Wrongful Dismissal and Employment Practices Liability

When can employees sue for wrongful dismissal?

Unjust dismissal. It’s a Government of Canada term that your HR professionals are more than familiar with. As set out by the Canada Labour Code, when an employee considers a dismissal to be unjust, there is a specific procedure to be followed to make complaints.1

Firstly, the question of who is entitled to protection from unjust dismissal springs to mind. On Canada.ca, the Federal government confirms that, “All employees, managers excluded, who have completed at least 12 consecutive months of continuous employment with the same employer and who are not covered by a collective agreement.”2

Secondly, you are likely wondering what can employees do if they feel their dismissal was unjust? The Government of Canada sets out some parameters for what dismissed employees can do.

For instance:

“a. They can request, in writing, a written statement from their employer giving the reasons for dismissal. The employer must reply within 15 days after the request is made.
b. They can file a complaint alleging unjust dismissal at any Labour Program office no later than 90 days from the date of the dismissal.

The complaint may be made by the dismissed person or by a representative, such as a lawyer. The complaint must identify the employee, state that the employee was dismissed, include the date of dismissal, and claim that the dismissal was unjust.”3 Last but not least, what does the term “constructive dismissal” mean and how is it interpreted by the Government of Canada?

“The courts have held that the unjust dismissal provisions of Part III of the Canada Labour Code also apply to “constructive dismissal”. In a constructive dismissal, the employer has not directly fired the employee, but has failed to comply with the contract of employment in some major respect or has unilaterally and substantially changed the terms of employment or expressed an intention to do either of these.

In such a case, the employee must clearly indicate within a short period of time, that he or she does not accept the new conditions of employment. Often the employee feels compelled to resign rather than accept the new conditions of employment. This may constitute constructive dismissal.

Not all cases of an employee quitting amount to “constructive dismissal”. Seek more information from any Labour Program office if you think this may apply to you.”4

Wrongful dismissal is precisely what an employee may decide to sue your organization for. During economically challenging times, businesses in every industry are making tough decisions. About how to pivot and how to thrive during unprecedented times. And when times are tight, every line item of cost is under scrutiny. This is why understanding the risks you face when you let employees go is vitally important.

Above all, protecting your business with employment practices liability insurance is nothing short of essential. Here is some timely information about wrongful dismissal and employment practices liability that sheds light on the value of this essential insurance.

Canada’s Labour Code and how it applies to your workplace

If wrongful dismissal and employment practices liability are on your mind you have landed on the right page. With more than 1,200 blog posts about business insurance, we are constantly developing more content to share with you. Our goal is to provide you with the insights you need to make informed decisions about your business insurance. Our hope is that you will seek out the expertise of an ALIGNED Insurance broker when it comes to buying EPL and other coverages.

To help you understand what you need to know about wrongful termination and employment practices, we’re citing information from the Government of Canada. Specifically, information from Part III of the Canada Labour Code about standard hours, wages, vacations and holidays.

For example:

“The provisions of the Code set labour standards for employment conditions by establishing minimum working conditions in the federally regulated private sector, such as hours of work, minimum wages, statutory holidays and annual vacations, as well as various types of leave. They also create a level playing field for employers by requiring all of them to meet these minimum entitlements.

List of industries that must follow Part III (Standard Hours, Wages, Vacations and Holidays) of the Code:


– Air transportation, including airlines, airports, aerodromes and aircraft operations. Banks, including authorized foreign banks. Grain elevators, feed and seed mills, feed warehouses and grain-seed cleaning plants 
– First Nations Band Councils (including certain community services on reserve) 
– Most federal Crown corporations, for example, Canada Post Corporation 
– Port services, marine shipping, ferries, tunnels, canals, bridges and pipelines (oil and gas) that cross international or provincial borders 
– Radio and television broadcasting 
– Railways that cross provincial or international borders and some short-line railways 
– Road transportation services, including trucks and buses, that cross provincial or international borders 
– Telecommunications, for example, telephone, internet, telegraph and cable systems 
– Uranium mining and processing and atomic energy 
– Any business that is vital, essential or integral to the operation of one of the above activities”5

Canada.ca: Overview of the parts of the Canada Labour Code and how they apply to your workplace

Whether or not your business falls into any of the categories noted above, you need to be aware of your responsibilities as a Canadian employer. Wrongful dismissal situations are difficult because they involve people, time, financial resources and emotions.

Protecting your business is not only possible, it’s essential. Our experienced insurance brokers across Canada have strong relationships with top insurance companies in Canada. We are experts at aligning choice, value and options for our clients. If you are looking for employment practices liability insurance that will respond to cases of wrongful dismissal, we can help you get aligned.

Wrongful dismissal risk management | How employment practices liability insurance works

HR Rules. Your human resources experts are essential when it comes to managing employee relations. They are adept at understanding and following employment best practices can protect against wrongful dismissal / termination, discrimination (i.e. age, sex, race, disability, etc.) or sexual harassment suits from your current, prospective or former employees.

However, despite following government mandated termination guidelines as well as HR best practices, there are risks involved with laying off or terminating employees. Employment exposures that employment practices liability (EPL) insurance can respond to are listed below.

  1. Actual or alleged wrongful or constructive dismissal, discipline, discharge or termination
  2. Breach of oral or written employment contract
  3. Discrimination and/or Defamation
  4. Employment-related libel, slander, humiliation, defamation or invasion of privacy, misrepresentation
  5. Invasion of privacy
  6. Punitive damages where insurable by law
  7. Sexual harassment
  8. Wrongful failure to employ or promote
  9. Wrongful deprivation of a career opportunity, wrongful demotion or negligent evaluation
  10. Vicarious liability for intentional acts

Similarly, all employees of an organization including directors and officers as well as potentially extending coverage to third party liabilities can also be covered by EPL.

Employment practices liability is available as a stand-alone coverage. EPL can be part of a management liability package policy. It can also be part of your directors and officers insurance policy.

Complimenting the work of your HR experts, employment practices liability insurance provide the resources you need defend your company against a lawsuit or to pay a claim.

COVID-19, wrongful dismissal and employment practices liability

COVID-19 continues to cause layoffs. That is to say, during these unprecedented times, employers are facing unknown and unanticipated risks as well as making uncomfortable decisions about employees.

Throughout COVID-19, we are monitoring how Canadian businesses are changing and adapting to new and uncertain circumstances. To help you manage your business risks, we have prepared some informative posts about COVID-19 risks, provincial workplace guidelines, insurance options and more. On our dedicated COVID-19 Info page, you can find a wide range of information.

For example:

If you are contemplating employee layoffs during COVID-19, our insurance experts can provide you with insights about insurance.

Source(s): 1,2,3,4 Canada.ca: Unjust dismissal ; 5 Canada.ca: Overview of the parts of the Canada Labour Code and how they apply to your workplace ;

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