3 Things to Keep in Mind When Dismissing An Employee Without Causeachkarlaw-admin
Employers have to make difficult decisions in the course of their business, especially during economically challenging times. One of the most common decisions they are faced with is determining whether to dismiss an employee.
It is at termination that an employer may face the greatest legal liability for damages from a former employee. The employment agreement, the manner of the employee’s dismissal, and other surrounding factors can determine how much an employer owes an employee on termination.
This article will outline 3 important things employers need to keep in mind when dismissing employees. It will also explain how an employment lawyer can help minimize your legal risks as an employer.
Severance Entitlements Are Not Set in Stone
Where an employer does not provide an employee sufficient working notice or pay in lieu of such notice through severance pay, the employee may sue the employer for wrongful dismissal.
In Ontario, many employers mistakenly believe that their only obligations to employees they terminate are exclusively outlined under the Employment Standards Act, 2000 (the “ESA”). If an employment agreement does not contain an enforceable termination clause limiting an employee’s entitlements to the ESA, they may be entitled to reasonable notice for a length to be decided by a court.
In Ontario, the Court determines an employee’s entitlement to severance in such cases based on factors such as:
- Years of service:
- Character of employment;
- The state of the labour market, including any economic considerations; and
- Other relevant factors.
An employee’s entitlements under the ESA can be capped at up to 34 weeks of regular wages. This amount is included in an employee’s common law reasonable notice entitlement of up to 24 months (with exceptional cases going as high as 28 months). Employees with exceptional years of service or other factors can be awarded up to 28 months.
The best way to minimize risk for this issue specifically is to speak with an employment lawyer in advance to ensure employment contracts are updated to include enforceable termination provisions. It also helps to have an employment lawyer negotiate an employee’s severance package in exchange for a Full and Final Release so the employee cannot then sue for wrongful dismissal.
Dismissing an Employee Improperly Has Consequences
The manner, timing, and surrounding circumstances can create problems for dismissing an employee. In most cases, a simple termination letter at a respectful, professional, and straightforward meeting can be enough.
Employers who engage in “bad faith” behavior in the manner of an employee’s dismissal can open themselves to additional aggravated and punitive damages in a wrongful dismissal case. Examples of bad faith behavior include but are not limited to the following:
- Dismissing an employee with cause where the employer reasonably should have known cause was not available to deny an employee their severance entitlements;
- Refusal to pay an employee their minimum entitlements or otherwise violating the ESA;
- Embarrassing, humiliating, or demeaning an employee when terminating them;
- Having a security guard unnecessarily walk an employee out of their workplace;
- Disparaging an employee following their departure; and
- Failing to file a record of employment with Service Canada to deny the employee access to their EI benefits.
Further, the employer could also owe additional Human Rights damages if the termination was related to an employee’s disability, family status, or other protected grounds under the Ontario Human Rights Code (the “Code”). Even if an employer is terminating the employer for unrelated reasons, their failure to take appropriate actions before dismissing the employee can lead to legal liability for violations of the Code.
Common examples where employers may face legal liability for Human Rights damages include:
- Dismissing an employee shortly before or after they sought leave from the workplace for medical reasons, a family obligation, or a religious holiday;
- Dismissing an employee while they are on medical leave;
- Dismissing an employee after they ask for workplace accommodations; and
- Failing to take reasonable steps to inquire about an employee’s accommodation needs where termination is linked to their performance or misconduct.
It is always best to consult with an employment and Human Rights lawyer and explain the circumstances surrounding an employee’s dismissal before dismissing that employee. An employment and Human Rights lawyer can help you take the steps necessary to minimize your liabilities surrounding the termination, especially where Human Rights may be at issue.
A Full and Final Release Provides Certainty
A Full and Final Release is a document an employee may sign in exchange for a severance package their employer offers. This document ordinarily restricts the employee from being able to sue their employer in the future for legal claims arising out of the employment relationship.
Employers should be mindful that “boilerplate” Full and Final Releases may not necessarily be enforceable. Further, failure to provide a benefit over and above the employee’s entitlements under the ESA may result in the Full and Final Release being unenforceable.
Even if an employee does not sign any release or accept an employer’s offer, that does not mean the employer is entitled to withhold the employee’s minimum statutory entitlements. The employer must always pay an employee’s minimum ESA entitlements, and failure to do so can result in additional damages on top of any owed severance.
An employment and Human Rights lawyer can assist employers with terminating their employees appropriately, and negotiating severance packages. They can also ensure the Full and Final Release is enforceable, so the employee cannot then accept the offer and sue their employer anyway, forcing the employer to incur additional legal costs on top of already paying out what the employee accepted for their severance.
Dismissing an employee without cause might seem straightforward, but can pose a number of problems for employers if they are not careful. Three things for employers to keep in mind regarding dismissals are:
- Employee’s severance entitlements are not set in stone;
- Dismissing an employee improperly has consequences; and
- A Full and Final Release provides certainty.
Employers who conduct an employee’s dismissal improperly open themselves to legal liability, and potential lawsuits for severance, additional damages, and legal costs. Employers can minimize these risks by consulting with an employment lawyer before dismissing any employee.
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. Contact us by phone toll-free at 1 (800)-771-7882 or email us at [email protected], and we would be happy to assist.
If you are a small or medium-sized company looking for full-service support with a same-day response, visit our CLO Program page for our strategic solutions.