Wrongful Dismissal Disputes and Legal Ways to Avoid Them

Letting an employee go is never easy but doing it the right way is essential to avoid wrongful dismissal disputes. If a termination is not carried out according to employment laws, an employer could face costly, time-consuming, and stressful legal claims. Therefore, it is imperative for employers to follow proper procedures when ending a working relationship with an employee. This also extends to situations involving an “independent contractor” who may, in fact, be a “dependent contractor” or perhaps even an employee under certain circumstances.

Employment laws must be followed even in difficult situations, such as when an employee's performance is not meeting expectations. Taking the right steps from the start may help to avoid protracted litigation and protect your business from unnecessary risk.

What Is Wrongful Dismissal?

Wrongful dismissal is a dismissal that does not obey the following legal requirements for termination. In Ontario, this typically happens in one of two scenarios:

Termination Without Cause

When terminating ‘without cause’, employers must:

• Comply with all Employment Standards Act (ESA) obligations

• Comply with any applicable contractual termination entitlements that surpass ESA obligations

• Provide common law reasonable notice or pay in lieu of notice for those employees who do not have any legally valid contractual limits pertaining to termination entitlements

• Ensure the termination is not based on or motivated by any grounds protected by the Ontario Human Rights Code

• Never dismiss employees for asking questions about or exercising their rights under the Employment Standards Act (ESA) or Occupational Health and Safety Act (OHSA)

The required notice period depends on the employee's length of service. Failure to provide proper notice or payment can result in wrongful dismissal claims.

Termination With Cause

Employers may be able to terminate employment without notice or termination pay in cases of serious misconduct, including:

• Theft or fraud

• Significant dishonesty

• Persistent insubordination

• Workplace harassment or violence

Under the ESA, this type of conduct would require evidence of "wilful misconduct, disobedience, or wilful neglect of duty that was not condoned by the employer”.

A termination for cause is a very tricky and difficult process. Proving “cause” requires good evidence.  All employers should consult with an employment lawyer prior to terminating an employee for “cause”. 

Best Practices for Employers

To minimize legal risks when terminating employees, be sure to document all incidents of misconduct or poor performance, issue clear warnings through progressive discipline, have clear and well-established work policies, and consider the context and severity of the alleged misconduct. It is also important to provide opportunities for improvement and assess accommodation needs, particularly regarding disabilities or medical requirements. Courts apply a contextual approach when evaluating termination justifications, considering the severity of actions, work environment, and prior disciplinary measures.

How to Avoid Wrongful Dismissal Disputes

Have Strong Employment Agreements

A well-written employment contract should outline the terms of termination, including what happens if an employee is let go with or without cause. However, termination clauses must be carefully worded to comply with all ESA requirements and to “hold up” in Court. Clear, legally sound agreements help protect businesses while ensuring employees understand their rights from the beginning.

Avoid Constructive Dismissal

Significant changes to an employee’s job without the employee’s consent may be considered constructive dismissal. This includes major shifts in duties, hours, or pay that go beyond what was initially agreed upon. Instead of making drastic changes, it is better to follow proper termination procedures if a position is no longer needed.

Seek Legal Advice Before Terminating an Employee 

If an employee is being dismissed for cause, it is a good idea to consult an employment lawyer first. Proving “cause” in court requires solid evidence, and failing to properly document misconduct could weaken a case. Getting legal advice before making a decision can prevent potential lawsuits down the road.

Understand Notice and Severance Requirements

When terminating without cause, employers must provide either working notice or severance pay. The amount depends on factors like the employee’s age, role, and length of service. Properly structured severance packages help businesses stay compliant with employment laws while treating employees fairly.

Act Quickly in Cases of Misconduct

If an employee’s misconduct justifies termination, delaying action can send the wrong message. Continued employment after a serious issue may be seen as an employer condoning the behaviour, which can make it harder to justify termination later. Keeping clear records and taking timely action strengthens an employer’s position if a legal challenge arises.

Get Trusted Legal Support from An Experienced Employment Lawyer to Avoid Wrongful Dismissal Disputes

Ensuring that employee terminations are handled correctly is key to avoiding wrongful dismissal claims. Speaking with an experienced employment lawyer at Gionet Fairley Wood LLP can provide valuable insights and strategies to minimize risk and handle any necessary negotiations or litigation if necessary.

With over 20 years of experience dealing with employment law matters in Barrie, Simcoe and throughout Ontario, GFW Law offers trusted legal advice and representation. Contact us today.

***The information provided in this blog is for general informational purposes only and should not be construed as legal advice. If you have legal questions, we strongly advise you to contact legal counsel.