Grounds for Termination
Employment can be terminated at any time if the employee is provided with appropriate notice of termination as well as any applicable legislative entitlements. However, if an employee engages in conduct that is incompatible with the fundamental terms of the employment contract, he or she may be dismissed without notice. It is very difficult to establish just cause for dismissal. Examples of the types of activities that may be found to constitute cause for dismissal, depending on the circumstances, include theft; workplace harassment; criminal activity; and significant dishonesty or fraud.
Employers must provide notice to the appropriate provincial or federal official that a mass termination will occur. Unlike the standards applicable to individual terminations, where a mass termination will occur, the amount of notice employees will be entitled to, is based on the number of employees who have been or will be terminated.
Typically, statutory notice periods range from one to eight weeks of notice (or pay in lieu of notice), depending on an employee’s length of service. The statutory minimums apply so long as an employee is not terminated for wilful misconduct. Employees under a fixed term contract are not entitled to reasonable notice.
Unlike statutory entitlements to notice, employees and employers are entitled to contract out of the common law notice periods, provided that the contract provides for at least the statutory minimum entitlements and is otherwise valid and enforceable. Employers are also typically responsible for the payment of benefits and entrenched bonuses during the common law notice period.
Is severance pay required?
Ontario is the only Canadian jurisdiction that provides employees with severance pay, which is distinct from payment for notice of termination. Mid-size to large employers operating in Ontario will be required to pay severance pay to persons who were employed for at least five years. The legislation requires a lump sum payment which is calculated as one week per year of service to a cap of six months.
Is a Separation Agreement required or considered best practice?
Separation agreements are not required by law, but are often entered into at the time of dismissal in order to reduce the risk of litigation over an employee’s legal entitlements. A separation agreement may also provide an opportunity for an employer to obtain the protection of restrictive covenants that were not contained in an employment contract, such as a non-competition or non-solicitation clause.
Remedies for employee seeking to challenge wrongful termination
When an employee has been dismissed and believes that he or she has not been provided with appropriate notice of termination, he or she is entitled to bring a complaint under employment standards legislation, or (in the case of a non-unionized employee) file an action in court. An employee’s entitlement to notice at common law will generally be greater than the employee’s entitlement under employment standards legislation. Consequently, some employees will bring a court action to sue for the difference between the amount of notice provided or paid under the applicable statute and the amount of notice that would be found to be due at common law. Most employees in Canada do not have a right to reinstatement if they have been wrongfully dismissed.
Canada makes it a criminal offence for an employer to retaliate (or threaten to retaliate) against an employee in order to convince them “to abstain from providing information to a person whose duties include the enforcement of federal or provincial law, respecting an offence that the employee believes has been or is being committed”. There are also specific protections offered to employees under almost every employment-related statute, should they come forward with a valid complaint about their employer, or if they assert their statutory rights. It should also be noted that employees generally have a duty of loyalty to their employer. Depending on the facts of a situation, an employee may be in breach of that duty (which can be grounds for termination) if their “whistleblowing” is for political or other purposes unrelated to asserting statutory rights.