wrongful dismissal

Definition of wrongful dismissal

Noun

wrongful dismissal (plural wrongful dismissals)

1. A legal doctrine that requires employers to have a job-related reason to terminate employees. This doctrine is largely irrelevant in the United States today unless stated in an employment contract.

Further reading

Wrongful dismissal, also called wrongful termination or wrongful discharge, is an idiom and legal phrase, describing a situation in which an employee's contract of employment has been terminated by the employer in circumstances where the termination breaches one or more terms of the contract of employment, or a statute provision in employment law. It follows that the scope for wrongful dismissal varies according to the terms of the employment contract, and varies by jurisdiction. Note that the absence of a formal contract of employment does not preclude wrongful dismissal in jurisdictions in which a de facto contract is taken to exist by virtue of the employment relationship. Terms of such a contract may include obligations and rights outlined in an employee handbook.

Being terminated for any of the items listed below may constitute wrongful termination:

• Discrimination: The employer cannot terminate employment because the employee is a certain race, nationality, religion, sex, age, or in some states, sexual orientation.
• Retaliation: An employer cannot fire an employee because the employee filed a claim of discrimination or is participating in an investigation for discrimination. This "retaliation" is forbidden under civil rights law.
• Employee's Refusal to Commit an Illegal Act: An employer is not permitted to fire an employee because the employee refuses to commit an act that is illegal.
• Employer Not Following Own Termination Procedures: Often, the employee handbook or company policy outlines a procedure that must be followed before an employee is terminated. If the employer fires an employee without following this procedure, the employee may have a claim for wrongful termination.

In Canadian law, absent a written contract which addresses how to end the employment relationship, the law implies into the employment relationship a term that it will not be ended without "reasonable notice" of its termination. The length of reasonable notice depends on a number of factors, best described by the Ontario Court in the 1960 decision of Bardal v. Globe & Mail:

There could be no catalogue laid down as to what was reasonable notice in particular classes of cases. The reasonableness of the notice must be decided with reference to each particular case, having regard to the character of the employment, the length of the service of the servant, the age of the servant and the availability of similar employment, having regard to the experience, training and qualifications of the servant.

An employer is entitled to dismiss an employee according to the terms of the employment contract. There are oral employment contracts, and written employment contracts, and combinations of oral and written employment contracts. In Canadian common law, there is a basic distinction as to dismissals. There are dismissals with cause, and dismissals without cause. Cause is employee behaviour that constitutes a fundamental breach of the terms of the employment contract. Where cause exists, the employer can dismiss the employee without providing any notice. If no cause exists yet the employer dismisses without providing lawful notice, then the dismissal is a wrongful dismissal. A wrongful dismissal will allow the employee to claim monetary damages in an amount that compensates the employee for the wages, commissions, bonuses, profit sharing and other such emoluments the employee would have earned or received during the lawful notice period, minus earnings from new employment obtained during the lawful notice period. In Canadian employment law, it has long been the rule that reinstatement is not a remedy available to either the employer or the employee - damages must be paid instead.

Although Canadian employment law provides some of the above remedies, each jurisdiction or country may treat employment law differently. It is important to determine which jurisdiction the employment occurs in or is regulated by, then seek appropriate legal advice relevant to that jurisdiction and its particular employment laws.

Wrongful dismissal will tend to arise first as a claim by the employee so dismissed. Many jurisdictions provide tribunals or courts which will hear actions for wrongful dismissal. A proven wrongful dismissal will tend to lead to two main remedies: reinstatement of the dismissed employee, and/or monetary compensation for the wrongfully dismissed.

A related situation is constructive dismissal, in which an employee feels no choice but to resign from employment for reasons imposed by the employer.

One way to avoid potential liability for wrongful dismissal is to institute an employment probation period after which a new employee is automatically terminated unless there is sufficient justification not to do so. The dismissed employee may still assert a claim, but proof will be more difficult, as the employer may have broad discretion with retaining such a temporary employee.

Defences

Successful defences have been:

• the employer discovers the employee was in such serious breach that he could have been summarily dismissed [1]
• contract allowed dismissal a without disciplinary procedure as long as notice give or paid in lieu. [2]

See also

• constructive dismissal
• unfair dismissal

References

1. Virgin Net Ltd v Sally Harper[2004] EWCA Civ 271
2. Boston Deep Sea Fishing and Ice Co Ltd v Ansell (1888) 39 ChD 339