Wrongful dismissal refers to any termination of employment that is not lawful. Employers can terminate an employee with cause or without cause.
What is with cause termination?
A with cause termination occurs when an employer considers the employee to have engaged in serious misconduct. Some examples of misconduct that may rise to the level of with cause termination include stealing, insubordination, and assaulting another employee.
A with cause termination is considered serious as the employee will not be eligible for employment insurance, severance pay, and notice of termination or pay in lieu of notice.
Since the consequences of a with cause termination are severe, employers must establish that the conduct of the employee rose to such a level that the employment contract is considered to have been fundamentally breached. For example, an employee that is late for work or has poor performance may not be grounds for a with cause termination. This type of conduct would require the employer to provide the employee with warnings and progressive discipline prior to terminating the employee with cause.
Accordingly, when an employee is dismissed with cause, but cause is found to not exist, then the employee would be considered wrongfully dismissed and is entitled to notice of termination or pay in lieu of notice and, in some cases, common law severance.
What is without cause termination?
When an employee is terminated without cause this means that they are being terminated but not for any significant workplace misconduct. A without cause termination can be for a variety of reasons such as, restructuring, poor work performance, and cost cutting. An employer is not required to provide an employee a reason for the termination.
When an employee is terminated without cause they are entitled to employment insurance, severance pay, and notice of termination or pay in lieu of notice.
A without cause termination can be considered a wrongful dismissal when the employee is not paid an adequate amount of severance.
What is notice of termination or pay in lieu of notice?
When terminating an employee, the employer must provide the employee with notice of termination or pay in lieu of notice as set out in the Employment Standards Code, RSA 2000 c E-9. The amount of notice required in the Employment Standards Code is based on how many years of service the employee has with the employer:
|Notice period||Length of employment|
|1 week||More than 90 days but less than 2 years|
|2 weeks||2 years but less than 4 years|
|4 weeks||4 years but less than 6 years|
|5 weeks||6 years but less than 8 years|
|6 weeks||8 years but less than 10 years|
|8 weeks||10 years or more|
Accordingly, if an employer is terminating a 3-year employee the employer must either provide the employee with 3 weeks of notice of their termination or provide payment in lieu of notice equating to 3 weeks of wages.
What is common law severance pay?
Some employees are entitled to additional compensation beyond the notice periods set out in the Employment Standards Code. How much severance pay an employee is entitled to depends on various factors, such as:
- The employees age at the time of termination,
- The length of service,
- The character of employment, and
- The availability of similar employment.
Unfortunately, there is no formula in determining how much severance an employee is entitled to. To determine the appropriate amount of severance an employee is entitled to lawyers must engage in legal research in reviewing wrongful dismissal cases and determining the appropriate period of notice for severance. There may also be additional factors besides the ones described above that should be considered when determining the appropriate amount of severance.
What is included in severance pay?
Severance pay includes not only an employee’s wages or salary, but any other benefit received during their employment. This can include:
- RRSP contributions,
- Health and dental benefits,
- Stock plans,
- Fringe benefits,
- Bonuses, and
Has your employer provided you with a deadline to accept their severance package?
Often, employers will give an employee a deadline to accept their offer for severance pay. Employees should request an extension so that the employee can be afforded the opportunity to speak with a lawyer. Regardless, employees have two years from the date of their termination to file a lawsuit against their employer for wrongful dismissal. It is more likely that not that an employer will be happy to provide the employee with a reasonable extension to consider their offer of severance.
Please note that once a severance release is signed you have waived your right to contest the amount of severance pay you are entitled to.
If you think you have been wrongfully dismissed or would like to determine if the severance package your employer has offered is adequate, please contact Inez Agovic for a free consultation at 780-412-2723.