Wrongful dismissal occurs when an employee is terminated without reasonable notice or without just cause, and the employer fails to provide appropriate compensation in lieu of that notice. The concept of "reasonable notice" is based on common law principles and differs from the minimum standards set out in the Employment Standards Act, 2000 (ESA).

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Employers have the right to terminate an employee, but they must either provide notice of termination or payment instead of that notice, unless the termination is for just cause. Just cause refers to serious misconduct such as theft, insubordination, or repeated neglect of duties. If an employer cannot prove just cause, they are legally obligated to compensate the employee appropriately.
 

Statutory vs. Common Law Notice

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Ontario law distinguishes between the minimum statutory notice under the ESA and the more generous common law notice.

ESA Notice: The ESA outlines the minimum notice or pay in lieu that an employee must receive, which depends on their length of service. For example:

1 week of notice after 3 months of service

Up to 8 weeks for longer service

Some employees may also be entitled to severance pay if they have worked for the employer for five or more years and the employer has a payroll of $2.5 million or more or if 50 or more employees are being terminated within a six-month period due to a business closure.

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Common Law Notice

In contrast, common law notice is typically more generous and is based on several factors, including:

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- The employee's age

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- Length of service

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- Position and level of responsibility

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Availability of similar employment

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Common law notice periods can range from a few months to over two years in some cases. When an employee sues for wrongful dismissal, they are usually seeking this enhanced common law compensation.