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How Courts Calculate Wrongful Dismissal Damages

When an employee has a verbal employment agreement or a written employment agreement that fails to restrict their termination entitlements, they are entitled to common law reasonable notice upon termination without cause. If an employer fails to provide enough notice or pay in place of notice, they may be liable to face wrongful dismissal damages. So, how do the courts calculate wrongful dismissal damages when determining the appropriate amount the employee is owed?

How Courts Calculate Wrongful Dismissal Damages

While the Ontario Employment Standards Act, 2000 explicitly outlines an employee’s minimum entitlements upon termination, determining an employee’s full entitlement to common law reasonable notice is more art than a science.  To avoid wrongful dismissal damages and determine common law reasonable notice, an adjudicator would examine the characteristics of the employee and the position they were terminated from to conclude how long it would take for that employee to secure comparable alternative employment. 

Some factors the Courts commonly consider to calculate an employee’s wrongful dismissal damages based on common law reasonable notice include but are not limited to:

  • Age
  • Salary
  • Years of Service
  • Character of Employment
  • Pregnancy
  • Disability 
  • Geography 
  • Economic Factors Impacting the Labour Market 
  • Education

No one factor is weighted more heavily than others, but certain factors may warrant greater notice relative to other factors in a given situation. Decision-makers rely on both previous decisions respecting combinations of such characteristics and the unique circumstances of the employee in front of them in deciding the appropriate amount of common law reasonable notice. 

The examples below illustrate how a court may analyze particular characteristics of an employee to award less or more reasonable notice or pay in lieu in the event of an employee’s termination.

Examples Of Calculations For Wrongful Dismissal Damages 

The Retail Store Manager

A fifty (50) year old retail store manager is terminated without cause after ten (10) years of service. The manager earned approximately $85,000.00 every year, which is competitive for the manager’s industry. 

A Court may award the manager nine (9) to eleven (11) months of notice for wrongful dismissal damages. A fifty (50) year old retail manager with ten (10) years of experience will likely not have significant difficulty securing a similar role at close to the same competitive salary. 

If the retail store manager had only worked one (1) year before being terminated, it is far more likely the Court would award only one (1) month to (3) months. It is common to see Courts award one (1) month per year of service while considering other factors to award less or more notice, but this is not a concrete rule. 

The Factory Worker

A sixty (60) year old machine operator is terminated without cause after thirteen (13) years of service. The worker earned approximately $110,000.00 every year, which is on the higher end for this role. 

A Court may award the machine operator thirteen (13) to sixteen (16) months of notice. A sixty (60) year old for such a physically demanding job would likely face significant difficulty securing a comparable role, even if many factories were hiring, especially at such a uniquely high salary. 

Suppose the sixty (60) year old machine operator also had a physical or mental disability. In that case, it is far more likely the Court would award fifteen (15) to eighteen (18) months for wrongful dismissal damages. Many employers may have biases about hiring an older employee with disabilities or simply could not afford to accommodate such disability needs in their workplace.  

The Vice-President of Sales 

A forty-five (45) year old vice-president of sales is terminated without cause after two (2) years of service. The vice-president earned approximately $200,000.00 every year with stock options and a significant bonus. 

A Court may award the vice-president three (3) to six (6) months for wrongful dismissal damages. A forty-five (45) year old vice-president of sales would likely face an arduous job search given that such senior management roles at such high pay are very limited in most labour markets. 

If the vice-president of sales was pregnant at the time of termination in the middle of a recession, it is far more likely the Court would award six (6) to nine (9) months. The potential of the vice-president of sales having to go on maternity leave soon after commencing in any new role and the decreased number of senior-management positions resulting from the recession would foreseeably exacerbate the vice-president’s job search difficulties. 

Wrongful Dismissal Damages Takeaway

While there are general guidelines about how a Court may decide how much common law reasonable notice an employee is entitled to upon termination, certain factors specific to an individual employee may significantly impact how many months of notice an employee is owed for wrongful dismissal damages. 

As every case turns on their own facts, an employee should immediately consult an employment lawyer upon the termination of their employment to determine their entitlements.

Contact Us

If you are an employer facing a wrongful dismissal claim, or an employee who believes that you’ve been wrongfully dismissed, our team of experienced workplace lawyers at Achkar Law can help. Contact us by phone toll-free at +1 (800) 771-7882 or email us at [email protected], and we would be happy to assist.

If you are a small or medium-sized company looking for full-service support with a same-day response, visit our CLO Program page for our strategic solutions.

Disclaimer: This blog is not intended to serve as or should be construed as legal advice and is only to provide general information. It is in no way particular to your case and should not be relied on in any way. No portion or use of this blog will establish a lawyer-client relationship with the author or any related party. Should you require legal advice for your particular situation, fill out the contact form, call (800) 771-7882 or email [email protected]