Dismissing an employee? – Be aware of your obligations

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Dismissing an employee? – Be aware of your obligations
Published December 8, 2014
By Lawrence Smith & Daniel Sorensen

Are you considering letting an employee go? Perhaps you’ve already let an employee go, and they’re demanding money? You should be aware that employees may be entitled to advanced notice or pay in lieu of notice when they are dismissed.

With Just Cause
When an employee is let go for just cause, the employee is not normally entitled to advance notice of their dismissal, nor pay in lieu of notice.

So what is just cause? This is a very complicated question – there are many cases and legal principles that come into play when determining whether just cause exists. Numerous cases have described the principle of just cause as follows:

If an employee has been guilty of serious misconduct, habitual neglect of duty, incompetence, or conduct incompatible with his duties, or prejudicial to the employer’s business, or if he has been guilty of wilful disobedience to the employer’s orders in a matter of substance, the law recognizes the employer’s right summarily to dismiss the delinquent employee.

However, there may be particular facts in your circumstances that mean you do not have just cause, even if there has been, for example, serious misconduct, willful disobedience or neglect of duty. If you intend to assert just cause for dismissal, you should get legal advice to determine whether you actually have just cause.

Without Just Cause
When an employee is let go without just cause, the employer must provide the employee with either advanced working notice of the termination or pay in lieu of such notice. Pay is lieu of notice is often referred to as severance. An employer has the option of providing the employee with a combination of advanced working notice and severance.

When determining severance, it is usually considered in terms of time rather than a monetary sum. This is because severance is based upon the notice an employee should have received.

In British Columbia, the Employment Standards Act sets out minimums for notice and severance. For federal employers, the Canada Labour Code sets out minimums for notice and severance. You should be are that the Employment Standards Act and the Canada Labour Code only set minimums. In practice, and subject to an employment contract, employees are often entitled to notice or severance exceeding that set out in the Employment Standards Act or the Canada Labour Code.

When determining notice or severance entitlements, the most useful court cases are those dealing with employees similar to the employee in question. When looking at cases dealing an employee similar to the one question, there will typically be a range of severance awards that can be used to predict the severance entitlement for an employee.

In decisions on notice and severance entitlements, Courts have considered four main factors as follows:

  • the employee’s length of service
  • character of the employment
  • the employee’s age, and
  • the availability of alternative employment.

Courts have tended to make more generous notice or severance determinations for employees that have longer lengths of service, or more responsibility in their employment.

Dismissed employees claiming severance have a duty to mitigate. The duty to mitigate requires employees to take reasonable steps to acquire new employment. If the employee finds new employment during the time that they are entitled to pay in lieu of notice, then their income from that new employment may reduce their severance entitlement. A Court can also penalize an employee by reducing the amount of severance to which they are entitled where the employee fails to take adequate steps to look for new employment.

Finally, and perhaps most importantly for employers, notice and severance entitlements can be dealt with by way of an employment contract. Subject to some limited exceptions, these clauses are usually enforced by the courts. Employers should take advantage of such contracts to reduce their notice and severance obligations.

Like contracts, for unionized employees, their notice and severance entitlements are usually determined by reference to the collective agreement. If a collective agreement is silent on notice or severance, then the minimums under the Employment Standards Act or the Canada Labour Code will often apply.

If you considering the dismissal of an employee, or have dismissed an employee, and need advice about your obligations, please hesitate contact us to schedule a consultation.