How to navigate through tricky terminations

Terminations can be a minefield, especially if you are unaware of the ins and outs of employment law. To help you navigate through it safely, here are the top items to be aware of when terminating an employee in Canada.

For cause vs. without cause

It is important to understand the difference between a termination for cause versus without cause. “Cause” is not the same thing as “good reason.” You may have a great reason to terminate an employee, but this does not mean you have cause. When you have cause, no termination notice is typically owed; it’s the employee who, through their actions or inactions, has breached their employment obligations in a fundamental way.

Examples of cause would be theft, workplace violence, or ongoing and sustained misconduct after multiple escalating written warnings. Knowing if you truly have cause can be challenging, so it is a good idea to discuss your situation with legal counsel before you proceed.

Know your floor to ceiling obligations

When the termination is without cause, make sure you know your minimum and common law obligations. Employees are entitled to a minimum amount of notice (and sometimes statutory severance pay) – this is the floor. An employee cannot be asked to sign away any future rights in exchange for the floor.

An employee may also be entitled to additional notice, known as common law reasonable notice – this is the ceiling. In advance of any termination, know your floor and your ceiling and structure any termination offers with those in mind.

Start with an employee agreement

When you hire someone, always have them sign an employee agreement as part of the onboarding process. A properly drafted and executed employment agreement can mean the difference between having to pay weeks versus months of termination pay. Agreements can also limit obligations for additional forms of compensation beyond the termination date. Lastly, they can protect a company’s intellectual property/confidential information and can prevent unfair competition through a non-solicitation clause.

Keep human rights issues in mind when you draft any employee agreement. While employee agreements can limit termination pay, a contract will not protect you if the employee’s termination is related, in anyway, to a protected ground of discrimination. Clearly identifying if an employee’s termination falls under a protected ground is not straightforward. A best practice is to seek legal assistance if matters of discrimination could be at hand.

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Resignations

Are you sure the employee has resigned? You can get into trouble concluding an employee has resigned, by either their words or actions, when, in fact, they have not legally resigned. Emotional outbursts are often mischaracterized as legal resignations. The following elements must be present to successfully declare that an employee has resigned:

1. Voluntary: Employee must give their resignation of their own accord;
2. Subjective: Words or conduct that clearly demonstrates subjective intent to quit; and
3. Objective: Conduct that a reasonable person would understand as carrying out the intention to quit.

Conduct a termination meeting

Carry out a termination meeting carefully to avoid pitfalls. Conduct the meeting in a private place and have at least two appropriate company representatives present. A termination letter, setting out any offer, should be presented to the employee during the meeting, but if an employee signature is required, that should not be accepted during the same meeting.

Avoid saying anything that could be taken as misleading or as illegal reasons for termination. Plan what you will say in advance and keep it short and to the point. At the end, recognize that this will be an emotional time for the employee. Offer the employee an opportunity to collect personal belongings and make sure they have a safe mode of transport home.

Terminations are complex and can escalate quickly – these are just a few of the key considerations involved in Canadian terminations. Protect yourself and your business by understanding the ins and outs of terminating employees. When in doubt, seek assistance by a professional before you approach the employee.