Canada: How Canadian Courts Assess Damages For Wrongful Dismissal

Last Updated: June 1 2006

Article by Carman J. Overholt, Q.C.

Originally published in May 2006

Understanding and assessing the possible legal issues raised by a termination of employment is fundamental to human resources management and avoiding costly legal disputes. Through a series of recent judgments of the Supreme Court of Canada, the law has been clarified regarding the standards expected to be met by employers and the consequences of not adhering to the legal standards created.

In the absence of an express contractual term regarding notice for termination of employment, Canadian Courts have held that there is an implied term that an employer will give an employee reasonable notice of termination of employment in an indefinite term contract of employment. This applies to all employees regardless of whether they have a written contract or not. In many cases, this notice will be in excess of the statutory notice requirements. The failure to provide what the common law says is reasonable notice in the circumstances, will result in a claim for damages for breach of that obligation, typically loss of wages and any benefits that would have been provided during the period of reasonable notice.

No notice is required, either by statute or common law, where there is "just cause" for dismissal. Just cause has been defined by the Supreme Court of Canada as follows:

"If an employee has been guilty of serious misconduct, habitual neglect of duty, incompetence, or conduct incompatible with his duties, or prejudicial to the employer’s business, or he has been guilty of willful disobedience to the employer’s orders in a matter of substance, the law recognizes the employer’s right to summarily dismiss the delinquent employee."

However, Canadian Courts have established a very high threshold to be met by employers in establishing just cause. The Supreme Court of Canada in McKinley v. BC Tel held that dismissal for just cause was appropriate in limited circumstances. Mr. Justice Iacobucci stated that the general approach to the determination of just cause is as follows:

"Underlying the approach I propose is the principle of proportionality. An effective balance must be struck between the severity of the employee’s misconduct and the sanction imposed. The importance of the balance is better understood by considering the sense of identity and selfworth individuals frequently derive from their employment… I favour an analytical framework that examines each case on its on own particular facts and circumstances and considers the nature and seriousness of the dishonesty in order to assess whether it is reconcilable with sustaining the employment relationship."

It is necessary to distinguish between the statutory requirement to provide notice and the requirement to provide additional notice depending upon a number of non formulaic factors that are derived from the common law in nine provinces and the Civil Code in the province of Québec. Despite the difference in the legal systems between Québec and the common law provinces, employees may be entitled to notice well in excess of statutory notice requirements in all Canadian provinces. Employment standards legislation in each common law province and the Labour Standards Act in Québec include a formula for payment of an amount of severance where employment is terminated without notice and without just cause. Generally speaking, this legislation, which is different in each province, provides for payment of a maximum amount of eight weeks of wages.

Although there is no Court decision that expressly limits the implied term of notice to two years, there are only a few decisions where Courts have awarded more than two years notice in extraordinary circumstances. The most important factors that are considered by Canadian Courts in determining how much notice is reasonable for a particular employee are age, length of employment, nature of responsibilities and the availability of alternative employment. Other factors, such as whether an employee was induced to leave other employment to take the position, may also influence the determination. These factors were established in various decisions by Canadian Courts.

In recent years, the nature of responsibilities has been less emphasized in the decisions of Canadian Courts. Although an employee with supervisory responsibilities will be typically entitled to a longer notice period than a clerical employee, there has been a narrowing in the difference in awards based upon the nature of the position held. Employees who are 50 years of age or older are typically given longer notice periods on the assumption that it is more difficult for them to secure alternative employment. Local economic factors are relevant in determining the length of the notice period. A recession or negative economic factors in an industry will lengthen the notice period. Not all employees are entitled to notice in excess of statutory requirements. An award of damages is subject to a deduction for amounts earned by an employee in mitigation of their damages.

In Wallace v. United Grain Growers Ltd., the Supreme Court of Canada held that employers have an obligation to be fair and honest with employees at the time of termination of employment. If the employer exhibits bad faith in the manner of termination of employment, an extension of the notice period for as much as an additional six months is appropriate.

In the most serious cases, the Court may also award damages for mental distress and punitive damages arising from the termination. Awards of punitive damages are reserved for the most serious cases of employer misconduct. For instance, such an award may be made where there are false allegations of dishonesty by an employer.

The termination of employment of employees in Canada requires a careful assessment of not only the statutory requirements regarding notice but the obligation to give considerably longer notice in many circumstances. The unique or special circumstances involved in each case are relevant because they may be the basis for additional possible claims against an employer including human rights complaints. Employers need to carefully assess the risk and potential liability resulting from the termination of an employment relationship in light of the recent developments in this area of the law and the high standards expected to be met by employers.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.