Terminating employment is the most serious action that an employer can decide to take. Even in the situation where there is a valid business reason for terminating the employee, there remain legal obligations that the employer needs to consider under employment contracts, statute, and, in some instances, common law and the surrounding human rights. This is because the Employment Standards Act, 2000 (ESA) sets out the basic requirements, minimum of which for those terminated from employment and those which have been a full-time or part-time employee for a continuous term of 3 months or more, requires the employer to give reasonable written notice or payment in lieu of notice or both.
Importantly, ESA is a set of minimum standard obligations, and often employees will have additional rights at common law and in the form of other statute. This is where at times it makes sense, and is often appropriate, to speak with the Toronto employment lawyer to gain a clarity of employer obligations and identify legal pitfalls, at the very least, prior to speaking to the terminated employee.
When the Employment Contract Is Unclear
An employment agreement is one of the earliest documents that you should review when planning a termination. Employment contracts may include clauses about termination, notice, compensation, benefits and other obligations triggered upon conclusion of an employment arrangement. Having an employment contract with a termination clause should not always translate to simply calculating figures stated and simply proceeding.
Employment contract language can be legally problematic, as is its enforceability – not to mention how things may have changed from when the contract was originally created.
A legal professional can be beneficial particularly if your employment contract is dated, the contract has been amended numerous times, if there are uncertainties within the document itself, or if there are uncertainties around termination entitlements.
Familiarizing yourself with the document prior to communicating with an employee offers clarity around potential obligations.
When Common-Law Notice Could Be an Issue
Ontario employers may incorrectly think that the “ ESA Minimum “ addresses all of an employee’s termination obligations. It doesn’t. The government itself highlights the ESA provisions, but clearly indicates those “ are minimum obligations “ and ” some of our employees have entitlement to more than minimum notice “ under common law.
The prospect of providing notice of employment beyond that offered under the ESA becomes relevant where you do not have valid contract language that restricts the employee’s termination rights. Such a notice period is not uniform, it may very greatly depending upon the facts and circumstances, so making the assumption that” everyone who has been working with us x years deserves the same termination package is a risky approach without further legal scrutiny.
When Terminating a Long-Service Employee
However, special thought should be given to long-serving employees in any dismissal situation. Length of service can influence entitlement to statutory severance and can be an important factor when determining the level of potential common-law notice. The continuity of an employee’s service may also require special attention; for instance, there are provisions in the Ontario ESA that allow prior service to continue to count for termination purposes on the sale of a business even if the employee continues employment with the new owner.
It is also advisable to always try and verify the employee’s total employment, not just based on a recent employment agreement, payroll record or organizational event. In fact, when dealing with an employee that has worked for the employer a considerable length of time, advice should always be obtained prior to closing the termination package so that any particular issues related to such long service may not be overlooked.
When the Employer Believes There Is Cause for Termination
Terminating employment for serious misconduct can be legally complex.
Under Ontario’s ESA regulations, the exemption from statutory notice and termination pay applies to an employee who has engaged in wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.
That is a specific legal standard. Poor performance, an error in judgement or conduct that the employer considers unacceptable does not automatically satisfy it.
Before relying on misconduct to withhold termination entitlements, an employer may benefit from having the circumstances and documentation reviewed. Relevant information could include previous warnings, investigation records, workplace policies, witness accounts and whether similar conduct had previously been tolerated.
Legal advice can help distinguish between a situation that may justify disciplinary action and one in which alleging cause could create additional risk.
When Performance Problems Are Part of the Decision
Employers must tread carefully if poor performance is the issue. Before making a decision to terminate for cause due to performance issues, employers should take a second look at how their concerns about the employee’s performance were documented, communicated and addressed.
Typically, employees’ performance should have clear expectations attached to their roles and duties, and employers should maintain reliable records of all discussions, warnings and discussions regarding potential improvements in performance.
Terminations for cause may become legally challenging if the cited reason for termination doesn’t match up with the employer’s own history and records on the employee’s performance (e.g. a track record of successful work followed by a complaint of previously unaddressed performance deficiencies).
When documentation is weak, when the employee challenges past warnings, or when an employer considers that the termination is a for-cause dismissal, seeking legal advice is highly recommended.
When Disability or Accommodation Is Involved
According to the Ontario Human Rights Code, every person has a right to equal treatment with respect to employment without discrimination based on, among other things, disability. Every person has a right not to be subjected to an adverse differential or the adverse differential for a prohibited ground of discrimination, and that is understood to extend to dismissals and layoffs, per the Ontario Human Rights Commission. None of the foregoing should suggest that an employer cannot terminate an employee with accommodation needs.
Employers can make decisions to dismiss individuals for reasons that do not discriminate or are not discriminatory in nature or effect. Those decisions, however, should be neutral and not predicated on or tainted by discriminatory assumptions, including discriminatory assessments of the need for accommodation. In the case of disability, the procedures the employer took to determine the appropriate accommodation is as important as the accommodation itself, states the OHRC.
In situations where accommodation or disability is part of the employment narrative, taking the step to secure legal advice prior to proceeding with termination is critical to ensure accommodation duties have been met.
When the Employee Has Recently Taken a Protected Leave
Timing may influence the potential risk. Generally, employers cannot terminate employees and treat employees unfairly on account of an employee having taken ESA-protected leave and exercising an employee’s statutory right by virtue of having done so. An employer’s motive for terminating the employment relationship could be legitimate and totally separate from any ESA-protected leave taken by the employee.
However, if a termination takes place relatively close to an employee having taken protected leave or having invoked an employment standard right, this timing could raise doubt about why an employer was really motivated to end the employment. Employers would be able to present the true reasons as to why the employment was ended with proper documentation, and consider legal advice if a period close to the termination date would create doubt as to the timing and whether other factors require concern.
When the Employee Has Raised Workplace Concerns
A similar approach should be taken if employees are making recent complaints about their workplace behaviours or about violations of their employment rights. A subsequent termination, therefore risks giving rise to the allegation that the employee was fired for having the agency to assert their protected right, and not solely for the operational reason supplied.
While the specific provision that prohibits reprisal for requesting or asserting right under ESA has become famous for this purpose, many other legislated protections might be applicable, depending on how and what kind of complaining was taking place prior to the dismissal.
Employers may wish to consider the chronology of the decision as any proof as to when the decision was entertained, who was involved, and the decision making factors shall be considered as valuable when disputed.
When Termination Pay and Severance Pay Are Being Confused
Termination pay versus severance pay are two entirely different entitlements under Ontario employment standards law. Severance pay is a minimum statutory entitlement that only arises where the particular ESA provisions and conditions have been met, and where there isn’t enough working notice being given, termination pay is the equivalent of the required written notice. This concept can often lead to significant problems and confusion when drafting a package.
It’s important for an employer to recognize that an individual may be entitled to one but not the other or to both severance and termination pay and these in fact separate entitlements from any contractual and common law termination or severance entitlements.
When Benefits Need to Be Addressed
Termination obligations are not limited to salary.
During the statutory notice period, Ontario employers generally must continue required contributions necessary to maintain the employee’s benefits plans. They also cannot reduce the employee’s wage rate or alter other terms or conditions of employment during that statutory notice period.
A termination package should therefore be reviewed with compensation and benefits in mind rather than focusing only on the employee’s regular wages.
Bonuses, commissions, vacation pay, incentive arrangements and other compensation components can create additional questions depending on the employment agreement and circumstances.
Where compensation is complex, reviewing these issues before the termination meeting can help avoid discovering an overlooked entitlement afterwards.
When Multiple Employees Are Being Terminated
A larger restructuring requires different planning from an isolated termination.
Ontario’s ESA contains special rules for certain mass terminations. The applicable obligations can depend on factors including how many employees are being terminated within the relevant period and establishment.
Employers planning a significant downsizing should therefore assess their obligations before announcing the restructuring.
Legal advice can also help coordinate individual employment agreements, statutory requirements, termination packages and communications across the affected workforce.
Planning becomes especially important when employees have different lengths of service, contractual arrangements or individual circumstances.
When There Is a Risk of a Human Rights Claim
Human rights considerations extend beyond disability.
The Ontario Human Rights Code protects against discrimination in employment based on protected grounds, and those protections extend to the end of the employment relationship. The OHRC advises employers to ensure that termination decisions are not linked to, based on or tainted by discrimination.
An employer should therefore examine whether any protected characteristic or accommodation issue could appear connected with the decision.
The way the termination is conducted can matter as well. The OHRC recommends treating employees with dignity and respect when ending employment.
Where human rights considerations are present, legal advice before the meeting can help identify issues that should be addressed before the decision is implemented.
When the Termination Package Includes a Release
Employers sometimes offer compensation beyond what they believe is immediately required in exchange for a release of potential claims.
A release is a legal document and should be drafted carefully. Its wording should correspond with the circumstances and the consideration being offered.
Employers should avoid simply copying a release used for another employee without considering whether it is appropriate for the current termination.
This is another situation where consulting a Toronto employment lawyer before delivering the termination documents can be useful. Once an offer has been communicated, correcting unclear or inappropriate wording can become more difficult.
Why Legal Review Is Most Useful Before the Termination Meeting
The timing of legal advice matters.
An employer has considerably more flexibility before the employee has been told that their employment is ending. At that stage, the employment agreement can be reviewed, calculations checked, accommodation or leave issues considered and documentation examined.
Potential problems can then be addressed before they become part of the termination itself.
After the termination has been communicated, the employer may have fewer options to correct an error without creating further complications.
For higher-risk situations, legal review should therefore be viewed as part of termination planning rather than something reserved exclusively for responding to a claim after the employee has left.
Preparing Before Seeking Legal Advice
Employers can make the review process more useful by gathering relevant information beforehand.
Important documents may include the employee’s original employment agreement and subsequent amendments, compensation information, benefits details, performance records, disciplinary documentation, workplace policies and correspondence relating to relevant accommodation or leave issues.
The employer should also be able to explain the genuine reason for termination and the timeline leading to the decision.
Providing complete information allows legal counsel to assess the situation in context rather than reviewing the termination package in isolation.
Conclusion
Not every employment termination will develop into a legal dispute, but certain circumstances warrant additional care. Long service, unclear employment agreements, allegations of cause, performance disputes, protected leaves, accommodation issues, complex compensation and larger workforce reductions can all make termination more complicated.
Ontario’s ESA establishes minimum termination standards, but those minimums do not necessarily represent the full extent of an employee’s potential rights. Human rights obligations and other legal considerations may also affect how a termination should be approached.
Consulting a Toronto employment lawyer before communicating a higher-risk termination gives an employer an opportunity to review the contract, documentation, statutory obligations and surrounding circumstances while there is still time to address potential issues. Careful preparation before the employment relationship ends is generally more practical than trying to correct avoidable problems after the termination has already occurred.
