An employer may terminate an employee at any time “with cause” or “without cause”.
An employer may summarily dismiss an employee without notice when “cause” exists. “Cause” is the situation where an employee’s conduct: violates an essential condition of the employment contract; breaches the good faith inherent in the work relationship; or is fundamentally or directly inconsistent with the employee’s obligation to his or her employer. The most common examples of cause are dishonesty, theft, or violence in the workplace. Termination for “cause” is considered the capital punishment of employment law and it is reserved only for the worst employee offenses.
When an employer terminates an employee “without cause” the termination is considered a breach of the employment contract. The common law of Ontario requires the employer to provide the employee with “reasonable notice” of the termination. Reasonable notice may take the form of either “working notice”, or pay in lieu of notice”.
Wrongful dismissal is the situation where an employer fails to provide the employee with reasonable notice of termination. The terminated employee is then entitled to assert a claim to recover the value of all losses arising from the employer’s failure to give reasonable notice. The employee’s claim includes the employee’s regular salary together with financial compensation for all lost benefits through to the end of the notice period.
There is no formula for the calculation of reasonable notice. Reasonable notice is determined based on all the circumstances of the individual employee. The courts have described the process of determining reasonable notice as an art, and not a science. The court examines the following factors to determine reasonable notice: the age of the employee; the length of service with the employer; the employee’s position with the employer; the employee’s position with the employer; the employee’s education and/or training; as well as the employee’s experience. These factors are not exhaustive. There are many other factors that will impact on the determination of what is reasonable notice in the circumstances.
Written Employment Contracts
A written employment contract may modify and/or re-define the employer’s obligation to pay the employee notice on termination “without cause”. Employers generally include provisions that will seek to limit or reduce the employer’s common law obligation to pay reasonable notice on a termination without cause.