'Terminations are probably one of the highest ranking risks of harm from an HR perspective'
If an employer makes a mistake when dismissing an employee, whether for cause or without cause, the results could be quite detrimental.
“A poorly executed termination can have a significant impact on the workplace. A termination that’s not conducted properly can lead to legal risk and employers who do not conduct terminations properly can be ordered to pay additional compensation to employees,” says Ozlem Yucel, employment lawyer at Turnpenney Milne in Toronto.
But the risks come not only to the bottom line — an improper firing may cause even greater harm at the workplace, according to Yucel.
“Not only does this increase the financial costs associated with the termination but it can lead to reputational harm. Employees who are terminated improperly may go on to bad-mouth the company, resulting in damage to the reputation in the industry or amongst customers, and a loss of business.”
The costs of making a mistake
Yucel recently conducted a web-based presentation, with Jeffrey Smith of Canadian HR Reporter, and she provided a litany of what damage may be incurred by the employer who gets the termination wrong.
“It can also lead to decreased morale amongst employees who remain at the company. If existing employees believe that the employer has handled itself badly, they will lose trust in an employer. Employees often identify with the fact that they themselves might be terminated in the future and if they believe that their employer is not going to treat them properly, that can lead to resentment amongst the existing workforce.”
“Terminations are probably one of the highest ranking risks of harm from an HR perspective,” she says.
Recently, several notable court cases have been released demonstrating the importance of conducting terminations properly for employers and Yucel also took a look at some high-profile cases in the presentation.
One recent Ontario case showed that offering the correct amount of entitlement after a termination can be challenging for an employer to determine.
Steps to take before a decision is made
As many businesses continue to downsize and face these issues, many employers are raising questions about the important element of managing a business and the legal risks of not doing it right and finding a way that “mitigates against your exposure,” says Yucel.
But before determining whether or not dismissal is warranted, “the first thing you should do is identify the why at the outset of your decision making process: why are you terminating this particular employee?
“The answer to that question will inform how to proceed with the termination moving forward,” she says.
