One of the less desirable parts of being an employer involves sometimes being forced to terminate staff members. While awkward and often painful termination meetings cannot be avoided, a potential claim for damages for wrongful dismissal can generally be sidestepped with a few simply preemptive steps. Employers are well advised to understand their obligations to terminated employees in order to avoid the pitfalls that can come into play when terminating an employee.
1. Cause or Without Cause
As an employer, you likely do not have “cause” to terminate an employee unless they steal from you, undertake gross insubordination or stop coming to work. Performance concerns, even those that are well documented, rarely amount to “just cause”. In most cases it is advisable to simply terminate the employee on a without cause basis and provide reasonable notice to the terminated employee.
2. Is There an Employment Agreement?
The Employment Agreement is the contract between the employer and employee that governs the nature of the relationship between the parties. A well drafted Employment Agreement should include a termination clause which will dictate the agreed amount of notice that is required to be paid to the terminated employee.
Absent an Employment Agreement or a termination clause within the Employment Agreement, an employer is required to pay the minimum amounts owed to the terminated employee under the Employment Standards Act, but also a further additional amount of pay in lieu of notice that is established by the common law (court decisions). While this additional amount of pay in lieu of notice is a variable determined by a number of factors including, but not limited to, 1) the employee’s age; 2) length of service; 3) whether the employee was in a managerial position or not; and, 4) the availability of alternative work elsewhere, the general rule of thumb is that the terminated employee is entitled to 2 – 6 additional weeks of notice per full year of employment. An employment lawyer can assist you in determining the most appropriate amount of notice required for a specific employee.
3. Prepare a Termination Package for the Terminated Employee
A Termination Package should include the following:
- a comprehensive Termination Letter; and
- a Full and Final Release.
A comprehensive Termination Letter needs to specifically outline the notice being provided to the terminated employee, including how much is for Employment Standards Act notice and how much is being offered to the employee in exchange for execution of the Release. The Termination Letter should also advise the employee of all benefits that will continue or cease during the notice period, discuss the return of corporate property, remind them of any confidentiality provisions that may be applicable to them, and advise them of their right to seek and obtain independent legal advice to review the Termination Package.
4. Conduct a Professional Termination Meeting
The manner of termination is an important aspect of any termination. The courts have repeatedly held that a poorly handled termination is justification for enhanced damages in a wrongful dismissal claim. While there is no one method to professionally conduct a termination meeting, the employer should be kind, respectful and professional. The employer should answer any questions that the employee may have and explain the termination package being offered to the terminated employee. The employer should advise the employee that they have the right to seek and retain legal counsel to review the termination package and encourage them to read it fully before executing it.
5. Issue the Record of Employment in a Timely Manner
The Record of Employment must be filed online or given to the employee within five days of the interruption of earnings, or termination of employment. Delay in the filing or delivery of the Record of Employment can interrupt an employee’s ability to claim Employment Insurance benefits. Additionally, the Record of Employment should be completed correctly with the proper code for the reason for the termination.
Are you an employee or an employer who is not sure how to proceed with a termination? Have all parties been treated fairly? Will there be any financial or legal backlash in the future? Contact our Employment Law Team today and gain insights that could save you thousands of dollars!
Scott Chambers is an Employment and Human Resources lawyer at Doak Shirreff Lawyers LLP. Scott can be reached directly at 250.979.2527 or [email protected]