Terminating the employment relationship

Questions from two readers about ending the employment relationship

Stuart Rudner
Since both questions from readers in this issue deal with the ability of an employer to terminate the employment relationship, I will review some basic concepts first.

Termination: With cause or without

Employees can be dismissed in one of two ways: for just cause or without just cause. Just cause can be based upon a wide range of behaviour, including insolence, dishonesty, performance issues, or any other basis upon which it can be found that summary termination of the employment relationship is justified. Where just cause exists, there is no obligation to provide any notice of termination or pay in lieu thereof.

In the absence of just cause, an employer that wants to terminate the employment relationship must provide notice or pay in lieu thereof. If you decide to dismiss an employee, you do not have to give them a “package” — you can provide working notice during which time the employee continues to carry out their duties.

How much notice?

All employees have an employment contract. Some are written but most are verbal. A written agreement can set out, in varying degrees of detail, the rights and obligations of the two parties. One issue that can be addressed (and which I strongly recommend to employers) is the obligations upon termination of the agreement. The parties are free to agree on how much notice, or pay in lieu thereof, the employer is required to provide. The only restriction is that the obligation cannot be less than the obligations set out in the applicable legislation.

I should digress for a moment to note there are very strict requirements with respect to how an employment agreement should be entered into, and many employers inadvertently fail to meet these requirements. Canadian Employment Law Today has addressed this topic in past issues.

If there is no written agreement, or if the written agreement in place does not address fundamental issues, the law will imply various obligations. If there is no expressed agreement with respect to the amount of notice to be provided in the event of termination, the termination will be governed by both statute and the common law.

This is where many employers run into trouble. The legislation sets out minimum notice periods — the courts have made it quite clear that in the vast majority of cases, this will not be sufficient.

Rather, the common law requires that employers provide “reasonable” notice of termination, designed to approximate the amount of time it will take the employee to find a new job.

There are no hard and fast rules regarding how much notice is “reasonable” in any particular circumstance. The courts have set out a number of factors to be considered, including the age of the employee, the length of service, and the position held.

Other factors can also become important in specific circumstances; for example, an employee that was induced to leave previous, secure employment will generally receive more notice. Similarly, where the employer does not act in good faith in the course of dismissal, “bad faith” or “Wallace damages” will be used to lengthen the notice period.

Termination via layoff

Question: Can an employer layoff employees with a settlement package as a means of getting rid of them? If so, how much notice do they have to give them?

Answer: Yes. There is no inherent right to a job (different considerations will apply for unionized employees). Employers are free to dismiss employees that they do not want to keep in their employ, unless the reason for termination would contravene human rights legislation. For example, you cannot terminate someone because they are female, or pregnant, or married, or Muslim.

Since there is no just cause for termination, notice would be required as described above. The notice could be working notice, or some sort of package involving pay in lieu of notice.

Terminating clumsy workers

Question: We have several employees that just keep getting injured, repeatedly. These employees don’t disregard safe work or lock-out procedures they just have a propensity for slipping and falling, banging their elbow, getting cut or scraped, dust in their eyes and so on. Can an employee be terminated for issues related to non-culpable safety performance?

Answer: The key word here is “non-culpable” (OK — perhaps it’s two words). If it is non-culpable, then just cause for dismissal does not exist.

Your question suggests that there is no basis to terminate for failing to follow appropriate procedures or otherwise abide by safety regulations.

Therefore, if you want to terminate the employment relationship, you must provide reasonable notice or pay in lieu as in the answer to the question above.

Alternatively, perhaps some training would be appropriate.

Stuart Rudner practices commercial litigation and employment law with Miller Thomson LLP’s Toronto office. He can be reached at (416) 595-8672or by e-mail at srudner@millerthomson.ca.

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