Wrongful Dismissal

When an employee is employed for an indefinite period of time, neither the employer nor the employee can terminate the employment relationship unless there has been a substantial breach or reasonable notice of termination is given

The employer must prove that a summary dismissal (firing) is justified. The method most recommended is to meet with an employee and advise the employee in writing that the employee’s unacceptable conduct will no longer be tolerated; the employer should have the employee sign the reprimand. The Courts have held that such prior warnings are necessary even in cases where the employee is intoxicated on the work site. To overcome this prior warning problem, many employers establish a code of conduct or policy manual. If an employer wishes to rely on such policy manuals or employment codes, the employer must establish that such were a part of the contract of employment. To accomplish this, it is recommended that each employee be required to read and acknowledge having read and understood such employment codes or policy manuals, prior to the commencement of employment. The safest course would be to include the most important conduct provisions in the letter of employment.

If an employer cannot establish that the employee is dismissed for just cause, the employer must give the employee reasonable notice of termination. If the employer fails to provide such notice, the employee is entitled to damages in an amount equal to the wages and benefits lost during such notice period. The employee is required to mitigate damages by seeking other employment which is similar in stature and pay.

Dismissal does not have to be a direct act. If an employer substantially alters the working conditions, such as reducing hours of work, pay or status of an employee, without first having given the employee reasonable notice, the employee can elect to treat such actions as constructive dismissal. The employee may thereby have a right of action for damages equal to the pay and other benefits lost during the reasonable notice period.

Buyers and sellers of businesses ought to discuss the possibilities of wrongful dismissal actions with their lawyers well ahead of any closing date. A purchaser is deemed to acquire the seller’s employees’ length of service so that a purchaser may incur substantial damages when summarily terminating a long term employee of the seller who does not fit in with the purchaser’s plans. This could be the seller’s brother-in-law who was employed by the seller for no other purpose than being a brother-in-law.

Since this area of the law is complicated, you should contact a lawyer prior to terminating an employee. Employees who have been terminated or have been given notice of termination should also check with a lawyer to determine whether the notice period was reasonable. Contact us for more information.