termination without cause
Most people assume that they know what a probationary period is and how it works in Canada. Unfortunately, however, there are many misconceptions with respect to the law in this regard, and many employers unknowingly expose themselves to significant liability when they hire new employees.
The three most popular HRinfodesk articles this week deal with terminating for cause without cause, employee travel expenses, and a case about dismissal due to Facebook postings.
On June 21, the Ontario Court of Appeal reversed the trial decision in Bowes v. Goss. It held that the duty to mitigate does not apply where an employment contract contains a clause setting out an employee’s severance entitlement arising from a termination without cause. However, the decision maintains the duty to mitigate where it is expressly incorporated in the employment contract.
In Ontario, employers owe vacation pay on employee wages. Wages are defined in section 1 of the Employment Standards Act to include “any payment required to be made by an employer to an employee.” Here is where it gets tricky. In Ontario, the employment standards may require two separate types of payments to an employee who is terminated without cause.
The Ontario Superior Court of Justice just decided that an employer terminated a 65-year-old long-term employee without the proper amount of notice or severance. As a result, the employer had to pay hefty damages, interest and costs award
Termination clauses can be void even if only a possibility they could violate Employment Standards Act
As those who read my comments regularly will know, I recommend that every employee be asked to sign an employment agreement that sets out, among other things, the amount of notice or pay in lieu thereof that will be required in the event of a dismissal without cause. Such a provision will eliminate all of the uncertainty that typically arises at the time of dismissal when the parties must assess, negotiate and possibly litigate what “reasonable notice” would be in light of all the circumstances.
Most employers are familiar with the potential legal exposure to damages that arises from dismissing an employee without cause. The damages are normally quantified by the value of compensation the dismissed employee would have received during the agreed-upon or court-ordered period of reasonable notice. However, most employers would not contemplate the possibility of having to pay the dismissed employee the value of disability benefits he or she would have received under a disability insurance policy until age 65…
Probably the most prevalent misconception in the area of employment law is the notion that all employees are entitled to “one month per year” as notice of termination without cause. This has, in the past, been referred to as the golden rule. In spite of repeated judicial pronouncements that the rule no longer applies, human resources professionals continue to apply it.
When I speak at conferences, I am often asked the following question: “Is severance pay required when an employee is terminated?”
Before this question can be answered, we have to first confront the difficulty that some payroll terms traditionally used to describe both termination, as well as any payments resulting from this event, haven’t always been defined with the greatest of clarity. My preference has always been for those terms that convey the clearest meaning of the related employment standards and source deduction requirements.
Employers that dismiss employees without cause, and without ensuring that they take steps to preclude all potential claims, can face significant liability beyond the “typical” wrongful dismissal damages. The recent decision of Mr. Justice Echlin of the Ontario Superior Court of Justice in Brito v. Canac Kitchens is an example of the type of situation employer’s dread. In that case…
A topic that I address often in presentations and with clients is the failure, on the part of the vast majority of employers in Canada, to use employment agreements properly (if at all). As I have said many times, policies and agreements are the easiest ways for employers to establish the rights and obligations of the parties and avoid having them imposed by common law or other principles.
One crucial piece of advice that I offer to employers is to have every single employee sign an employment agreement that, if nothing else, sets out what will happen in the event of dismissal without cause. The reason for this suggestion is simple: without a contractual dismissal provision, an employer’s obligations in the event of dismissal without cause are unpredictable and often extensive.
I recently read an Alberta case where a financial consultant, a top performer, was terminated without notice. The court found he was wrongfully dismissed and terminated in an insensitive manner; this error in judgment cost the employer $2.2 million in damages.