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Wrongful Dismissal Claim: How Much to Ask For

Are you an employee who is experiencing termination without notice?  Maybe you haven’t been paid in place of such notice?  This article highlights what you need to know before proceeding with a wrongful dismissal claim, including calculations and deductions, risks associated with miscalculating deductions and how to maximize your claim.

An employee may be entitled to a wrongful dismissal claim if they experience termination without cause for either:

  1. Working notice leading up to the termination date 
  2. Pay in place of such notice

Employees not provided with sufficient notice or pay may claim wrongful dismissal against their employer.

There are a variety of components to a wrongful dismissal claim depending on the facts of each case, which creates uncertainty about how much a terminated employee should ask for when negotiating severance pay or commencing legal proceedings against their employer.

What Are Some Elements Of A Wrongful Dismissal Claim?

The Employment Standards Act, 2000 (ESA) governs an employee’s minimum entitlements upon termination in Ontario, including termination pay, statutory severance pay, benefits continuation and payment of any unpaid wages and vacation pay.  Upon termination, employers cannot provide employees any less than their bare minimum statutory entitlements.  Termination clauses in written employment agreements that attempt to contract out of an employee’s statutory entitlements are unenforceable. 

If there is a verbal or written employment agreement with an unenforceable termination clause, a terminated employee is entitled to common law reasonable notice.  This verbal agreement includes the employee’s ESA entitlements. It typically allows the employee to seek damages for loss of commissions, bonuses, benefits, stock options, and other perks they enjoyed as part of their employment pro-rated for the entire length of the notice period. 

Depending on circumstances, an employee may be entitled to additional damages as part of the overall wrongful dismissal claim.  Examples include damages for breaches of applicable Human Rights legislation, bad faith conduct in the manner of their dismissal, and other torts like intentional infliction of mental distress, special damages for expenses incurred while seeking alternative employment and more.  

How To Calculate Wrongful Dismissal Damages 

Under the ESA, after three months of continuous employment, a terminated employee is entitled to 1 week of regular earnings per year of service up to 8 weeks. 

In cases where an employee has worked five years or more with an employer who has a minimum global payroll of 2.5 million, the employee is also entitled to statutory severance pay of approximately one week per year of service for up to 26 weeks.  An employee’s minimum statutory entitlements to notice pay could be up to 34 weeks. 

Common law reasonable notice typically exceeds an employee’s bare minimum statutory entitlements.  Courts calculate an employee’s common law notice by considering previous cases and examining an employee’s unique circumstances to determine how long it should take to find comparable and alternative employment.  Factors include age, years of service, the character of employment, the state of the employment market, and more.  This calculation usually results in one month per year of service, but this is not an affirmed legal rule.  All employee’s circumstances are different, and certain factors can result in higher or lower notice awards. 

An employee may be entitled to other damages concerning their wrongful dismissal claim, including:

  • Tangible or non-tangible harm suffered
  • What has been granted to others in similar circumstances
  • Unique considerations relating to the specific claim for additional damages requested

Although the Canadian Human Rights Act (CHRA) includes a usual limit of $20,000.00, a unique consideration may lead to a higher limit under the Ontario Human Rights Code instead.

What Are Deductions of Damages?

Deductions of damages are amounts taken off an employee’s award for their wrongful dismissal action. 

When an employee is terminated, they are obligated to mitigate damages as much as possible and make reasonable efforts to secure alternative employment to lessen damages of a termination.  If they don’t, damages can be deducted from the claim.

If an employee starts at another job or earns an income from self-employment, their notice period award will be reduced dollar-for-dollar for what they made during their notice period. 

If they fail to demonstrate reasonable efforts to find alternative employment during their notice period, they may not get a notice award for the period they are claiming. 

An employee should consider any money they have already earned from an alternative employment when deciding on any amount they ask/settle for in a wrongful dismissal claim. Realistically, if an employee makes more in a new role than their old one, they will likely not have any entitlement to notice period damages starting from the time of their new role. However, if an employee finds a better-paying job immediately after termination, they are still entitled to ESA statutory entitlements without any mitigation requirement. 

Conclusion 

Wrongful dismissal entitlements can be straightforward.  Like all legal issues, facts can complicate matters and add a layer of nuance to the claim requiring legal expertise and research.  Many tools are available to employees trying to calculate their wrongful dismissal damages, but this is not a replacement for a lawyer’s expertise and legal advice. 

Starting a legal proceeding carries risks, including stress, time, and potential costs being awarded against the losing party.  Suppose an employee pleads their case improperly, miscalculates their damages, or makes mistakes that may result in them losing their case.  In that case, they could have the employer’s legal fees awarded against them.  Even withdrawing a claim could have cost consequences against employees claiming wrongful dismissal. 

Our experienced wrongful dismissal lawyers at Achkar Law can help employees confidently determine how much they can ask for in their wrongful dismissal claim and cut an employee’s potential legal costs through strategic negotiation and litigation. 

Contact Us

Whether you are an employer or an employee looking for assistance with workplace or other legal issues, our team of experienced employment and human rights lawyers at Achkar Law can help.  Contact us by phone toll-free at +1 (800) 771-7882 or email us at [email protected] , and our team of experienced employment lawyers will be happy to assist.

If you are a small or medium-sized company looking for full-service support with 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]