HR Toolkit


Keeping the Right People

Employment Termination

Most employers find dismissal of an employee to be a difficult process regardless of the reasons for the dismissal. However, when a dismissal is necessary, it is important for the employer to:

  • Be informed about and comply with legislation
  • Treat the employee fairly and act in good faith
  • Handle the termination process in a professional way that preserves the employee's dignity
  • Be careful about how much information is communicated to others about the facts and reasons for the termination

Termination, as discussed in this section, is an action taken by the employer to end the employer/employee relationship. Employers have a basic right to terminate the employment of an employee, but along with that right comes responsibilities. Employers must comply with the employment/labour standards and human rights legislation for their jurisdiction and beyond that, employers must treat employees fairly and in good faith as defined by common law or civil law (Quebec).

 

Important

The content in this section of the HR Toolkit is for general information only. It is not legal advice. It is about the termination of employment of an individual employee who is not covered by a collective agreement. Review employment and labour standards and human rights legislation for your jurisdiction to ensure that your organization complies with the legislation as it relates to employment termination.

If you must terminate the employment of an employee, consult a lawyer for advice on the best way to proceed with the termination, given the specific circumstances.

This information is meant to be taken in its entirety. Reading and/or reproducing only parts of this section could result in misunderstanding of its contents. Please read and/or reproduce this section in its entirety.

This section is about the termination of employment for a single employee. Each province or territory has specific requirements for group terminations. Refer to the employment and labour standards for your jurisdiction for a definition of 'group termination' and the associated statutory requirements.


 

Terminology

Key concepts about termination that are incorporated into all employment/labour standards in Canada:

'Termination with cause' or 'Termination with just cause'

At law, termination with cause or termination with just cause means that an action or omission by the employee has irreparably damaged the employment relationship between the employer and the employee. Usually, termination with cause occurs when an employee is dismissed for a serious reason related to the employee's conduct.

Not all employment/labour standards define 'termination with cause.' Those that do refer to: willful misconduct, disobedience and deliberate neglect of duties as justifiable reasons for termination with cause.

 

'Termination without cause'

Termination without cause means that the employee is being terminated for reasons that are not related to misconduct and notice of the termination and possibly severance pay is required as outlined in the employment/labour standards.

 

Notice

Notice is the amount of time between informing an employee in writing that s/he will be terminated and the date upon which the termination will take effect (i.e. the last day that the employee will be paid). An agreement, including an employment agreement, cannot be made with an employee for less than the minimum notice requirement as provided for in employment/labour standards.

 

Payment in Lieu of Notice

Payment in lieu of notice means that an employer may choose to have the termination take effect immediately, and pay the employee for the weeks of notice required by the legislation or, if greater than that required by legislation, as agreed to in the employment contract.

 

Important

Once you have determined that an employee is to be dismissed without cause, you will have to carefully consider whether you want to give the employee notice or pay in lieu of notice. This will depend on several factors, including the impact on both the organization and the employee of having the employee continue to be at work during the notice period.

 

Severance Pay

Some jurisdictions require that an employee who is terminated without cause be provided with severance pay. This will depend on the size of the employer and the length of service of the employee.

 


Legislation

Employment/labour standards outline the basic rights and responsibilities of the employer when terminating the employment of an employee. Human rights legislation must also be considered. An employer can terminate the employment of an employee at any time for any reason, as long as it is not in violation of human rights or other employment legislation or the employment/labour standards.

  • Leaves as defined by employment/labour standards
  • Human rights
  • Termination - when notice is not required
  • Termination - when notice is required

 

Important

There is no exact formula for determining reasonable notice. Legislation simply provides the bare minimum an employee is entitled to. It is best to consult with a lawyer.


 

Leaves as defined by employment/labour standards

The employment/labour standards in all provinces/territories give employees some protection from termination of employment while on maternity/pregnancy leave and parental leave and prior to, or after, taking the leave to which they are entitled. An employer cannot terminate the employment of an individual who is eligible for or on leave for reasons related to the leave. For example, the employment of a pregnant employee cannot be terminated because she is pregnant; a mother or father cannot be terminated from employment because he or she is taking leave to care for the child.

An employer can terminate the employment of an employee who is on a leave, as long as the pregnancy (or other reason a person is on leave) is not the reason for the termination. In other words, an employer can terminate the employment of an employee on leave if the employer has a legitimate or business reason for the termination. However, the employer will have to prove that the termination was completely unrelated to the leave.

Check the employment/labour standards for your jurisdiction for the complete list of leaves that are covered by the legislation.

Important

If, for legitimate or business reasons, you are considering terminating the employment of an employee who is on a leave as defined in the employment/labour standards for your jurisdiction, consult a lawyer about the best way to proceed.


Human rights

Human rights legislation protects individuals from a termination that is based on discrimination as defined in the code/act.

Check the Human Rights Code/Act for your jurisdiction for a complete list of the factors that are covered by this legislation.

 

Termination - when notice is not required

 

At the beginning of employment

Each province allows for termination without advance notice for a specific period at the beginning of employment:

No statutory obligation for notice

Province/Territory

No notice of termination required
during the first:

Alberta

3 months

British Columbia

3 months

Manitoba

30 days

New Brunswick

6 months

Newfoundland & Labrador

3 months

Northwest Territories

90 days

Nova Scotia

3 months

Nunavut

90 days

Ontario

3 months

Prince Edward Island

6 months

Quebec

3 months

Saskatchewan

3 months

Yukon

6 months

Information collected: February 2005.

Important

It is always important to make sure that you have the most up-to-date information about legislation in your jurisdiction. Check your province or territory's employment/labour standards website for the most accurate information.


 

Termination during the probationary period

Most organizations have a probationary period at the beginning of the employment relationship. However, no province or territory has specific employment standards for 'probationary' employees. As noted above, all jurisdictions do allow for an employer to terminate the employment of an employee at the beginning of his/her employment without notice or payment in lieu of notice, unless the reasons for termination are because of discrimination as prohibited by human rights codes/acts.

After the first month(s) of employment as stated in the employment/labour standard for your province or territory, the minimum standards for notice or payment in lieu of notice will apply, regardless of whether or not the employee is classified as probationary by your organization.

 

Specific term or task

In most provinces, the employment/labour standards also allow for no notice of termination for fixed term contracts where the employee has been hired for a specific term or task of 12 months or less, unless the employer is ending the contract before its fixed term.

The exemption from providing notice with a fixed term contract is contingent upon the employment ending at the exact date specified in the contract.

Notice will be required even when there is a fixed term contract if:

  • The employee works past the date specified in the fixed term contract period (some legislation allows an employee to work for a short time past the termination date before notice is required)
  • The fixed term contract is for longer than 12 months
  • The employee is terminated before the date stated in the fixed term contract (in this case the employer might have to pay out the balance of the contract)
  • The employee is employed on a succession of fixed term contracts

For most provinces, exemption from providing notice is contingent upon a fixed term contract of 12 months or less. This does not mean that an employer can enter into one 12-month contract after another to avoid the obligation of providing proper notice of termination. The employment/labour standards for most provinces include rules on how to determine if the fixed term is for longer than 12 months and will therefore require notice. In most provinces, back-to-back contracts, and contracts with little time in between, are added together to determine if the 12 month exemption has been exceeded.

Consult the employment/labour standards for your province for the specific details on how to determine if a fixed term contract has exceed the exemption from notice period and therefore notice is required.

 

'Termination with cause' or 'Termination with just cause'

If an employee is incompetent or the employee's conduct is so unacceptable that it seriously impacts on the organization and gives rise to a breakdown in the employment relationship, you can terminate the employment of the employee without notice or payment in lieu.

Some common grounds used in termination with cause are:

  • Dishonesty - theft or fraud by the employee that is serious enough to warrant dismissal from employment
  • Insubordination - an employee repeatedly breaks organizational policies and meaningful and progressive discipline has not resulted in a change in behaviour
  • Incompetence - an employee is incompetent at his/her job and performance has not improved even though the employee has been given the tools, guidance, support, training and sufficient time needed to improve and an opportunity to make the required improvement

Termination with cause is difficult to prove and the onus will be on the employer to show that the employee's actions were very serious or show a pattern of behaviour.

  • For long term employees the organization will also have to show that the incompetence or misconduct has not been condoned by a lack of action on the part of the employer over a long period of time
  • If termination with cause is the result of the progressive discipline process, thorough documentation of the process which shows that progressive discipline was fairly and consistently applied will be needed
  • If termination with cause is the result of a serious event, the onus will be on the employer to show that a fair investigation of the event took place prior to the termination and that the event was indeed serious enough to warrant dismissal from employment
  • If the employee had problems - such as alcohol or drug abuse - the employer attempted to accommodate the employee while he or she sought treatment, to no avail

 

Termination - when notice is required

 

Termination without cause

In most circumstances, an employer must provide written notice of the intent to terminate employment and the termination date. If an employer wants the termination to take effect immediately, most employment/labour standards allow employers the option of payment in lieu of a working notice period (a written notice of termination and the date upon which employee ends is still required).

Payment in lieu of notice is based on the normal weekly salary of the employee and benefits must also be covered for the notice period. Some legislation also states the date by which payment in lieu must be made.

Check the employment/labour standards for your jurisdiction for the specific details on how payment in lieu is calculated and when the payment is due.

In the nonprofit sector, termination without cause is often the result of restructuring the organization or changes in funding. The termination is related to the position, not the individual's performance or conduct. For example:

  • An organization may decide to reorganize its operations and in doing so, a position becomes redundant therefore the employee who held the position is terminated
  • Funding for a project is not renewed and the employee who worked on the project is terminated
  • Two organizations decide to share space and share a receptionist. The employment of the receptionist from one organization is terminated

In some cases, an employee through no fault of his or her own may not be a good fit with the needs of the organization. In other cases, the employee's performance may be poor but it does not meet the legal standard for termination with cause. As long as the employer has -- in fairness and good faith -- made reasonable efforts to help the employee meet the expected standard and has given the employee time and support to improve, the employer may terminate the employment of the employee by giving notice or payment in lieu of notice as required by legislation.

In a termination without cause, there is no legal obligation for the employer to give a reason. However, when being terminated without cause, most employees want to know why. If you provide a reason, it is important for an employer to be fair and honest about the reason for such a termination. Under no circumstances should you allege that you have cause for termination when in fact you do not.

 

Length of notice required by legislation

After the first month(s) when no notice is required, the length of advance notice that is required by law for termination without cause is directly related to the length of time the employee has been with the organization.

Termination of employment

Province/Territory

Statutory notice or payment in lieu

Alberta

1 week after 3 months
2 weeks after 2 years
4 weeks after 4 years
5 weeks after 6 years
6 weeks after 8 years
8 weeks after 10 years

British Columbia

1 week after 3 months
2 weeks after 1 year
3 weeks plus one week for each additional year after 3 years to a maximum of 8 weeks

Manitoba

1 pay period

New Brunswick

2 weeks after 6 months
4 weeks after 5 years

Newfoundland & Labrador

1 week after 3 months
2 weeks after 2 years
3 weeks after 5 years
4 weeks after 10 years
6 weeks after 15 years

Northwest Territories

2 weeks after 3 months to 3 years
2 weeks plus one week for each additional year after three years to a maximum of 8 weeks

Nova Scotia

1 week after 3 months
2 weeks after 2 years
4 weeks after 5 years
8 weeks after 10 years**

Nunavut

2 weeks after 3 months to 3 years
2 weeks plus one week for each additional year
after three years to a maximum of 8 weeks

Ontario

1 week after 3 months
2 weeks after 1 year
3 weeks after 3 years
3 weeks plus one week for each additional year after 3 years to a maximum of 8 weeks

Prince Edward Island

2 weeks after 6 months
4 weeks after 5 years
6 weeks after 10 years
8 weeks after 15 years

Quebec

1 week after 3 months
2 weeks after 1 year
4 weeks after 5 years
8 weeks after 10 years

Saskatchewan

1 week after 3 months
2 weeks after 1 year
4 weeks after 3 years
6 weeks after 5 years
8 weeks after 10 years

Yukon

1 week after 6 months
2 weeks after 1 year
3 weeks after 3 years
3 weeks plus one week for each additional year after 3 years to a maximum of 8 weeks

Information collected: February 2005.

** In Nova Scotia, special rules apply in some situations where an employee has been employed by the same employer for ten years or more. Check with a lawyer or the Labour Standards Office for interpretation of the Labour Standards when terminating a person who has been an employee for 10 years or more.

 

Severance pay

Some jurisdictions require that an employee who is terminated without cause be provided with severance pay. This will depend on the size of the employer and the length of service of the employee.

Important

It is always important to make sure that you have the most up-to-date information about legislation in your jurisdiction. Check your province or territory's employment/labour standards website for the most accurate information.



Termination process

Preparation for the possibility that you will have to terminate the employment of an employee starts before the employee is hired by having a termination policy or an employment contract that states the organization's responsibilities upon termination. The employee should be advised about the employer's disciplinary and termination policies before being hired.

When looking back, an employee should never be completely surprised by a termination. Once an employee starts work, expected conduct should be clearly explained and the termination policy should be restated. Throughout the employment relationship, the employee should be given appropriate supervision, feedback on performance, and time to improve. Problems with conduct or performance should be addressed promptly. In the nonprofit sector it is also important for the employer to provide employees with timely information of funding issues, in cases where employment is tied to funding.

For more information about managing employee performance, visit the Performance Management section of the HR Toolkit.

When a termination is necessary, whether it is with or without cause, the employer must treat the employee with dignity. The employer should carefully consider how to conduct the termination meeting in a way that is respectful and compassionate.

 

Termination policy

Your organization should have a policy on termination which complies with the employment/labour standards for your jurisdiction. Employment/labour standards legislate the minimum acceptable standards for notice or payment in lieu; your organization may decide to provide more than the minimum notice or payment in lieu. The policy should address:

    • Who will be responsible for the decision to terminate
    • Types of actions/behaviour that could result in termination with cause (the policy should state that the list of examples is not exhaustive)
    • How breaches of conduct will be investigate

 

Employment contract

  • All new employees should sign a written employment contract that states how much notice the employee will be given if terminated without cause as it is outlined in your policy
  • If there is a probationary period at the beginning of employment, the length of the period and the termination process during probation should be stated (termination process must comply with employment/labour standards)

 

Treat the person with dignity

Termination can be very difficult for the employee and requires confidentiality, respect and compassion on the part of the employer. If an employee believes that s/he has been wrongfully dismissed, then the way that s/he was treated before, at, and after termination of employment will become part of the evidence that is considered when making a judgment in the case. If the employer did not treat the employee with "good faith", a court might order the employer to pay the employee additional compensation by lengthening the period of notice (called "Wallace damages").

In the Wallace Decision, a well-known case on termination, the Supreme Court of Canada stated:

In the course of dismissal, employers ought to be candid, reasonable, honest, and forthright with their employees and should refrain from engaging in conduct that is unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive.
Important

It is important that an employee should never be completely surprised by a termination, which is usually the case when a manager has not communicated the next steps to an employee who is misbehaving or performing incompetently.


The termination meeting

Another aspect of the process that is important to consider is how an actual termination will take place. This is particularly important when the termination of employment takes effect immediately (terminated with cause or is terminated without cause but with payment in lieu of notice).

Important

Even in cases of serious misconduct, the employer must show that the incident was properly investigated. Consider suspending the employee, with pay, pending an investigation rather than rashly terminating his or her employment .

The steps to be taken on the day that an employee is notified of his or her termination should be carefully planned.


Where: Choose the location for the termination meeting carefully

  • Select a location which provides privacy and allows the terminated employee to exit without the embarrassment of facing other staff
  • Choose a neutral site such as a meeting room rather than your office

 

When: If possible, be sensitive to issues and important dates in the employee's life and choose a day that will minimize stress on the employee

  • Avoid holidays and vacations
  • Avoid Fridays - if an employee is terminated on a Friday, this prevents the employee from obtaining legal advice or counseling before the weekend and leaves him/her with the whole weekend to worry and build up anger about the situation
  • Terminate near the end of the day when other employees have left and therefore embarrassment to the employee is minimized

 

Who: Two members of the management team should be present at the termination meeting

  • The second manager is there as a witness

 

What: Collect/prepare the necessary documents in advance

  • Letter of termination which states the date upon which it takes affect and any payment you are offering

 

How: Be brief and get to the point

  • Explain the situation
  • Avoid emotional, personal, and other inappropriate remarks
  • Explain how the termination will be communicated to other staff and clients
  • Acknowledge that the employee has the right to seek legal counsel
  • Review the termination letter with the employee and clarify any payment and benefits that will be provided
  • Let the employee know what you are willing to say in a reference (honesty is the best policy; however, if you terminating the employee for cause, you will want to provide a reference which indicates only dates of employment and type of position)
  • Ensure that the employee returns the organization's property
  • Explain the next step - where the person should go after the meeting, how to gather his/her personal belongings, and so forth
  • This is primarily an information-giving meeting; however, provide an opportunity for questions
  • Ensure that the person can get home safely, for example, provide cab fare and see the person to the cab

 

Good Practice

When terminating the employment of a valued employee due to circumstances beyond your control, focus on the employee's strengths, and offer any assistance you are able to give to help the person find new employment.


Good Practice

It is helpful to make a script to help you remember all the important information you need to cover during the termination meeting.



Disputes about termination

When a dispute about termination occurs, an employee has some options for seeking resolution. If an employee believes that his or her employment has been terminated because of discrimination, s/he may pursue a claim through the human rights commission or through the courts, but generally not to both. If the employee proves that the termination of employment was unlawful because of discrimination, the human rights commission may reinstate the employee to his or her position. A court cannot do so but can only provide damages to the employee.

If an employee believes that s/he has not receive sufficient notice, payment in lieu or notice, or severance pay when the termination of employment was without cause, s/he can choose to direct the complaint to the employment standards authorities or the courts, but not to both.

If the employee believes that there was no cause for termination, and yet the employer has asserted cause, s/he can choose to complain to the employment standards authority or issue a claim in court, but not both.

For a dispute directed to the courts, common law and civil law (Quebec) will be used in addition to statutes to resolve the dispute. Common law is based on the decisions made and upheld by the courts, and is therefore always evolving. If an employee's claim of wrongful dismissal directed to the courts is successful, the employer will be required to pay financial compensation to the employee which is usually more than what the employee would receive by statute.

 

Constructive dismissal

Constructive dismissal is when there is a fundamental change in the employment relationship that amounts to a dismissal. A claim of constructive dismissal may occur when the employer, without the consent of the employee:

  • Significantly reduces an employee's salary
  • Significantly changes an employee's benefits
  • Makes a significant change to an employee's work location
  • Makes a significant change to the employee's hours of work
  • Makes a significant change to the employee's authority or responsibilities

An employee must indicate to the employer that he/she is not accepting the change in order to later attempt to assert that he or she has been constructively dismissed.

An employee may make a claim for constructive dismissal to the courts or, in some jurisdictions, to the employment standards authority. In deciding the merits of the case the courts will determine if the change in the employment relationship was so fundamental that it amounted to a termination of employment and, if so, what compensation is appropriate.

 

Wrongful dismissal

Wrongful dismissal is a legal claim made before the courts about the cause (in the legal sense) or length of notice/payment in lieu of notice given to the employee when s/he was terminated from employment.

If the claim of wrongful dismissal is justified, then the courts will look at the contract of employment, whether it is in writing or not, and common law or civil law in Quebec, to determine 'reasonable notice' and the appropriate financial compensation in lieu of notice. Under common law 'reasonable notice' has been determined by the courts by looking at things such as: age, profession, experience, length of service, nature of the employment and factors related to the ability of the employee to find similar employment. Common law notice periods and payment in lieu as decided by the courts are often significantly more than the statutory requirements, especially for people in senior management positions.

In cases of wrongful dismissal the courts will also look at the way in which the employee was treated before, during and after termination of employment. If the employer did not act in good faith , the amount of damages awarded to the employee may be even greater (called "Wallace" damages, as explained above)

 

Conclusion

Many employees in the nonprofit sector are very dedicated to the mission of the organization, the clients or cause it serves, and the employees who serve the organization. This can make the need to terminate the employment an employee even more difficult for the employer. If you must terminate the employment an employee:

  • Consult a lawyer for advice on the best way to proceed with the termination, given the specific circumstances
  • Act fairly, consistently, and in good faith at all times
  • Conduct the termination in such a way that the dignity of the employee is preserved

Even with appropriate legal advice and a thoughtful process, there is no guarantee that an employee will not take your organization to court as the result of a termination. However, to decrease the likelihood that an employee will sue because of a termination, and to increase the likelihood of a successful defense if sued, an employer should:

  • Use a written contract of employment which states termination provisions
  • Have clear policies that employees have read, understand and agree to abide by
  • Consistently and fairly apply the policies
  • Implement an orientation process which clearly outlines your organization's expectations for the behaviour and performance of your employees
  • Provide employees with ongoing feedback about their performance which is documented in the employees' personnel files
  • Establish a fair discipline process, clearly explain the process to employees and consistently implement it
  • Consult with a lawyer prior to the termination
  • Treat the employee in a respectful, impersonal and unemotional way during the termination process

 

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