Wrongful Dismissal and Constructive Dismissal Compensation: What Damages Can You Claim?achkarlaw-admin
Have you just been terminated, or is your employer trying to force you to resign? Do you work in a toxic environment, which is now causing you to dread coming to work? These scenarios can be stressful, frustrating, and challenging to navigate for employees. However, you have legal rights and options if you find yourself in one of these situations. You may be wondering what compensation for wrongful dismissal or constructive dismissal can you claim.
If an employer terminates you without cause, the employer is legally obligated to provide the employee with reasonable notice or pay in lieu of notice. Therefore, the termination of employees needs to be conducted carefully to avoid potential exposure to liability and ensure that they are provided with their minimum entitlements at law.
This article will define wrongful dismissal and constructive dismissal, as well as discuss the types of damages employees may be entitled to when bringing these types of claims.
What is a Wrongful Dismissal Claim?
Contrary to popular belief, an employer does not need to provide a reason for your termination – that is not an illegal dismissal. Instead, employees are entitled to either working notice or pay in lieu of notice if they are terminated without cause.
In Ontario specifically, where an employee is terminated without cause, they must be provided their minimum working notice or pay in lieu of such notice as outlined under the Employment Standards Act, 2000 (the “ESA”). Some employees may be entitled to additional notice over and above the ESA notice upon termination.
An employee can bring a lawsuit for wrongful termination, or unfair dismissal, if their employer terminates their employment without cause and provides insufficient notice or pay in lieu of such notice. This is also the case where an employee wants to challenge an employer’s allegation of just cause for their termination. These are fact-specific issues that are best discussed with an employment lawyer before signing anything following a termination.
Lawsuits for wrongful termination do not arise from the general injustice of being terminated, their employer’s bad faith and dishonesty, or other violations of relevant legislation. Wrongful dismissal strictly covers whether an employee was provided adequate notice or pay in lieu of such notice upon termination.
What is a Constructive Dismissal Claim?
A constructive dismissal claim is fact specific and typically arises when the employer has not expressly fired the employee. Instead, the employer engaged in behavior to force the employee to resign and/or unilaterally altered a fundamental term of the employment agreement.
Some common examples of grounds for constructive dismissal are:
- Where an employer makes a significant change to the employment agreement without the employee’s express consent such as compensation, hours, duties, title, geographic location, and other significant terms; and
- The employer created or failed to address an intolerable and toxic work environment forcing the employee to leave the workplace.
Where an employee successfully claims constructive dismissal, they would be entitled to damages as though they were terminated without cause formally.
Damages for Wrongful or Constructive Dismissal
Both wrongful and constructive dismissal are terminations without cause entitle an employee to either working notice or pay in lieu of such notice. This is generally referred to as “severance pay” or a “termination package”, but may be negotiated with an employee upon termination.
Under the ESA, an employee may be entitled up to 8 weeks of termination pay and 26 weeks of statutory severance pay depending on a variety of factors, including:
- how many years of service they had with their employer; and
- whether their employer has a global employee payroll of at least $2.5 million.
If an employer does not expressly limit an employee’s termination entitlements to their minimum entitlements under the ESA with an enforceable termination clause, then the employee will be entitled to common law reasonable notice.
Common law reasonable notice includes the employee’s minimum entitlements under the ESA but can be as high as 27 months of pay in total. The Court makes a decision about an employee’s reasonable notice by taking into account a number of factors, including but not limited to:
- Years of service;
- Character of position;
- Annual compensation;
- The availability of similar employment based on any relevant economic considerations at the time of termination; and
- Other factors a Court might otherwise consider.
Further, an employee’s damages for wrongful or constructive dismissal can include prorated commissions, bonuses, stock options, benefits, pension contributions and anything else the employee would have received had they worked the awarded reasonable notice period.
Depending on the facts of a case, an employee may be entitled to additional damages separate from their owed severance pay. Examples include:
- Aggravated damages
Aggravated damages may occur where an employer was particularly insensitive, unprofessional or engaged in other behavior in the manner of an employee’s entitlements causing them reasonably foreseeable mental distress and emotional upset;
- Punitive damages
Punitive damages occur where the Court wants to punish employer behavior that departs from standards of common decency and deter others from similar behavior;
- Human Rights damages
Human Rights damages occur for violations of the Ontario Human Rights Code flowing from failure to accommodate, harassment, or discrimination on the basis of a protected ground in the workplace; and
- Damages for other civil claims
Other damages for various civil claims, such as fraud, negligent misrepresentation and intentional infliction of mental distress.
An employee can also seek some of their legal costs from their employer in a successful wrongful or constructive dismissal claim.
How Can an Employment Lawyer Help?
Whether you are an employer or an employer, you should not underestimate the value of seeking legal advice from an employment law firm in any workplace dispute.
An employment lawyer can help no matter what stage of a workplace dispute, in ways including but not limited to:
- Drafting and reviewing employment contract before the start of the employment relationship;
- Legal advice about an employee’s termination entitlements and best next steps;
- Negotiating a severance package; and
- Suing for constructive dismissal or wrongful dismissal.
Damages for wrongful and constructive dismissal claims are assessed on a case-by-case basis. Depending on the type of dismissal, there may be damages in addition to severance pay they may be entitled to.
Whether you are an employer looking to terminate an employee or an employee who was just terminated without cause, a consultation with an employment lawyer is the best way to maximize your entitlements, minimize your legal risk, and achieve your desired result.
If you have any questions about wrongful or constructive dismissal claims, our team of experienced wrongful dismissal lawyers at Achkar Law can help.
- How Courts Calculate Wrongful Dismissal Damages
- Wrongful Dismissals: Steps of a Lawsuit in Ontario
- Constructive Dismissal Claims
- Ontario Constructive Dismissal Claims Due To Management And Bullying