Wrongful Dismissal vs Termination: What’s the Difference?
The terms “dismissal” and “termination” are often used interchangeably. You will see the latter used more in legislation (i.e. the BC Employment Standards Act), and the former in more recent case law.
However, within the umbrella term “dismissal” or “termination”, there are different categories.
*This article is not considered legal advice and should only be used for general information. If you are looking for support regarding workplace harassment please connect with a lawyer.
What Is Termination/Dismissal in British Columbia?
In British Columbia, “termination” or “dismissal” is the broad legal term used to describe the end of an employment relationship. It is the umbrella concept. Within it, there are several distinct legal categories.
Termination does not automatically mean something improper has occurred. An employment relationship can end lawfully or unlawfully. The legal analysis begins by identifying what type of termination has taken place and what obligations flow from that classification.
In non-unionized workplaces in British Columbia, termination generally falls into four forms:
Termination without cause/dismissal without cause
Termination for cause/dismissal for cause/just cause dismissal
Constructive dismissal
Temporary layoff (subject to strict statutory limits)
Each carries different legal consequences.
When an employer fails to provide the notice or severance required by law, a lawful termination can become a wrongful dismissal.
Termination/Dismissal Without Cause in BC
Termination/dismissal without cause in BC means an employer ends employment for reasons that are not about serious wrongdoing. Instead, the business may be restructuring, cutting costs, or changing direction.
In BC, employers have the legal right to end employment without cause. They do not have to prove misconduct. They also do not have to give a detailed explanation for their decision. However, that right comes with clear legal duties.
When an employer chooses to terminate without cause, they must provide working notice of termination or pay-in-lieu of working notice (referred to as "termination pay” or “severance”).
First, the Employment Standards Act sets minimum notice rules based on how long the employee worked there.
Second, courts look at four factors: age, tenure, nature and character of the position, and availability of comparable work and comparable pay.
Termination for Cause
Termination/dismissal for cause happens when an employer says the employee did something so serious that employment must end immediately without any working notice or pay-in-lieu.
Also known as “just cause.” Just cause is not about small mistakes or one bad day at work. The threshold in British Columbia is very high. Ending someone’s job without notice or severance is the most serious step an employer can take. Because of that, the law expects strong proof.
Just cause usually involves serious misconduct. Examples can include theft, fraud, violence, or major dishonesty. In some cases, it may involve repeated problems, such as ongoing poor performance or rule breaking. But even then, employers are normally expected to give clear warnings first. This is known as progressive discipline. The employee must be told what is wrong and given a fair chance to improve.
If an employer claims just cause, they must prove the misconduct was serious enough to justify ending the job without notice or pay.
If they cannot prove cause, the termination may be treated as without cause. When that happens, notice or severance will commonly be owed.
Constructive Dismissal
Constructive dismissal occurs when an employer does not formally terminate employment, but makes a fundamental and unilateral change to the terms of employment. In those situations, the law may treat the employment relationship as having been terminated, even if no formal dismissal occurred.
Temporary Layoffs (With Limits)
A temporary layoff is when a job is paused, not ended. The employment relationship is meant to continue. There are clear time limits. If a layoff lasts too long, it can legally become a termination. Layoffs must follow specific rules. If those rules are not met, the employee may be entitled to notice or severance pay.
In some cases, a layoff can also amount to constructive dismissal, especially if it was not allowed under the employment contract or if it significantly changes the employment terms.
Defining Wrongful Dismissal in BC
Wrongful dismissal in BC happens when an employer ends employment without the proper notice or pay-in-lieu (i.e. termination pay or severance) required by law or employee contract. It is important to understand that wrongful dismissal is not about whether the firing “felt” unfair. It is about whether the law was followed.
In most cases, wrongful dismissal occurs when:
An employee is terminated without just cause, and
The employer fails to provide proper notice or pay.
In British Columbia, an employer can end a job without cause. What makes it wrongful is failing to give the employee the notice or severance they are entitled to under the law or their contract.
When Does Termination Become Wrongful?
The most common reason is improper notice. If an employee is let go without just cause, the employer must give proper notice or severance pay. If the amount is too low, or if no notice is given at all, the termination may be wrongful.
Many contracts include a termination clause that tries to limit how much notice or severance is owed. These clauses must follow the Employment Standards Act. If a clause provides less than the law requires, or if it is unclear, a court may decide it cannot be enforced. When that happens, the employee may be entitled to more than what their contract outlines.
A termination can also be wrongful if it is illegal. Employers cannot fire someone because of race, gender, disability, religion, or other protected grounds under human rights law. They also cannot dismiss an employee for standing up for their workplace rights or reporting a safety concern. This is called retaliation or a “prohibited” action under worksafe laws, and it is not allowed.
Common Misconceptions About Wrongful Dismissal
There are many myths about wrongful dismissal in BC. Let’s clear up a few of the most common ones.
“My employer cannot fire me for no reason.”In BC, an employer can end employment without giving a reason. This is called termination or dismissal without cause. It is legal, as long as proper notice or pay in lieu is provided.
“If I got the Employment Standard Act minimum, that’s all I’m owed.”Not always. The Employment Standards Act sets the minimum amount of notice or severance. It is the starting point. Sometimes employees are entitled to more under common law.
“The first severance offer is final.”Often, it is not. Many employees accept severance offers without reviewing whether the amount reflects their full legal entitlement. In some cases, the offer only includes the Employment Standard Act minimums. Once a release is signed, it may be too late to ask for more.
Severance Pay in BC: Employment Standard Act Minimums
Severance pay in BC does not come from just one place. It comes from two main sources of law. Understanding both is key.
The first source is the Employment Standards Act. This law sets the minimum notice or severance an employer must provide when ending employment without cause. The amount is based on how long the employee worked for the company. These amounts are clear and fixed.
The second source is common law reasonable notice. This is created by court decisions over time. Under common law, an employee may be entitled to more than the ESA minimums. Courts look at factors such as age, length of service, type of job, and how hard it may be to find similar work.
ESA Termination Pay (Statutory Minimums)
In British Columbia, the Employment Standards Act sets out the minimum notice or termination pay an employee must receive when dismissed without cause.
The amount is based on length of service:
After 3 months of work - 1 week
After 12 months - 2 weeks
After 2 years - 2 weeks
After 3 years - 3 weeks
After 4 consecutive years - 1 extra week per year of service, up to a maximum of 8 weeks
Employment Contracts and Termination Clauses
Many employment contracts include a section called a termination clause. This clause explains what happens if the employment ends. In some cases, a valid clause can limit how much severance pay an employee receives.
For example, a contract may state that the employee will only receive the minimum notice required under the Employment Standards Act.
But not all termination clauses are valid. Courts in British Columbia review these clauses very carefully. When a termination clause is found to be invalid, the employee may be entitled to common law severance instead. That amount is often much higher than the Employment Standard Act minimums. Common law severance is based on age, tenure, nature and character of the position, and comparable work at comparable pay.
Know Where You Stand Before You Act
Whether you are an employee reviewing a severance offer or an employer planning a termination, the details matter. The classification of the dismissal, the wording of the contract, and the steps taken before and after termination can all affect the outcome.
If you are facing a workplace termination issue in British Columbia and need clear, practical guidance grounded in employment and human rights law, PortaLaw can help. Contact our office to discuss your situation.