Wrongful Dismissal

The dismissal (termination) of an employee may be subject to both legislation and common law. Wrongful dismissal refers to a situation in which the employee alleges that they were terminated without just cause and/or without a sufficient severance package. Often times, in wrongful dismissal claims, the plaintiff will also seek aggravated, punitive damages, or moral (mental distress) damages, and may claim that the employer has committed one or more torts (such as defamation, invasion of privacy, intentional infliction of emotional distress, etc.). Note: Coverage for such events may vary between insurers. For example, HIROC will cover only legal costs associated with the defense of such claims.

Common Claim Themes

  • Absence of and inadequate employment agreement with enforceable dismissal provisions. 
  • Inadequate reference checks. 
  • Inadequate hiring and performance management processes for regulated and non-regulated staff.
  • Ambiguous leave of absence policies.
  • Imprecise clauses in letters of offer.
  • Vague job descriptions and responsibilities. 
  • Indefinite work hours.
  • Lack of regularly scheduled and documented progress reports and performance appraisals. 
  • Poor documentation of progressive communication and discipline processes.

Case Study 1

Concerns were brought forward to a healthcare organization regarding the misuse of organization funds involving an administrator. An independent external audit was undertaken and the healthcare organization administrator was terminated with cause. The administrator sued the healthcare organization and the Board Chair for breach of contract including discrimination based on sexual orientation. Case review determined that the administrator revealed his sexual orientation after he was terminated from his position and the matter was dismissed without costs.

Case Study 2

There was a discussion at multiple senior management and board committee meetings of a healthcare organization regarding the alleged mismanagement of funds. Concurrently, the contract of a physician acting in an administrative capacity was not renewed. The physician later alleged wrongful dismissal, defamation, loss of competitive advantage, intentional infliction of mental distress, moral damages and bad faith conduct against the healthcare organization, chief of staff and an acting department chief. Case review determined that there was exposure on the part of the involved parties (including failure to follow internal policies, procedures and by-laws) and a settlement was made.

    Mitigation Strategies

    Applicant Screening

    • Adopt a standardized, fair and transparent hiring and performance management review processes for employees that include (but are not limited to):
      • Obtaining and confirming reference checks from previous employers;
      • Obtaining criminal and credit background checks;
      • Verification of education (e.g., diplomas, certificates) and driving history (if driving is an essential requirement of the position);
      • Proof of identity and eligibility to work in Canada; 
      • Current and valid professional license and/or registration (e.g., regulatory body for engineers or lawyers).
    • Adopt a standardized process for applicant background checks including:
      • A release form to enable any third party to release information related to the applicant;
      • Standardized criteria for references to rate the applicant;
      • Ensuring all references are personally contacted for a verbal discussion prior to the granting of privileges. 
    • Ensure the hiring and performance management review processes for regulated health professionals requires the applicant and employee to disclose whether the applicant or employee:
      • Is named (or has been since last review), as a defendant in any civil legal action arising from their professional conduct, competence or capacity, including whether the claim is resolved or a judgment rendered;
      • Is currently or has ever been involved in any regulatory body investigation resulting in a referral to a disciplinary or quality committee, and/or a decision of a regulatory body affecting the applicant’s licensure or registration;
      • Has ever been (or has been since last review), found liable in any Canadian or international court of competent jurisdiction as a result of a breach of the standard of care, professional misconduct, etc.;
      • Has ever been (or has been since last appointment), charged or convicted with a criminal offence in Canada or internationally, including the reason;
      • Has voluntarily or involuntarily relinquished any professional license, registration or entitlement to practice with no restrictions.

    New Hires

    • Ensure new employees sign:
      • An employment agreement including enforceable dismissal provisions, a probationary period, and statement indicating there are no promises outside the agreement that the employee is relying on in accepting the position (e.g., compensation and benefits);
      • An acknowledgment they have read the organization’s key policies and standards of conduct, and that failure to adhere to the standards may lead to suspension and/or dismissal.
    • Ensure all new employees attend an orientation to the organization and their work areas/departments.
    • Ensure mandatory training is conducted, attended and documented.
    • Implement reminders and monitor and document new employee performance during and at the conclusion of the probationary period, and periodically thereafter. Consider dismissal of employees if they do not have a successful probation.

    All Employees

    • Ensure complete and timely documentation of all issues with the employee and attempts to address the employee’s:
      • Unprofessional and/or disruptive behaviour (including confirming the expectations of the disruptive practitioner in writing);
      • Clinical skills and competency issues (where indicated).
    • Implement a formal system of scheduled performance reviews for all employees.
    • Ensure policies and procedures governing work schedules, including overtime, time off, work from home and use of company equipment (e.g., vehicles and IT resources) are applied equally to employees in the same or similar jobs.


    • Provide ongoing education to professional staff administration and leaders (e.g., best practices for conducting performance management and peer reviews, leading teams of professionals and critical and difficult discussions).


    • Adopt a standardized process for managing the dismissal of employees.
    • Obtain legal advice prior to proceeding with a dismissal if the employee has: 
      • Lodged a formal complaint in the past six months; 
      • Returned from any leave of absence in the past six months;
      • Has been involved in a workplace investigation in the past six months; 
      • Has been named in a regulatory body investigation;
      • Has been named in civil or criminal litigation;
      • Has actual or potential health issues, including pregnancy.
    • Implement a dismissal checklist to ensure:
      • The decision aligns with employment laws;
      • Adherence to any contractual requirements in employment agreement;
      • The employee is provided with:
        • Record of employment;
        • Appropriate severance package (if applicable);
        • Accrued wages and vacation pay;
        • Dismissal letter, or letter confirming and accepting resignation or retirement;
        • Any release letter the employee is required to sign in exchange for their severance package;
        • Information concerning benefits and pensions;
        • All organizational property is returned including: laptops; cell phones; memory sticks; confidential data; company credit cards; corporate membership cards; business cards; ID cards; company vehicle; keys; company uniform; outstanding expense vouchers;
        • Access to the organization’s computers and remote access are disabled (ideally during the dismissal meeting);
        • The employee’s email is redirected, their name is removed from any directories and website, and their voicemail message is changed; 
        • Payroll is notified;
        • External plan administrators for pension and benefits are notified.

    Monitoring and Measurement

    • Implement formal strategies to monitor and measure the effectiveness of and adherence to performance management and dismissal policy policies and practices across all sites and programs (e.g., learnings from staff complaints, incidents and claims involving employee dismissals, exit interviews, human resource and employee record chart audits).


    • HIROC claims files.
    • ECRI Institute. (2014, January). Hiring and firing. Healthcare Risk Control Risk Analysis, 3, Employment Issues 2. 
    • Employment Professionals Canada. (2014, July). Five things you need to know about background checks. 
    • Employment Standards Act, S.O. 2000, c. 41.
    • Gallant, D. J., Herber, A. P., & Roderique, H. J. (2011, May 11). Background checks and references –the do’s and don’ts [PowerPoint]. Presented at the Fasken Martineau Institute Labour, Employment and Human Rights Group Seminar. H
    • Honda Canada Inc. v. Keays, [2008] 2 S.C.R. 362, 2008 SCC 39. 
    • Human Resources and Skills Development Canada. (2012). Information on labour standards – Terminations [questions and answers]. 
    • Human Rights Code, R.S.O. 1990, c. H.19. 
    • Ontario Ministry of Labour. (2015, November 20). Termination of employment [guide to Employment Standards Act, 2000]. 
    • Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701.