, therefore, entitled to the same notice period and or compensation in lieu of notice as if they had been wrongfully dismissed.
Examples of some fundamental changes to the conditions of employment that may be classified as a constructive dismissal are: substantial reduction in pay; reduction in hours; change in duties and responsibilities; and requirements that the employee relocates to another city (provided this was never part of the employment contract). Minor incidental changes will generally not be enough to sustain a constructive dismissal claim.
The concept of constructive dismissal has emerged in recognition of the inequality in bargaining power in the employment relationship. If not for constructive dismissal, employers could simply force employees to quit in an effort to avoid having to give reasonable notice or provide compensation in lieu of notice.
The burden is on the employee to prove that they have been constructively dismissed. The employee needs to prove that the employer made a fundamental change and that this change was made unilaterally. The success of such a claim will largely depend on the facts of each particular situation. Therefore, employees are strongly encouraged to speak with a lawyer and obtain legal advice before they decide to end their employment and sue for constructive dismissal.
Bad Faith
If an employer has acted unfairly or in bad faith at the time of termination, an employee may be entitled to an increase in the amount of notice they are entitled to. Some examples of an employer’s unfair conduct and bad faith conduct include, but is not limited to; making allegations of fraud or sexual harassment at the time of firing where there is no reasonable basis for such allegations; firing an employee without warning and with no opportunity to explain his/her conduct; and failing to provide any reason for the firing. An employer should afford an employee some procedural fairness to be able to tell their side of the story and employers have a positive obligation to be forthright, candid and honest in the manner in which the employee is terminated.
What Benefits are Included in Reasonable Notice
After determining the reasonable notice period the next issue that typically arises is what employee benefits should be included during the reasonable notice period. The goal of the Courts in awarding damages in wrongful dismissal actions is to place the employee in the same position he or she would have been in had reasonable notice been given. As such, employees are generally entitled to the continuation or replacement cost of all employee related benefits that they normally would have received had they been given reasonable notice. This usually includes the continuation or value of all heath, medical, and dental benefits. The employee is also entitled to be compensated for all other benefits that they normally enjoyed as an employee and would have received during the reasonable notice period. For example, non-discretionary bonuses should be paid for the period marked by reasonable notice and the employer should continue to contribute to the employee’s pension plan or match the employee’s RRSP contribution (if applicable). Other damages typically awarded in wrongful dismissal actions include, damages for scheduled across the board salary increases that would have been implemented during the reasonable notice period; insurance coverage; damages for loss of the use of a company car; loss of accruing vacation pay; loss of stock options; and reasonable costs for searching for new employment.
Termination Clauses
As mentioned above, there is an implied term in every contract of employment that an employer will provide an employee with reasonable notice of termination. This presumption, however, may be rebutted with a valid and enforceable termination clause in an employment agreement.
Employers are increasingly looking to minimize their exposure to common law notice periods (i.e. notice periods that are awarded by the Courts depending on the factors listed above) by inserting a termination clause in their employment agreement with their employees. A termination clause is an unambiguous, statutorily compliant, clause that outlines the amount of notice an employer will provide an employee if they are terminated without cause.
In the majority of instances when a termination clause is present, the termination clause will provide for a notice period that is less than what an employee would have received under the common law presumption of reasonable notice. It is for this reason that many employees seek to challenge the validity and enforceability of these clauses. Some arguments that are usually put forth to challenge these clauses include, misrepresentation, lack of consideration, duress and unconscionability. Employees also tend to challenge the specific content of these clauses. In this regard, the employee will argue that the clause is too vague and ambiguous or that it fails to comply with the minimum notice periods required by the applicable employment legislation in the province.
Every termination clause must, at the very least, comply with the minimum statutory requirements in the jurisdiction of employment. A termination clause that fails to satisfy the minimum statutory requirements will be void. For example, a clause that states that in the event of termination without cause an employer will provide the employee with “2 weeks notice or pay in lieu of” will likely be struck and held unenforceable because it fails to, or has the potential to fail to comply with the minimum notice periods set out in the relevant employment standards legislation. If a termination clause is held to be void and unenforceable, the common law presumption of reasonable notice will not be rebutted and the employee will be entitled to rely on the common law presumption of reasonable notice.
Mitigation of Damages
An employee has a duty to lessen their damages. That is, an employee has a positive legal obligation to try and find alternate employment. This does not mean that an employee must accept a job that is substantially different or a job that pays significantly less. The obligation is to look for and accept alternate employment which is in the employee’s own best interest. Should the parties not agree on the reasonable notice period and the matter proceeds to litigation, the employer bears the onus on a balance of probabilities to prove that the employee has failed to lessen their damages.
If you have an employment law issue or question, feel free to contact us. If you have been asked to sign a release or have been offered a severance package and would like legal advice regarding your rights then please contact us by email.
What is Wrongful Dismissal? The following article provides a general overview of wrongful dismissal law in Alberta. The information provided is not applicable to unionized employees and may not apply to employees who work for a federally regulated employer.
Termination of Employment
In general, an employer is permitted to terminate employment without just cause, provided they give an employee reasonable notice or compensation instead of reasonable notice. An exception to this is if an employer has violated an employee’s human rights or violated certain parts of the Employment Standards Act (i.e. failure to reinstate an employee after pregnancy leave). Employees who work for a federally regulated employer, such as a bank or airline may have a statutory protection against unjust dismissal, even if notice is given.
Reasonable Notice
There is an implied term in every contract of employment that an employer will provide an employee with reasonable notice of termination. This presumption may be rebutted with a valid and enforceable termination clause (this will be expanded on below). Absent an enforceable and valid termination clause, an employer must provide an employee with reasonable advance notice of termination or payment in an amount equivalent to all salary and benefits that would have been earned by the employee during the reasonable notice period. The ‘wrongful’ in wrongful dismissal, refers to the failure of an employer to provide an employee with reasonable notice and does not refer to the dismissal itself.
A common point of contention in most wrongful dismissal disputes is usually in determining the length of the reasonable notice period and what employee benefits should be included during this period. Although permissible, it is unlikely that an employee will be given “working notice”, as many employers opt to, and prefer to provide terminated employees with compensation in lieu of actual working notice. This is largely because employers do not want to continue to have a terminated employee in their employ that may have little incentive to be productive and may hold some animosity towards them as a result of their termination. If an employee has been given working notice, the employer has an obligation to continue to employ the employee in their similar capacity and provide them with the same compensation. An employer cannot unilaterally change the employees’ roles, responsibilities, and compensation in a substantial way during the working notice period.
The Employment Standards Code only provides minimum notice periods. An employee can be entitled to a notice period beyond the statutory minimum, depending on a number of factors which the courts will consider in determining the appropriate notice period. These factors include: length of employment; training and experience required to fill the position; responsibility attached to the position; availability of equivalent alternative employment; employee’s relevant education, training and experience; the employee’s age; and if there was inducement to leave another job.
Strategy
Since embarking on a lawsuit for wrongful dismissal is a voluntary exercise, there are some calculations that need to be made before you start a claim for damages for wrongful dismissal. You do not want to spend thousands of dollars chasing an illusory claim.
- Your first step is to determine what the proper notice period should have been. As a rough rule of thumb, you can figure that you should get one month's notice for every year of full time service. This will give you an idea of the upper end of the damages you can get if you are successful.
- Your next step is to determine whether your employer has a defence to your claim. If you are fired for cause, then you can anticipate a spirited defence, and it is unlikely that you will get any quick or generous offers to settle. If you go to trial, you may get nothing. If you believe your damages to be substantial you may be prepared to take that risk. You need to weigh the risk versus reward.
- From an employer's point of view, it may be a good idea to dismiss an employee without proper notice and hope that they can easily get another similar paying job. You have a duty to mitigate your damages by making reasonable efforts to get another job. If you get another job, then the income you earn at the new job is deducted from the damages you are entitled to for failure to give you reasonable notice. If you get a comparable job within a short period of losing your job, it is unlikely to be worth it to bring a claim for wrongful dismissal.
If you have a claim that you want to pursue, or you want to know if you have a good claim, please email me at sean@oneillaw.ca giving me the details of your circumstances. Who did you work for? How long did you work there? What was your job? How much money did you make? What were the circumstances surrounding your dismissal? I will keep everything in confidence., and will get back to you very quickly.
Below you will find a more detailed discussion of some of the issues that may arise.
Constructive Dismissal
As a general rule, employees who quit their employment are not entitled to compensation from their employer. However the exception to this general rule is where an employee quits because their employer unilaterally and fundamentally changed the conditions of employment. The law classifies such situations as a ‘constructive dismissal’. In other words, the employer did not directly dismiss the employee but the employer changed the job so completely that the employment contract was effectively at an end. This distinction is significant, because if an employee voluntarily quits, their employer would not be legally obliged (unless agreed to otherwise between the parties) to pay the employee compensation. If, however, the employee is constructively dismissed, the effect is the same as if the employer had wrongfully dismissed the employee (i.e. not provided reasonable notice or just cause). With constructive dismissal, the employee is, therefore, entitled to the same notice period and or compensation in lieu of notice as if they had been wrongfully dismissed.
Examples of some fundamental changes to the conditions of employment that may be classified as a constructive dismissal are: substantial reduction in pay; reduction in hours; change in duties and responsibilities; and requirements that the employee relocates to another city (provided this was never part of the employment contract). Minor incidental changes will generally not be enough to sustain a constructive dismissal claim.
The concept of constructive dismissal has emerged in recognition of the inequality in bargaining power in the employment relationship. If not for constructive dismissal, employers could simply force employees to quit in an effort to avoid having to give reasonable notice or provide compensation in lieu of notice.
The burden is on the employee to prove that they have been constructively dismissed. The employee needs to prove that the employer made a fundamental change and that this change was made unilaterally. The success of such a claim will largely depend on the facts of each particular situation. Therefore, employees are strongly encouraged to speak with a lawyer and obtain legal advice before they decide to end their employment and sue for constructive dismissal.
Bad Faith
If an employer has acted unfairly or in bad faith at the time of termination, an employee may be entitled to an increase in the amount of notice they are entitled to. Some examples of an employer’s unfair conduct and bad faith conduct include, but is not limited to; making allegations of fraud or sexual harassment at the time of firing where there is no reasonable basis for such allegations; firing an employee without warning and with no opportunity to explain his/her conduct; and failing to provide any reason for the firing. An employer should afford an employee some procedural fairness to be able to tell their side of the story and employers have a positive obligation to be forthright, candid and honest in the manner in which the employee is terminated.
What Benefits are Included in Reasonable Notice
After determining the reasonable notice period the next issue that typically arises is what employee benefits should be included during the reasonable notice period. The goal of the Courts in awarding damages in wrongful dismissal actions is to place the employee in the same position he or she would have been in had reasonable notice been given. As such, employees are generally entitled to the continuation or replacement cost of all employee related benefits that they normally would have received had they been given reasonable notice. This usually includes the continuation or value of all heath, medical, and dental benefits. The employee is also entitled to be compensated for all other benefits that they normally enjoyed as an employee and would have received during the reasonable notice period. For example, non-discretionary bonuses should be paid for the period marked by reasonable notice and the employer should continue to contribute to the employee’s pension plan or match the employee’s RRSP contribution (if applicable). Other damages typically awarded in wrongful dismissal actions include, damages for scheduled across the board salary increases that would have been implemented during the reasonable notice period; insurance coverage; damages for loss of the use of a company car; loss of accruing vacation pay; loss of stock options; and reasonable costs for searching for new employment.
Termination Clauses
As mentioned above, there is an implied term in every contract of employment that an employer will provide an employee with reasonable notice of termination. This presumption, however, may be rebutted with a valid and enforceable termination clause in an employment agreement.
Employers are increasingly looking to minimize their exposure to common law notice periods (i.e. notice periods that are awarded by the Courts depending on the factors listed above) by inserting a termination clause in their employment agreement with their employees. A termination clause is an unambiguous, statutorily compliant, clause that outlines the amount of notice an employer will provide an employee if they are terminated without cause.
In the majority of instances when a termination clause is present, the termination clause will provide for a notice period that is less than what an employee would have received under the common law presumption of reasonable notice. It is for this reason that many employees seek to challenge the validity and enforceability of these clauses. Some arguments that are usually put forth to challenge these clauses include, misrepresentation, lack of consideration, duress and unconscionability. Employees also tend to challenge the specific content of these clauses. In this regard, the employee will argue that the clause is too vague and ambiguous or that it fails to comply with the minimum notice periods required by the applicable employment legislation in the province.
Every termination clause must, at the very least, comply with the minimum statutory requirements in the jurisdiction of employment. A termination clause that fails to satisfy the minimum statutory requirements will be void. For example, a clause that states that in the event of termination without cause an employer will provide the employee with “2 weeks notice or pay in lieu of” will likely be struck and held unenforceable because it fails to, or has the potential to fail to comply with the minimum notice periods set out in the relevant employment standards legislation. If a termination clause is held to be void and unenforceable, the common law presumption of reasonable notice will not be rebutted and the employee will be entitled to rely on the common law presumption of reasonable notice.
Mitigation of Damages
An employee has a duty to lessen their damages. That is, an employee has a positive legal obligation to try and find alternate employment. This does not mean that an employee must accept a job that is substantially different or a job that pays significantly less. The obligation is to look for and accept alternate employment which is in the employee’s own best interest. Should the parties not agree on the reasonable notice period and the matter proceeds to litigation, the employer bears the onus on a balance of probabilities to prove that the employee has failed to lessen their damages.
