10 common myths about ending the employment relationship
Every employee has a probation period during which they can be dismissed without notice or cause. Although legislation allows for termination of short-term employees without notice or pay in lieu, there must be a clearly-worded provision which sets out the specific terms. Simply saying something like “probation period — three months” is meaningless. If there is no clear provision, the common law requirement of reasonable notice will apply.
In the absence of a contract which states otherwise, employees are only entitled to the Employment Standards Act minimum amounts of notice or pay in lieu thereof. The law is exactly the opposite — if there is no enforceable contractual termination clause, then the common law requirement of reasonable notice applies. Again, if there is no clear provision, the common law requirement of reasonable notice will apply.
The common law requires one month of notice for every year of service (or two weeks for every year, or some other absolute amount). The courts have been very clear there are many factors to be considered in assessing what constitutes reasonable notice, and every situation will be considered based upon its own circumstances. Data based upon actual court awards supports the proposition there are no hard and fast rules.
In calculating whether an individual has the required five years of service in order to be eligible for severance pay (in Ontario), only the current period of employment is counted. The Employment Standards Act of Ontario provides for severance pay, over and above notice of termination, if certain requirements are met. One requirement is five years of service; however, it can be satisfied through a cumulative period of employment, even if that period has been interrupted by the resignation of the employee.
If you are concerned about a human rights complaint, dismissing the individual on a without cause basis will preclude a claim being brought. Regardless of the manner of termination, if an individual can show that even a tiny portion of the reason for dismissal related to a protected ground, then the applicable human rights legislation will have been breached.
Just cause (summary dismissal) is a lost cause. I have spent several years authoring a book on just cause for dismissal which will be published by Carswell and available within months. I can comfortably say that Judges will support dismissals for cause when they find it is warranted, and it is not impossible to convince them of that. However, employers should approach summary dismissal cautiously, with appropriate evidence, consideration and advice.
Working notice is doomed to fail. Many employers fall into a rut in which every dismissal without cause is handled the same way (for example, by offering a lump-sum payment). Employers should consider their options in every situation, which can include working notice, salary and benefit continuance, lump-sum payment or a combination thereof. In many circumstances, working notice can be a viable option that allows an employer to get at least some value for their money. Furthermore, anecdotal evidence suggests that it is easier for someone to find a new job while they are still employed.
Pay in lieu of notice of dismissal involves base salary only. Unless there is a contractual provision or enforceable policy that says otherwise, all forms of remuneration are to continue throughout the notice period. This includes commissions, bonuses and all benefits, including disability coverage. Employers risk liability if they cut off coverage or fail to compensate an employee in the same manner they would have if they had worked through the notice period.
Providing positive or negative references to dismissed employees can result in liability. An ill-founded fear of litigation has led many employers to adopt a “name, rank and serial number” approach to references, which involves no substantive comments whatsoever. In the vast majority of dismissals without cause, there is no reason not to provide a positive reference. And if the package includes a “clawback” provision which reduces the payout if the individual obtains new employment, then the employer has good reason to help them find a new job. The risk of liability when providing an honest, positive reference is virtually nil. At the same time, negative references given in an honest, good faith manner should not result in liability.
Non-competition covenants are enforceable against former employees. In the vast majority of cases, they are not. Employers should rely upon other forms of protection, such as non-solicitation clauses and well-drafted confidentiality agreements.
Stuart Rudner is a partner with Miller Thomson LLP in Ontario, specializing in employment law. He provides clients with strategic advice regarding all aspects of the employment relationship, and represents them before courts, mediators and tribunals. He is author of You’re Fired: Just Cause for Dismissal in Canada, published by Carswell. He can be reached at (905) 415-6767 or firstname.lastname@example.org. You can also follow him on Twitter @CanadianHRLaw, join his Canadian Employment Law Group on LinkedIn, and connect with him on Google+.