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You are Fired! Part II

In Part 1, I wrote that Employees, with significant service time, may be entitled to advance notice of termination, or severance in lieu of advance notice, well in excess of the minimum amounts set out in the Employment Standards Act.

Expanding on those concepts and diving a little deeper in the issue, employment is considered to be a specialized contract with a number of implied terms and obligations, including:

  • the obligations to act in good faith

  • to be loyal

  • the obligation on the employer to give advance notice of termination

Job terminations fall into one of two categories:

  1. Termination for cause, where no notice and/or severance must be given; and

  2. Termination without cause, where notice and/or severance must be given.

A termination for cause is one in which an employee has conducted themselves in such a way that they are found to have significantly breached their employment obligations; theft and insubordination are good examples, being significant breaches of loyalty and trust. An under-performing employee does not by their lack of performance give the employer cause to terminate employment, except in special circumstances.

On a termination without cause, the employer must give the employee advance notice of the termination, the amount they would be paid during the period of advance notice (“severance”), or a combination of advance notice and severance.

Unless the amount of notice or severance is previously set by contract, the amount of notice or severance is arrived at by analysis of employee-specific factors: their age, their length of service with the employer, their position, and the availability of similar employment, having regard to their experience, training, and qualifications. For employees with long service times, it is common to see notice periods and corresponding orders for severance in excess of a year and sometimes approaching two years.

Plan ahead, obtain advice from a competent labour attorney, to review and develop your company employment contracts and limit your exposure ahead of time. So when the time comes to let a under-performer go, you are not facing devastating severance payments.

Mark W. Hundleby is a lawyer and partner at ERA Law, and maintains a litigation and employment practice.

Mark W. Hundleby Barrister and Solicitor


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