How important is giving a reason?
Question: If an employer dismisses an employee without cause but provides sufficient pay in lieu of notice, how important is the letter of termination outlining the reason for dismissal? What if the employee disagrees with the reason or thinks it’s unfair?
Answer: The termination letter is still important. It is a seminal record in the event of a termination being challenged. It will be scrutinized and any defects could be costly.
Most common law jurisdictions require written notice of termination of employment. To the extent possible in the circumstances, it should be short and unassailable. To start, an obvious question is: Why include reasons in a without-cause termination letter at all? Except in jurisdictions where more is required, this situation calls for general reasons, at most. The employer could state that the company is moving in a different direction or briefly state any genuine business reasons, such as if the position is being eliminated. The inclusion of more details is an invitation for the employee to disagree or raise concerns regarding fairness.
However, there are cases where it may be wise to include reasons. For example, if there are concerns about a possible human rights complaint, stating the genuine and bona fide business reasons for the dismissal may extinguish the employee’s concerns about any perceived discrimination. Whatever the case, any reasons given should be truthful to discourage the employee from challenging them.
An important function of the termination letter is to notify the employee that the portion of the severance payment in excess of the employee’s entitlement under employment standards legislation is contingent on the employee’s signing of a full and final release. Furthermore, even if sufficient pay in lieu of notice is paid, there are usually other issues to address. The employer may want to convey information about unpaid vacation pay, return of company property, post-employment obligations such as confidentiality, non-solicitation or non-competition, or termination of benefits and any option for conversion from a group to a personal plan.
