Terminating with or without cause can be a tough judgment call for an employer. Acommonexample iswhen an employee has had performance issues that aren’t too serious but persist over a long period of time. “Bardal Factors,” as they are known, include character of employment, length of service, age, and availability of similar employment, having regard to the experience, training and qualifications of the employee. More notice is required if an employee is closer to retirement age and if they are likely to experience significant barriers to finding new employment after being terminated. Provincial employment standards legislation sets out the minimum notice and compensation that an employee is entitled to during termination, and common law often provides for more, especially if it is difficult for the employee to find another job. “Common law hopes to provide a bridge, so to speak, between two jobs,” says Koldorf. “The employee has an obligation to look for work during this time.” 3. Common (Civil) Law A misconception often held by employers is that common law will require one month of pay per year of service. That may be true for an older employee who has been with a business for a long time and is approaching retirement age. But for a younger employee who hasn’t been with a business for many years and can likely find a new job easily, common law will not require such a significant entitlement. Some employers limit common law entitlements by helping former employees find new employment. There are outplacement agencies that can help people with their resumes, jobs searches, job interview preparation and other transitional tasks. When employers provide a service such as this as part of a termination package, former staff members are more likely to find a job more quickly, which limits what the employers need to pay in common law entitlement. Termination costs can also be decreased by offering fixed term contracts. Instead of hiring employees indefinitely, you would hire employees for one year or another predetermined amount of time. At the end of the fixed term contract, the contract expires but then you have the option of renewing the contract. But if you don’t want to renew it, there is no termination or severance pay. “When a contract is complete, everybody just moves on,” says Koldorf. Terminating with or without cause can be a tough judgment call for an employer. A common example is when an employee has had performance issues that aren’t too serious but persist over a long period of time. Or an employee sometimes meets expectations for performance but struggles to meet expectations at other times. “In cases like this, we often advise employers to terminate without cause because there is a high threshold to prove that low performance is cause for termination,” says Koldorf. “So without cause termination is often faster and more cost effective. You want to try to avoid an accusation of wrongful dismissal.” There are three distinct sources of rights that employees have when it comes to termination. The first is provincial legislation. The second is dictated by an employment contract. The third is common (or civil) law. 1. Provincial Legislation Employment standards legislation provides the minimum entitlements for all employees. Each province has its own employment standards legislation, though they have commonalities, except Quebec. This legislation provides minimum notice that an employer must give an employee based on the employee’s length of service. To use Ontario as an example, a terminated employee is entitled to roughly a week of notice (or pay in lieu of notice) for every completed year of service. In Ontario, there is also severance pay for employees who have been with the employer for at least five years and the employer has a global annual payroll of at least $2.5 million. 2. Employment Contract If you have an employment contract with an employee (which is always recommended) you should check whether it contains a termination provision. A properly drafted termination provision could limit what an employer must pay a terminated employee to the minimum required by provincial legislation. If it does have a termination provision, check whether it is enforceable. “In Ontario and a few other provinces, laws related to whether termination provisions are enforceable have been a moving target,” says Koldorf. “When a court issues a decision on a termination provision, the law might change.” If there isn’t an enforceable termination provision or an employee didn’t sign an employment contract, then the employee is subject to common law. In Ontario, the 1960 case of Bardal v. Globe & Mail Ltd. (1960 Carswell Ont 144 [Ont. H.C.]) sets out the key factors in determining an employee’s reasonable notice period. The 28 | 2024 | Issue 6 SupportingYour Practice
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