When does it make sense to sue for wrongful dismissal?

“Should I sue for wrongful dismissal?”

Dave believes he was fired for disagreeing with his boss, and that he was shortchanged in his severance package. Could he receive a worthwhile sum of money by suing?


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Q. When is a wrongful dismissal suit justified and worth the time and money required to get legal representation? I was an assembly line manager in a clothing factory and believe I was fired by my employer for personality issues—mainly for disagreeing with him regarding how assembly line workers should be scheduled in the plant and how safety issues were being dealt with. I received a paltry two weeks of severance pay per year worked (I worked there three years).

A. When is it worthwhile to hire a lawyer to seek greater severance package entitlements? That is a good question, Dave, and one that comes up all the time. There are really two answers to this.

First—and this is the less frequent of the two situations—if you are an employee who believes they have not been treated fairly, wants to prove their point or show their former employer that they will not stand for this and can afford to get into litigation where the goal is to prove a point, then you should hire a lawyer and prove your point. This isn’t the situation for most people, but it does come up from time to time.

The second and more frequent situation is where an employees is willing to incur some legal fees provided that they will end up getting more than that amount in a settlement. Most of the time, I suggest that clients think of the legal fees that they will incur as an investment and focus on how much return they are likely to see on that investment. To put it another way, is the difference between what you have been offered and what you should have been offered enough in terms of dollars to make it worth paying a lawyer?

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However, I will also add to both of these examples that, in many cases, employers contribute something towards the legal fees of the former employee, so you may not be responsible for the entire bill.

A few things stand out to me about your situation. First, I’m going to assume that you are not in a union, which is a very different discussion.

It sounds like you have been terminated “without cause,” which means that you are entitled to notice or pay in lieu of notice. If you were terminated for cause, you would not have received any compensation.

Next, it sounds like you might have been paid less than your minimum entitlements under the Employment Standards Act. But I’m getting ahead of myself here. 

There are two systems that define what you are entitled to upon termination of your employment.

First is the Employment Standards Act is a statute. It is not optional. You get this no matter what. The bad news is that it only provides you with a minimum set of entitlements. 

The second system is the common law. Put very briefly, a judge will decide how much notice (or pay instead of notice) you are entitled to. This is an estimate of the amount of time that is should take you to find a similar new job. The amount of time is then converted into dollars by looking at what a typical month is worth to that employee. As an employee, you want your common law entitlements and, in most cases, you have the right to choose that system. Your common law notice period will almost always be longer than your entitlements pursuant to the Employment Standards Act. (The main exception to this is employees who sign a contract of employment specifically accepting their Employment Standards Act minimum entitlements.) 

Unfortunately, the amount of time that you worked there is a big factor in determining your notice period. With only three years of service, unless there are some additional supporting facts, your notice period is likely going to be well under a year.

It is also important to understand that if you obtain a new position with approximately the same compensation one month after your employment was terminated, it wouldn’t make sense to then proceed to debate whether your common law notice period is two months or six months because you obtained a new position, or “mitigated your losses,” after one only month, putting an end to this entitlement. If you expect to get a new job quickly, it is critical that you make a deal quickly, before you get a new job, so that you can seek your full entitlements.  

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In terms of mitigation, I’ll also add that an employee has a duty to make reasonable efforts to seek out (and accept) new, similar employment during the notice period and cannot simply do nothing in order to later point to the fact that they have not obtained a new position. The flip side of this is that an employee is not required to take any job that is available. The obligation is to seek out a new, similar job. For example, just because Tim Hortons would hire you today does not mean that you are obligated to take that position.

I should also mention that if you have signed an agreement accepting the severance offer that was provided to you, you might not be able to get out of that deal to be allowed to pursue your full entitlements. However, if you were paid less than your Employment Standards Act minimum entitlements, you would likely be able to get out of the agreement.

Scott Hawryliw is a civil litigation lawyer with SRH Litigation in Barrie, Ont. He helps clients with legal problems related to injuries, employment, and business issues and can be reached at [email protected]