Most commonly, “wrongful dismissal” refers to an employer’s termination of a worker’s employment without adequate advanced notice and without justification for failing to give notice (a.k.a. “just cause”). It also includes terminations on unproven allegations of cause, where the employer relies on the allegations to refuse to give notice or pay in lieu. Constructive dismissals also fall under the broad category of wrongful dismissal.
In the most common usage, the phrase wrongful dismissal is synonymous with unjust dismissal and termination without cause.
The breach of contract
It is an implied term of most employment contracts that employees are entitled to reasonable working notice of termination or pay in lieu of notice. A wrongful dismissal is considered a breach of contract and would generally (but not always) entitle the employee to financial compensation, known as pay in lieu of notice.
Dismissals without cause are permissible, as long as the company provides notice of termination or pay in lieu (subject to various exceptions). That means that an employer does not have to have a “good reason” to dismiss an employee, if it provides adequate notice or pay in lieu (subject to various qualifications related to human rights and other statutory schemes).
Damages for the breach
The financial compensation owing after a wrongful dismissal is determined by the relevant notice period. Employees are entitled to received the same amounts that they would have been paid had they been employed through to the end of the relevant notice period, including compensation for salary, benefits, bonus (unless the bonus policy has an enforceable provision saying otherwise), allowances, and even perks like an employer-paid phone plan. This default entitlement. however, may be subject to exceptions, such as if the employment contract has an enforceable clause that disentitles the worker to certain payments after termination.