Heidi Giesbrecht
ICBC Cases • Personal Injury • Wrongful Dismissal 

Employment Law FAQ

If an employer does not have just cause to dismiss, can it still dismiss an employee?

In a non-union situation (unless there is a written contract saying otherwise), the employer has the absolute right to dismiss an employee. An employee does not “own” his or her job or have absolute job security. An employer has the right to dismiss an employee regardless of whether it has “just cause” to do so. If the employer does in fact have just cause to dismiss an employee, it can dismiss on the spot and there is no legal obligation to give the employee either working notice or severance pay in lieu of notice.

On the other hand, if an employer does not have just cause to dismiss the employee, it can still dismiss, but certain rights of the employee are triggered by the dismissal. An employee dismissed without just cause is entitled to either receive reasonable working notice that the job is coming to an end or severance pay in lieu of working notice.

What is “just cause” for dismissal and how is that different from good reasons that do not stack up to just cause?

A few examples of what the Courts have and have not found to be just cause will help to illustrate the point:

GOOD REASONS FOR DISMISSAL WHICH ARE NOT JUST CAUSE

BEHAVIOUR WHICH HAS BEEN FOUND TO EQUAL JUST CAUSE FOR DISMISSAL

All of these examples are quite general. It is, therefore, important to discuss the particular facts of your case with a lawyer to determine whether the complaints against an employee actually amount to just cause for dismissal without any obligation to pay severance pay or give working notice.

What amount is reasonable for working notice or severance pay if an employee is dismissed without just cause?

Depending on the case, reasonable notice can go from several weeks to as high as twenty-four months which is the rough upper limit. However, twenty-four months notice is rare. It is usually reserved for senior management and long term employees such as a top manager of a major corporation who is dismissed after 25 – 30 years of service.

What factors do the Courts take into account in determining the amount of notice or severance pay in a particular case?

The Courts consider a number of factors including the dismissed employee’s age, length of service, position held, and the difficulty in finding alternative work. Promises of long term employment and whether the employee left secure employment and/or relocated to take the job can be aggravating factors which lead to longer notice. The manner of dismissal, can also result in extra severance pay being awarded to the dismissed employee if done in a bad faith way.

Contrary to common belief, there is no formula or rule of thumb to determine reasonable notice such as a week or a month of notice per year of service. Some companies do use such formulas but the Courts do not.

It is important for both employers and employees to obtain legal advice not only on whether “just cause” exists, but on how much notice or severance pay is payable. Paying for an hour of legal advice before you dismiss an employee can avoid lawsuits and hundreds of if not thousands of dollars in legal fees afterwards.

It is also important for a dismissed employee to know what reasonable notice is and to obtain legal advice to ensure that a severance offer is fair and reasonable and if not, to negotiate for better terms.

Can an employer require a dismissed employee to work out the notice period rather than paying him severance pay?

Yes, the employer can require the employee to work out his or her notice period. This means that if an employer dismisses an employee on June 1st, and gives him, for example, three months working notice, the dismissed employee must show up and work out the notice through to the end of August. In some situations a working notice can work out well for both employer and employee. However, in many situations a working notice is too awkward and uncomfortable for both the employer and the employee. The employee may be unmotivated. Co-workers and subordinates may feel uncomfortable or will not pay attention to the orders of a managerial employee who has been let go but is working out his notice period. There is also the risk that a resentful employee could do serious damage to the employer’s business before leaving. The employer therefore usually chooses to offer severance pay in lieu of notice.

If offered a working notice, the dismissed employee must work through the notice period. If the dismissed employee refuses to work it, he will be found to have broken the employment contract himself and will not be entitled to sue for wrongful dismissal or severance pay. It is the employer’s option, not the employee’s to provide severance pay instead of requiring the employee to work out the notice.

Does the employer have a duty to warn the employee of his shortcomings before dismissing him?

There is no duty to warn for obvious things like theft but in most cases yes, there is a duty to warn.

If the employer is dissatisfied with an employee’s performance, the Courts have held that in fairness to the employee, the employer must notify the employee of his or her shortcomings and give the employee a reasonable time to improve and “pick up his socks”. The employer must also warn the employee what the result will be if he fails to improve, namely, that his job is in jeopardy and that he will be dismissed. It is important for an employer to be clear and specific both as to the employee’s shortcomings and what the outcome will be if improvement is not or can not be made by the employee.

Failure to warn may deprive the employer of the ability to establish just cause for dismissal when it is trying to justify its actions to a Judge in a Courtroom. If the employee’s job performance is unsatisfactory to the employer, why did it not reprimand the employee and warn him that he had to change? Employers often fail to warn and this can be fatal to the employer’s just cause defence.

What is constructive dismissal?

Usually if you quit a job, you have terminated the employment contract and are not entitled to receive any severance pay. However, the term “constructive dismissal” means that certain actions by the employer which result in the employee quitting can equal dismissal. If there is constructive dismissal, the employee is justified in quitting and can do so without losing the right to sue for wrongful dismissal. This may occur in the following situations:

  1. where pay is lowered;
  2. where the employee is demoted; and,
  3. where the job duties are changed dramatically.

Reducing an employee’s pay will almost always be constructive dismissal. A demotion is usually only constructive dismissal if it is also humiliating, has diminished the employee in the eyes of his peers and subordinates, and if no reasonable person could be expected to tolerate it. Unilateral changes to job duties will be constructive dismissal only if they are major changes. The Courts use terms like “fundamental changes” which “go to the core” of the employment contract.

Constructive dismissal is a very complex area of the law. Legal advice should be obtained before quitting a job in order to find out if by quitting, you are breaking the employment contract yourself and extinguishing your rights to severance pay or whether you have been constructively dismissed which would allow you to quit with your rights to sue for severance pay intact.

What is meant by “duty to mitigate” in a wrongful dismissal claim?

The duty to mitigate is an important consideration to any dismissed employee in deciding whether it is financially worthwhile to sue the former employer for wrongful dismissal. The wrongfully dismissed employee is obliged at law to act in a way which mitigates or reduces his damages or loss. What this means, is that the wrongfully dismissed employee must mitigate by looking for another job.

If the dismissed employee is successful in finding other employment, any earnings from that new job during the notice period will be subtracted from the damages payable by the former employer. For example, lets say the Court awards a dismissed employee 12 months notice. The employee earned $2,500/month in his former job. He is unemployed for the first 6 months after dismissal and then gets a job paying $2,500/month for the next 6 months. The value of 12 months notice is $30,000. The employee has earned $15,000 in the 12 month notice period. The employee will receive Judgment against the former employer only for the balance of $15,000.

This example makes it clear that one of the things you must carefully consider before deciding whether to sue is: what are my job prospects? If you are re-employed quickly and have largely mitigated or reduced your damages, there may be little or in some cases no financial gain by suing for wrongful dismissal.