Exposure to liability for wrongful dismissal actions does not just arise at the time of termination. When an employee files a claim for wrongful dismissal, the claim may even refer to events prior to the employee being hired. Following these 10 steps helps minimize exposure to liability in a wrongful dismissal action at each stage of employment.
1. Avoid inducements
Luring an employee away from secure employment by using inducements may increase the notice period due on termination. Some courts have found that the impact of inducement decreases the longer the employee remains employed, but some courts have awarded longer notice periods due to inducement even after lengthy periods of employment.
2. Avoid promising permanent employment
Employers who are proven to have promised someone permanent employment and instead dismiss the employee after a short period of time, have been found to owe much longer notice periods based upon these promises.
3. Use employment contracts
Employment contracts are critical because they can limit the amount of money an employer must pay an employee to dismiss the person without cause.
A termination clause in an employment contract can limit an employee’s entitlement upon termination to the minimum amounts set out in employment standards legislation, or some slightly higher amount that is acceptable to the employer.
Without a termination clause, an employer that dismisses an employee without cause is liable for notice periods at common law that are significantly higher than set out in legislation.
4. Document discipline
It is difficult to prove cause for dismissal based upon poor performance. This can only be done with a lengthy and clear paper trail. Document all employee performance problems. Documents showing cause for termination based upon performance must demonstrate that the employer did the following:
•set out a standard of performance for the employee;
•told the employee that she was not meeting the standard;
•gave the employee an opportunity to meet the standard;
•offered the employee assistance in meeting the standard; and
•advised the employee of the consequences of failing to meet the standard.
5. Allegations of cause
Do not allege cause for dismissal unless it can be proven. Needlessly destroying a former employee’s reputation is likely to result in a higher damages award.
Additionally, when terminating an employee for cause it is important to first conduct an investigation during which the employee is given the opportunity to respond to any allegations.
6. Timing of termination
Dismissing employees at particular times may result in longer notice periods.
Review the employee’s work circumstances. A wrongful dismissal action is more likely if the employee recently received some type of commendation, promotion or discretionary raise.
Review the employee’s personal circumstances. Employers have been found to have acted in bad faith by dismissing individuals who are particularly vulnerable, such as an individual whose wife was just dismissed from her job. Avoid firing employees on their birthdays or the holiday season, if possible.
7. Drafting the termination letter and settlement offer
Use termination letters in all cases. The letter should state that the employee is being dismissed, and the effective date of dismissal. If cause is alleged, the cause should be clearly set out. If cause is not alleged, the tone of the letter should demonstrate sympathy and appreciation for the employee. Thank the employee for the years of service and wish her well in the future.
Consider attaching a settlement offer outlining anything that the employer is offering in excess of statutory requirements. The offer should provide a date by which it must be accepted, and should advise the employee to seek legal advice before signing.
The offer should have appended to it a well-drafted release, wherein the employee releases the employer and its representatives from any other claims or actions with respect to the employment and its termination.
8. Scheduling the termination meeting
The key to conducting termination meetings is respecting the employee. Schedule the meeting in a private location at a time of day that will allow the employee to clear out belongings with a minimal amount of contact with other employees. If this is not possible, the employee should be allowed to come back later to collect belongings. If at all possible, the employee should be allowed to clear out belongings and leave the workplace unsupervised.
9. Conducting the termination meeting
Two members of management should conduct termination meetings, and at least one should take detailed notes during the meeting. Get straight to the point — inform the employee of the termination, the reasons for the termination, and what she is required to do next (clear out belongings, return company property).
Do not force the dismissed employee to sign a settlement offer during the meeting. Allow the employee time to review the offer and seek legal advice.
10. Providing references
References (verbal or written) must be honest. They should not be critical of an employee’s performance unless criticisms can be backed up with evidence. Employers should not mislead the party requesting the reference by providing a glowing reference of a poor performer.
Many employers have instituted policies of only providing references including the date of hire, position, duties, salary and date of termination. By instituting and following such a policy, employers decrease their exposure to allegations of failing to provide adequate references.
Julie McAlpine is an associate with Filion Wakely Thorup Angeletti LLP. For more information contact (416) 408-3221, firstname.lastname@example.org or email@example.com.