The dos and don'ts of terminations, for employer and employee

Do not fire someone if they are essential to the operation of your enterprise

If an employer advises the employee on why they are being let go, they must be honest, write Howard Levitt and Peter Carey.
If an employer advises the employee on why they are being let go, they must be honest, write Howard Levitt and Peter Carey. Photo by Getty Images/iStockphoto

We live in an ever more complex world. Sometimes it feels as though we need a refresher course just to turn on the television.

So it is with employment law. It is more complex than it needs to be. The reasons for this are beyond the scope of this article but we can at least shed a little light on the topic.

The Employment Standards Act (the "Act") is the legislation that governs employment conditions in the province. Except that it doesn't. The courts have held that there are common law rights that dramatically supersede those in the Act.

The Act, according to the courts, sets out only the minimum basic entitlements. For example, the length of notice of termination of employment is set out in the Act.

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However, common law notice is usually several times that amount. Further, if a termination clause in an employment contract could potentially result in an employee receiving less notice than what is required in the Act, the entire clause will be unenforceable, resulting in the greater common law notice being required.

The courts in Ontario do not like termination clauses in employment contracts and are continually devising ever more ingenious ways to invalidate them. All of this is familiar to regular readers.

Today we are going to attempt to simplify your (employment law) life by providing a handy checklist — or, more precisely, a list of dos and don'ts for both employers and employees when the working relationship comes to an end.

First for employers: do not fire someone if they are essential to the operation of your enterprise! The number of calls we receive from employers who have fired individuals that manage all the passwords to the company's email or bank accounts and the like is astounding.

Make sure you have all the necessary information you need from an employee before they are fired.

Sometimes companies fire individuals they are required by statute to have before that position is filled by their replacement, such as a safety officer in a regulated industry.

Do not feel obliged to go into detail about why an employee is being let go. In fact, you (the employer) are under no obligation to advise an employee of the reasons for their dismissal.

We frequently receive calls from employers asking us what grounds they need to fire someone they want to get rid of. You don't need any grounds. Just thank the employee for their service and pay them the appropriate amount or provide working notice.

If you do advise the employee why they are being let go, you must be honest. The trap here is that some employers try to sugarcoat the reason for firing by saying that there has been a reorganization of some kind when in fact the employee is simply bad at their job.

This is a mistake. Such dishonesty, even if meant well, can be regarded by the courts as bad faith and can lead to increased damages should the matter go to court.

Do pay departing employee their statutory notice and severance (if applicable) immediately, regardless of any dispute about notice. Failure to do so may, once again, lead to a finding of bad faith against the employer.

Do issue a Record of Employment immediately. Failure to do so can also lead to a finding of bad faith and additional damages against you at trial. And even if the case does not go to trial, the employee's lawyer may insist on more money to settle it believing that a court will provide it otherwise

Finally, in the absence of an enforceable termination clause in the employment contract (and many are not enforceable), pay reasonable notice — with the emphasis on "reasonable." Don't give away the shop, but understand that litigation usually costs a lot more than just being reasonable in the first place.

Now, for departing (or soon to be departing) employees: do not resign. If your employer is making your life difficult, hang in there — unless a good lawyer (not all are) tells you that you have a solid case for constructive dismissal.

If you are being fired unexpectedly, do not in a fit of pique announce you are quitting or that you were going to retire anyway. If you resign or retire, you are not entitled to any notice or severance at all.

Do not download the company's confidential information onto your computer. This will only lead to serious repercussions later on.

If you are a senior officer or director, you may be a fiduciary and, if so, certain obligations will remain with you after you leave. You should see a lawyer immediately.

Do not attend an "exit interview," or, if you do, say as little as possible. Nothing good can come of such an interview, and the employer may be nosing around for after-acquired cause. And what is the employer going to do if you don't attend such an interview anyway? Fire you?

Do keep a diary of your job search. If you are fired, you are required to mitigate your damages by looking for suitable equivalent employment. The best evidence of this is to keep track of your search efforts.

This list is not comprehensive. It is meant to help prevent some common pitfalls we have observed when the employment relationship comes to an end. Hopefully it will help simplify that process, and your life.

Howard Levitt is senior partner of Levitt LLP, employment and labour lawyers with offices in Ontario and Alberta, and British Columbia. He practices employment law in eight provinces and is the author of six books, including the Law of Dismissal in Canada. Peter Carey is a partner at Levitt LLP.