Terminating an employee can be hazardous to your businesses | CFIB
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Terminating an employee is never an easy task. It is important to approach the termination process with sensitivity, empathy, and clear communication to minimize any negative impact on the employee and maintain a positive work environment for the remaining staff. Understanding the legal requirements, best practices, and the potential impact on your business is crucial.
When terminating an employee, you generally have two options: termination with just cause or termination without cause.
Termination with just cause refers to termination based on a valid reason, typically due to the employee's misconduct or violation of company policies. Examples include theft, insubordination, harassment, or repeated negligence. In such cases, the employer is not obligated to provide any severance pay or notice period. (Note: some jurisdictions require you to go through the Labour Board to determine whether or not notice should be paid, even in a situation of just cause).
Termination without cause occurs when an employer decides to end the employment contract without any specific reason or fault on the employee's part. This could be due to downsizing, restructuring, or other business-related reasons. In these cases, the employer may be required to provide a notice period or severance pay, as outlined by employment laws or the employment contract. There are exceptions to the notice requirement depending on industry and/or length of employment. A CFIB Business Advisor can help you determine your obligations.
Providing a reason, whether written or in-person, can increase the risk of exposure to claims of unfair dismissal. The burden of providing evidence to support these reasons falls entirely on the employer. It is therefore recommended to terminate without cause and provide termination pay. However, ultimately, this decision is up to the business owner.
The right to terminate employees comes with the responsibility to comply with Employment Standards and Human Rights legislation. Employers should exercise caution and follow the regulations closely; any employee who feels they have been unfairly treated or dismissed can file a complaint with the appropriate authorities.
Note that there are situations when it is not recommended to terminate an employee either for cause or without cause, for example:
- employees on a protected leave,
- on sick leave
- employees suffering from addictions or mental illness.
In these circumstances, it would be best to reintegrate the employee and later reconsider termination. These situations trigger accommodation requirements not only under employment standards, but also under Human Rights and even workers’ compensation rules. Getting legal advice is strongly recommended before terminating in these situations.
Know the Legal Framework:
Canada has strict labour laws that govern termination procedures. Ensure you are familiar with the Employment Standards Act in your jurisdiction, as it dictates key aspects of employee termination, such as notice periods, severance pay, and termination reasons.
You may also need to consider requirements under the Common Law, the Civil Code (in Quebec) as well as the federal Canada Labour Code.
For employers in Quebec, it is important to be well-informed about employment termination regulations, read our article La cessation d’emploi : tout ce que vous devez savoir (in French only).
Provide Notice or Pay in Lieu:
In most cases, you must provide written notice of termination or pay in lieu of notice. The length of notice or pay required depends on the employee's length of service and specific circumstances. Failing to do so can result in significant legal consequences.
The written notice of termination of employment must be addressed to the employee. It can be provided in person, by mail, or by e-mail, providing delivery can be verified.
Employers should be aware of both the statutory requirements and the common law principles when terminating employees to ensure they meet their legal obligations.
Consider Severance Pay:
In some cases, employees may be entitled to severance pay in addition to notice or pay in lieu. Consult the Employment Standards Act and legal counsel to determine if this applies to your situation.
For more on notice and severance, please read our article Notice and severance: what you need to know
Mitigating termination through a well-crafted employment contract is an important strategy that can help both employers and employees establish clear expectations, reduce misunderstandings, and potentially prevent disputes that could lead to terminations.
Record of Employment:
Employers must file a Record of Employment (ROE) after termination. Read our article ROEs: what you need to know for more information on completing and issuing an ROE.
During the termination process, be mindful of maintaining confidentiality. Only those directly involved in the termination decision should have access to sensitive information.
Collect Company Property:
Gather all company-owned items (e.g., keys, laptops, access cards) from the terminated employee before they leave the premises. Be sure to remove the employee’s access to any company systems/networks.
Prepare for Transition:
Plan how you will handle the transition of the employee's responsibilities. Be ready to redistribute tasks, reassign projects, or hire a replacement if necessary. You should also explain to your staff that the employee is no longer with the company (without going into details), and that any queries should be directed to a named person.
Review and Learn:
After the termination process is complete, conduct a thorough review to learn from the experience. Evaluate whether there were any underlying issues that led to the termination and how you can prevent similar situations in the future.
Employee termination is a complex process that requires careful consideration and adherence to labour laws. Know what you are doing before you act. Getting it right will lessen your chance of having to deal with significant financial harm later on, such as thousands of dollars in legal bills and potentially tens of thousands in court-imposed judgment.
Our dedicated Business Resources team is readily available to support you in making well-informed choices. Feel free to reach out to our experienced Business Advisors anytime at 1-833-568-2342 or email@example.com.