Wrongful Dismissal In Canada. What It Means And How To Avoid It
Wrongful dismissal is one of the most common and costly employment claims in Canada, and it is also one of the most misunderstood.
Contrary to what the name implies, wrongful dismissal does not mean the employer had no right to end the employment. It means the employee was dismissed without adequate notice or pay in lieu of notice.
In Canada, an employer can generally end an employment relationship for almost any reason that is not discriminatory or otherwise unlawful, but except in narrow circumstances, the employee is entitled to reasonable notice of that decision.
Failing to provide it is what makes a dismissal “wrongful,” and it is the source of most termination related litigation in the country.
Wrongful Dismissal Is About Notice, Not Fault
This distinction is the key to understanding the entire area.
A wrongful dismissal claim is not usually an argument about whether the employer was allowed to let the employee go. It is an argument about whether the employee received enough notice or pay in lieu.
An employer who dismisses a long serving employee with a token amount of notice has almost certainly committed a wrongful dismissal, even though the decision to end the relationship was entirely within their rights. The remedy the employee seeks is the value of the notice they should have received.
Termination For Cause. A High Bar
An employer can dismiss without notice only where there is just cause – serious misconduct that fundamentally breaks the employment relationship, such as theft, fraud, serious insubordination, or a grave breach of trust.
Canadian courts set the bar for just cause very high, and they rarely uphold it. Even significant performance problems usually do not amount to cause unless the employer has followed a documented, progressive process of warnings and opportunities to improve. Employers who assume they have cause, dismiss without notice, and are later found not to have met the standard face the full wrongful dismissal exposure they were trying to avoid, often with additional damages for how the dismissal was handled.
How Reasonable Notice Is Determined
Where there is no cause, the central question becomes how much notice the employee was entitled to. Canadian courts assess this using a long established set of factors, often called the Bardal factors after the case that established them:
- Age Of The Employee – Older employees generally receive more notice, on the reasoning that they may take longer to find comparable work.
- Length Of Service – Longer tenured employees receive more notice.
- Character Of Employment – Senior, specialised, or managerial roles often attract longer notice.
- Availability Of Similar Employment – If comparable roles are scarce, notice tends to be longer.
No single factor is decisive; courts weigh them together. The result is highly fact-specific, which is part of what makes wrongful dismissal exposure difficult to predict without experience.
The Gap Between Statutory Minimums And Common Law
This is where employers are most often caught out.
Provincial and territorial employment standards legislation set a floor – a minimum amount of notice or pay on termination. But that statutory minimum is usually far less than what the same employee could claim at common law under the Bardal analysis. A long serving senior employee might be entitled to only a few weeks under the statutory minimum but many months under common law.
Unless a valid, enforceable employment contract limits the employee to the statutory minimum, the common law entitlement applies – and many employers discover, too late, that the number they budgeted for is a fraction of what they actually owe.
Federally Regulated Employees Have Extra Protection
Employees in federally regulated sectors – banking, telecommunications, interprovincial transportation, and similar industries, have additional protection under federal legislation, which provides an unjust dismissal process that can, in some cases, result in reinstatement.
Reinstatement is a remedy not generally available to provincially regulated employees. This is a separate regime from common law wrongful dismissal, and it changes the risk calculus significantly for employers in those sectors.
Common Mistakes That Lead To Wrongful Dismissal Claims
- Assuming the statutory minimum is all that’s owed. Without an enforceable contract clause, common law notice usually applies and is far higher.
- Claiming cause without documentation. If cause cannot be proven, the employer owes full notice – sometimes with additional damages.
- Relying on an old or defective contract. A termination clause that does not meet current enforceability standards leaves the employee on common law notice.
- Handling the dismissal poorly. Misleading the employee, being untruthful about the reason, or acting in bad faith can attract additional damages beyond the notice period.
- Terminating a long serving or senior employee without advice. This is where exposure is greatest and where mistakes are most expensive.
Does wrongful dismissal mean I wasn’t allowed to fire the employee?
No. It almost always means the employee wasn’t given enough notice or pay in lieu. You can generally end employment for lawful reasons, but you usually owe reasonable notice.
How much notice does an employee get?
It depends on their age, length of service, seniority, and how easily they can find comparable work. Common law notice is usually much higher than the statutory minimum and can run to many months.
Can I dismiss for cause and avoid notice?
Only where there is genuine serious misconduct, which is a high bar in Canada. Cause is hard to prove, and getting it wrong exposes you to full liability.
How do I limit wrongful dismissal risk?
The most effective protection is an enforceable termination clause in a properly drafted employment contract, combined with providing proper notice when terminating without cause.
How We Help
We draft employment contracts with enforceable termination provisions designed to limit exposure, calculate appropriate notice or pay in lieu when a termination is necessary, and manage the process to reduce the risk of a claim.
For higher risk terminations – senior employees, long-tenured staff, or situations involving alleged cause, we connect you with our network of Canadian employment lawyers. We are not a law firm and this does not constitute legal advice, but our guidance helps you avoid the most common and expensive mistakes.
Facing A Difficult Termination?
Book a call before you act.
We’ll help you handle it correctly and limit your exposure.