Canadian Rental Service

Legalese: October 2012

By Deryk Coward   

Features Business Intelligence

Know your legal rights to avoid wrongful dismissal lawsuits.

Know your legal rights to avoid wrongful dismissal lawsuits.

When an employee is terminated from a job, the individual often feels slighted and may either sue the former employer or file some other type of formal complaint. Sometimes, proper protocol was followed by the employer and the employee was justifiably dismissed. However, there are occasions when an employee’s dismissal was not justified at law.  When an employee’s termination was not justified, compensation for the loss of employment may be awarded by the courts.

Do you know your legal rights when it comes to terminating one of your employees?

Generally, when an employee has been terminated without cause by his or her employer, there is an obligation to give the terminated employee “reasonable notice.” The appropriate length of such notice will often come down to the length of time worked and the level of position held by the employee at his or her place of business. However, if there was a specific notice period specified in the employment contract, that period of notice will typically be binding upon the parties.


It should be noted that this article only applies to workplaces that are non-unionized. In unionized workplaces, the terms of the collective bargaining agreement always take precedence.

A matter of wrongful dismissal that is often litigated is whether the employee was terminated with or without cause. The only time an employee has a right to pursue a claim for reasonable notice (or for payment in place of that notice) is when the employee has been dismissed without cause. Proving cause depends on the specific facts of each case. Generally, a court will find cause when misconduct committed by the employee goes to the very root of the employment contract. This misconduct could possibly, but not necessarily, come from a single incident such as theft of company valuables. It can also arise from multiple events that go to the root of the employment contract, such as chronic lateness or unexplained absences.

The court in the Manitoba case of Boulet v. Federated Co-operatives Ltd. stated a few more points of interest regarding wrongful dismissal. In this decision, the court said the employer has the onus of proving just cause for dismissal and the standard of such proof is on a balance of probabilities (greater than 50 per cent). This means employers do not have to prove beyond a doubt that they had cause. They simply must show it is more likely that they had cause than it is that they didn’t. The court also said the performance of an employee must be gauged on an objective standard, especially when dealing with management level positions.

Finally, it is important for employers to keep in mind three main points in order to reduce its exposure to money damages that can arise from a wrongful dismissal claim.

It is important to identify and document the employee’s misconduct with enough precision and specificity that both the employee and the court, if necessary, can ascertain the nature of the misconduct so the employee can respond to the employer’s case.

An employer must be able to prove cause on a balance of probabilities.

An employer must be able to establish that the nature or degree of the misconduct warranted the employee’s dismissal.
The decision to terminate an employee cannot be made lightly. It is the most serious form of discipline, and a last resort for employers. If you choose to terminate one of your employees for cause, the onus will be on you to demonstrate that the decision was justified. Courts will award a terminated employee monetary damages if you did not have cause. Moreover, you could be faced with legal fees and court costs that could exceed the value of the notice period paid to the departed employee.

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