Termination Without Cause: 3 Things To Keep in Mind
Employers often face tough decisions, especially in challenging economic times. One of the most significant decisions they must make is whether to terminate an employee without cause.
Termination can be a legal minefield for employers. The employment agreement, the manner of the employee’s dismissal, and other factors can impact how much an employer owes the terminated employee.
In this article, we’ll outline three crucial things employers need to keep in mind when dismissing employees without cause. We’ll also explain how an employment lawyer can help minimize your legal risks as an employer.
1. Severance Entitlements Can Vary
Severance entitlements are not set in stone. In Ontario, many employers mistakenly believe that their only obligations to terminated employees are defined by the Employment Standards Act, 2000 (the “ESA“). However, if an employment agreement lacks an enforceable termination clause that limits entitlements to the ESA, employees may be entitled to reasonable notice determined by a court.
Factors that influence an employee’s entitlement to severance under the ESA may include age, years of service, the nature of the job, the labor market conditions, and other relevant considerations. An employee’s entitlement under the ESA can be capped at up to 34 weeks of regular wages, included within an employee’s common law reasonable notice entitlement of up to 24 months (with exceptional cases extending to 28 months for employees with unique service records).
To minimize risks, consider consulting with an employment lawyer to ensure employment contracts include enforceable termination provisions. An employment lawyer can also negotiate a severance package, often in exchange for a Full and Final Release, preventing potential wrongful dismissal claims.
2. Dismissing an Employee Requires Care
The manner, timing, and surrounding circumstances of an employee’s dismissal matter. A respectful, professional termination process can often be sufficient. However, employers engaging in “bad faith” behavior during dismissals may open themselves up to additional damages in wrongful dismissal cases.
Examples of bad faith behavior include:
- Wrongfully dismissing an employee with cause when there’s no justifiable reason.
- Refusing to provide employees with their minimum ESA entitlements or violating the ESA.
- Using demeaning or humiliating behavior when terminating an employee.
- Unnecessarily escorting an employee out with a security guard.
- Disparaging an employee following their departure.
- Failing to file a record of employment with Service Canada, affecting an employee’s EI benefits.
Moreover, employers could face additional Human Rights damages if the termination is related to an employee’s disability, family status, or other protected grounds under the Ontario Human Rights Code (the “Code“). Even if the termination is unrelated, an employer’s failure to take appropriate actions before dismissal can lead to legal liability for Code violations.
Common examples where employers may face Human Rights damages include dismissing an employee during medical leave, after a request for workplace accommodations, or failing to inquire about accommodation needs related to an employee’s performance or misconduct.
To minimize these risks, consult with an employment and Human Rights lawyer to address any potential issues related to an employee’s dismissal, especially where Human Rights may be at issue.
3. The Importance of a Full and Final Release
A Full and Final Release is a document that an employee may sign in exchange for a severance package. It typically restricts the employee from suing the employer in the future for claims related to the employment relationship.
Employers should be cautious, as standard Full and Final Releases may not always be enforceable. Failure to provide benefits beyond an employee’s ESA entitlements may render the Full and Final Release unenforceable. Even if an employee doesn’t sign any release or accept an employer’s offer, the employer must always pay the employee’s minimum ESA entitlements. Failure to do so can result in additional damages on top of owed severance.
An employment and Human Rights lawyer can assist employers in proper termination procedures, negotiating severance packages, and ensuring the enforceability of the Full and Final Release. This can save employers from potential additional legal costs and complications down the road.
Terminating an employee without cause may appear straightforward, but it can lead to various legal challenges if not handled carefully. Employers must keep three essential considerations in mind:
- Severance entitlements can vary.
- Dismissing an employee improperly has consequences.
- A Full and Final Release provides certainty.
Employers who dismiss employees without cause improperly risk legal liability, lawsuits for severance, additional damages, and legal costs. Consult with an employment lawyer before dismissing any employee to minimize these risks.
What Damages Can You Claim For Constructive And Wrongful Dismissal?
Contact Achkar Law
If you are an employer needing assistance with dismissing an employee or facing a wrongful dismissal claim, our team of experienced workplace lawyers at Achkar Law can help.