What to Do If You've Been Wrongfully Dismissed

What Is Wrongful Dismissal?

In Ontario, "wrongful dismissal" doesn't mean you were fired unfairly. It means you were fired without proper notice or pay in lieu.

Unless you were fired for serious misconduct (theft, violence, etc.), your employer must give you either:

• Working notice: Advance warning you'll be let go
• Pay in lieu of notice: Immediate termination + severance pay
• Combination: Some notice period + some severance pay

If they gave you less than you're legally entitled to, that's wrongful dismissal—regardless of whether the firing was justified.

Two Types of Severance: ESA vs. Common Law

Here's where it gets tricky. Ontario has two different severance standards, and most employers only tell you about the lower one.

Employment Standards Act (ESA) Minimums

The ESA sets bare minimum severance based on length of service:

Common Law Severance (The Real Number)

Unless your employment contract specifically limits you to ESA minimums, you're entitled to reasonable notice under common law—which is typically much higher.

Common law severance considers factors like:

• Length of service: Longer service = more severance
• Age: Older workers get more (harder to find new jobs)
• Position level: Managers and executives get more
• Availability of similar work: Specialized roles get more

Rule of thumb: Common law severance is roughly 1 month per year of service, but can range from 2-4 weeks per year (junior roles) to 1.5-2 months per year (senior roles).

Calculate Your Severance (Rough Estimates)

Examples

What's Included in Severance?

Severance should include your full compensation package during the notice period:

• Base salary
• Bonus payments (if you normally get them)
• Commission (based on historical averages)
• Benefits continuation (health, dental, life insurance)
• Car allowance or other perks
• RRSP/pension contributions
• Stock options (if vesting continues)

Special Situations

Constructive Dismissal

If your employer fundamentally changes your job (major pay cut, demotion, relocation), you can treat this as dismissal and claim severance—even if you quit.

Mass Layoffs

If 50+ employees are laid off, additional severance pay may be required under the ESA. This is on top of regular severance, not instead of it.

Just Cause Dismissal

If fired "for cause," you get zero severance. But the bar for just cause is very high—usually theft, fraud, or serious insubordination. Poor performance alone is rarely just cause.

Your Options: Sue, Negotiate, or Accept

Option 1: Accept the Offer

When to do this:

• The offer is close to common law severance
• You have a new job lined up
• You can't afford legal fees or time off
• Your employment contract clearly limits severance to ESA minimums

Option 2: Negotiate

Most wrongful dismissal cases settle out of court. A lawyer can often negotiate 2-5x the initial offer without going to trial.

Benefits of negotiation:

• Faster resolution (2-6 months vs. 1-2 years for trial)
• Lower legal costs
• Confidential settlement
• Certainty of outcome

Option 3: Sue for Wrongful Dismissal

When to sue:

• Large gap between offer and common law entitlement
• High-paying job with significant severance at stake
• Employer refuses to negotiate in good faith
• You have a strong case and good evidence

Risks of suing:

• Legal costs (usually $15,000-$50,000+)
• Time (1-2 years to trial)
• Uncertainty of outcome
• Possible costs award if you lose

The Duty to Mitigate

You have a legal obligation to look for new work and minimize your losses. This means:

• Apply for jobs actively and document your efforts
• Accept reasonable employment offers (similar pay/position)
• Don't turn down good jobs just to maximize severance
• Be prepared to prove your mitigation efforts in court

If you find a new job during your severance period, your former employer's obligation reduces accordingly. But you still keep what they've already paid.

Time Limits and Deadlines

Don't wait to get legal advice. Even if you're negotiating, having a lawyer review your severance package early can save you from signing away valuable rights.

Red Flags: When You Definitely Need a Lawyer

• 🚩 Pressure to sign immediately: "This offer expires in 24 hours"
• 🚩 Non-compete clauses: Restrictions on working for competitors
• 🚩 Broad release language: Waiving all possible legal claims
• 🚩 Discrimination concerns: Firing related to age, gender, family status, etc.
• 🚩 Whistleblowing: Terminated after raising legal/safety concerns
• 🚩 Large severance gap: Offer significantly below common law entitlement

What Documents to Gather

Before meeting with a lawyer, collect:

• Employment contract and any amendments
• Job description and organizational chart
• Pay stubs for the last year
• Bonus/commission history
• Benefits statements
• Performance reviews
• Disciplinary records (if any)
• Termination letter and severance offer
• Company policies (employee handbook, etc.)

The Bottom Line

Most employees significantly underestimate their severance entitlement. ESA minimums are just that—minimums. You're probably owed much more.

Don't sign anything without understanding your rights. A 30-minute consultation with an employment lawyer can often pay for itself many times over.