A wrongful dismissal settlement in Canada is an agreement that resolves a dispute over the compensation an employee should have received when their employment ended. It can include unpaid severance, bonuses, benefits and other amounts, along with terms about payment and the employee’s departure.
Your employer’s first offer does not determine what your claim is worth. Before accepting it, you need to know what you are legally owed, what the offer leaves out and what rights you would be giving up.
Samfiru Tumarkin LLP helps non-unionized employees in Ontario, Alberta and British Columbia assess severance offers and negotiate compensation. Getting started is straightforward: our team reviews your situation, explains your options and helps you take the next step.
⚠️ Your employer’s signing deadline is not your legal deadline.
A deadline to accept a severance offer does not set the time limit for pursuing your legal entitlement. The offer itself may expire, so get advice promptly—but do not sign away your rights simply because you have been given a few days to decide.
On This Page:
- 1. Settlement Amounts
- 2. What a Settlement Can Include
- 3. Our Wrongful Dismissal Court Wins
- 4. Is Your Offer Enough?
- 5. The Process & Timing
- 6. Before You Sign
- 7. Provincial & Federal Rules
- 8. Settlement FAQs
How Much Is a Wrongful Dismissal Settlement in Canada?
There is no fixed settlement amount. The starting point is usually the notice or compensation you should have received, taking into account your employment contract, applicable law and circumstances.
For employees entitled to common-law notice, important factors include age, length of service, position and the availability of comparable work. Your full compensation package also matters—not just your base salary.
A settlement then addresses the unpaid amount, any other supported claims and the terms needed to resolve the dispute. Payments already received and income from a new job can affect the calculation.
For the broader rules, see our guides to wrongful dismissal in Canada and severance pay in Canada.
What is the average wrongful dismissal settlement?
An online “average” is not a reliable way to assess your offer. Many settlements are private, and employees with similar salaries or years of service can have different entitlements.
There is also no automatic one-week-per-year or one-month-per-year formula for common-law notice. A useful assessment compares your offer with your own rights—not someone else’s payout.
💡 A simplified calculation—not a settlement prediction
Suppose an employee earns $6,000 a month and their assessed entitlement is nine months of base salary. That produces a $54,000 starting figure. If the employer has already paid $12,000 toward that same entitlement, the remaining base-salary claim would be $42,000 before other adjustments.
Bonuses, benefits, new employment income, taxes and legal fees would still need to be considered. The nine-month period in this example is an assumption, not a formula for your case.
What Can a Wrongful Dismissal Settlement Include?
A settlement can address more than the number of weeks or months offered in your termination letter. Depending on your employment terms and the claims involved, it may include:
| Component | What should be reviewed |
|---|---|
| Salary or regular wages | Compensation for the notice period, accounting for notice or payments already provided. |
| Bonuses and commissions | Amounts already earned and compensation you would have received during the notice period, subject to enforceable terms. |
| Benefits and retirement contributions | Lost health and dental benefits, pension contributions, RRSP matching and other applicable benefits. |
| Equity and incentive compensation | Stock options, restricted share units and other incentives, including the plan’s termination provisions. |
| Other outstanding amounts | Unpaid wages, accrued vacation pay, expenses and other amounts still owing when employment ended. |
Simply calling a bonus “discretionary” or requiring “active employment” does not necessarily settle whether it belongs in your compensation. The wording of the plan and employment agreement needs to be reviewed.
Can you receive compensation beyond severance?
Potentially. A dismissal involving workplace discrimination or bad-faith conduct may support additional compensation. A negotiated settlement may also include a contribution toward legal fees.
These amounts are not automatic extras in every wrongful dismissal claim. The facts must support them, and the same loss can’t simply be counted twice.
Wrongful Dismissal Court Wins: What Our Clients Were Awarded
Our goal is to resolve your claim effectively, without unnecessary litigation. When court action is needed, which is rare, our past decisions show the experience we bring to protecting an employee’s compensation.
The examples below are published court awards. Each illustrates a different reason an employer’s initial position may fall short.
24 months’ pay and benefits for a long-service employee
In Visaggio v. Joynt-Dent Inc., Samfiru Tumarkin LLP represented an Ottawa dental hygienist whose employment ended after more than 33 years with the practice.
Our team secured an award based on 24 months’ pay and benefits. The court awarded $110,294 after crediting notice and compensation already provided, with a separate award for legal costs.
Why it matters: Long service and the employee’s actual prospects of finding comparable work can support compensation well beyond employment standards minimums.
More than $182,000 after an employer denied severance
In Paul v. Sensient Colors Canada Ltd., our team represented an Ontario salesperson dismissed without severance after more than 10 years of employment.
The court rejected the employer’s grounds for withholding severance in her circumstances and awarded $182,822.84. Her compensation was based on a 12-month notice period and included salary, bonus pay, benefits and employer profit-sharing contributions, as well as vacation pay owing.
Why it matters: A “for cause” allegation does not end the discussion—and an offer based only on salary can leave important compensation out.
Six months’ compensation after six months of employment
In Greenlees v. Starline Windows Ltd., Samfiru Tumarkin LLP represented a British Columbia salesperson who was dismissed after approximately six months with the company.
The court awarded compensation based on six months’ notice, considering factors including his job prospects and the circumstances in which he had been recruited from secure employment.
Why it matters: Short service does not automatically mean a small entitlement. The full employment history and circumstances deserve a proper review.
These cases are not a payout chart. They show why reviewing the contract, compensation and circumstances can make a meaningful difference to what an employee can pursue.
How Do You Know Whether Your Settlement Offer Is Enough?
An offer should be assessed against your legal entitlement—not simply whether it sounds generous or exceeds the government minimum.
Before recommending whether to accept, our lawyers consider four questions:
- Is the notice period appropriate? Your circumstances may support more compensation than the employer’s formula allows.
- Does the employment contract validly limit your rights? A signed termination clause is not necessarily enforceable.
- Does the calculation include your full compensation? Bonuses, commissions, benefits and incentives can materially change the value.
- Are the deductions and settlement conditions justified? Payments already made, new employment income and proposed repayment terms need careful review.
💡 A contract review can change the outcome.
In Alarashi v. Big Brothers Big Sisters of Toronto, our team successfully challenged the termination clause the employer relied on to limit severance. The employee was awarded $9,033.44 in additional compensation, plus a separate legal costs award.
Is the value of a claim the same as the settlement amount?
Not necessarily. The amount claimed, a likely court award and a negotiated settlement can be different figures.
A settlement assessment considers what the evidence supports, any genuine disputes and the benefit of resolving the matter without further expense or delay. Our job is to explain those considerations and negotiate from an informed position. You decide whether to accept a settlement.
How Does a Wrongful Dismissal Settlement Work?
You do not need to navigate the process or confront your former employer alone. Our team can handle the communications and negotiations on your behalf.
1. We review your documents and assess what you are owed
The starting documents usually include your employment contract, termination letter, severance offer and recent compensation records. Bonus plans, commission agreements, benefit details and relevant correspondence can also matter.
We identify what the employer has offered, what may be missing and the legal basis for pursuing more.
2. We negotiate with your employer
We present your position and seek an appropriate resolution. Many employment disputes can be resolved through negotiation without a trial. In other cases, mediation provides an opportunity to reach an agreement with the assistance of a neutral mediator.
If a legal claim is needed, settlement discussions can continue while it moves forward. Starting a claim does not automatically mean you will have to testify at a trial.
3. We review and document the agreement
A settlement should clearly address the amount, payment timing, deductions, benefits and other agreed terms. It will usually include a release covering the claims being resolved.
An employer may settle without admitting liability. What matters is understanding the compensation and terms you are accepting.
How long does a wrongful dismissal settlement take?
There is no standard timeline. Some disputes resolve through early negotiations; others take longer because the parties disagree about the contract, the reason for dismissal or the compensation owed.
The goal is not to prolong your dispute. It is to pursue an appropriate result efficiently, while keeping you informed about the options at each stage.
What Should You Check Before Signing a Settlement?
The headline dollar amount is only part of the agreement. Before accepting, make sure you understand:
- What you will actually receive: Whether the amount is before or after deductions, whether earlier payments are included, and how legal fees and expenses are handled.
- When and how you will be paid: A lump sum, instalments and salary continuation can have different practical consequences.
- What happens if you find another job: Some agreements reduce or stop future payments when you start new work.
- What the release covers: It may resolve more than your claim for additional severance.
- Other obligations: Review confidentiality, non-disparagement, reference wording, benefit coverage and any repayment requirements.
⚠️ Before you sign, always check first.
A binding settlement or release usually prevents you from returning later to demand more compensation for the claims it covers. Get advice before accepting the terms—not only before signing the final document.
Do Wrongful Dismissal Settlements Differ by Province?
Yes. Although common-law notice principles share similarities across provinces, employment standards, court procedures and filing deadlines can differ.
For local guidance, read our pages on:
What if your workplace is federally regulated?
Eligible federally regulated employees may also have an unjust dismissal complaint under the Canada Labour Code. This is a separate process with a usual 90-day deadline to complain to the federal Labour Program.
Read our guide to federally regulated employers in Canada and the official information about federal unjust dismissal complaints.
Do not assume negotiations pause a legal deadline. Have the applicable filing dates checked while settlement discussions are underway.
Unionized? Termination and severance disputes generally need to be addressed through your union and the grievance process. Samfiru Tumarkin LLP’s employment law team does not assist with unionized workplace disputes.
Wrongful Dismissal Settlement FAQs
Is a wrongful dismissal settlement paid on top of severance?
Not automatically. A settlement often resolves a dispute about unpaid severance rather than creating a second payment for the same loss. Amounts already paid toward your entitlement are generally taken into account. Other supported claims may add separate compensation.
Does finding another job reduce my claim?
Income from comparable replacement work during the notice period can reduce common-law wrongful dismissal damages. That is not a reason to stop looking: employees pursuing those damages are expected to make reasonable efforts to find suitable work.
Keep records of your applications and interviews. Your settlement’s wording also matters, particularly if future payments depend on whether you find work. Learn more about the duty to mitigate after dismissal.
Are wrongful dismissal settlements taxable in Canada?
Compensation for lost employment is generally taxable. Different components can receive different tax treatment, so the gross settlement amount may not be what reaches your bank account.
Calling a payment “damages” does not automatically make it tax-free. The agreement should accurately reflect what each payment represents. See the Canada Revenue Agency’s guidance on retiring allowances.
Will a settlement affect my Employment Insurance benefits?
It can. Report the settlement to Service Canada and have its effect on your claim checked. The result depends on what the payments represent and the rules applying to your claim, including any applicable temporary measures.
Do not assume that every settlement requires repayment of Employment Insurance benefits—or that none of it needs to be reported. Check the current Employment Insurance measures before finalizing your expectations.
Can you negotiate a settlement after a constructive dismissal?
Yes. A substantial change to your employment or other serious employer conduct may support a constructive dismissal claim and a negotiated resolution. The first question is whether a constructive dismissal occurred, so get advice before resigning.
Our guide to wrongful dismissal vs. constructive dismissal explains how the claims overlap and why establishing a dismissal matters before assessing compensation.
See our guide to constructive dismissal in Canada. Ontario employees can also read about constructive dismissal settlements in Ontario.
How do legal fees affect the settlement?
The fee arrangement should be explained before you retain a lawyer. Samfiru Tumarkin LLP offers contingency arrangements for eligible employment matters, with the contingency fee calculated on additional money recovered after the firm is retained.
In many cases, an employer contributes toward legal costs as part of a settlement. Review the fees, expenses and applicable taxes when assessing your net recovery. Learn more about our fee arrangements.
Find Out Whether Your Severance Offer Is Enough
You do not need to calculate your claim or negotiate with your former employer on your own.
Send us your termination letter, severance offer and employment contract. The employment lawyers at Samfiru Tumarkin LLP can assess what you may be owed, identify what the offer leaves out and help you pursue an appropriate settlement.
We represent non-unionized employees across Ontario, Alberta and British Columbia.
Before you accept the offer, understand its value.
➡️ Have Your Severance Offer Reviewed or call 1-855-821-5900.