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. Although it is very difficult to establish just cause for dismissal, the types of activities that may constitute cause for dismissal 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, where 50 or more employees will be terminated at an employer’s “establishment” within a four-week period. 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. Common law notice period awards are often much longer than those required by statute (but would incorporate any statutorily mandated payments) and depending on an employee’s position and length of service, up to 24 months may be awarded. Employers are also typically responsible for the payment of benefits and entrenched bonuses during the common law notice period.
Is Severance Pay Required?
Employees are entitled to statutory notice of termination or pay in lieu thereof in all Canadian jurisdictions, unless they have been terminated for “just cause” or “willful misconduct”. The statutory notice period is based on an employee’s length of service, but does not exceed eight weeks in any jurisdiction. Mid-size to large employers operating in Ontario will be required to dispense severance pay to persons who were employed for at least five years (this requires a lump sum payment that is calculated as one week per year of service to a cap of six months).
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. They may also provide an opportunity for an employer to obtain the protection of restrictive covenants that were not contained in an employment contract. In general, an older employee is entitled to a longer common law notice period than a younger, but otherwise similarly situated employee.
Remedies for Employee Seeking to Challenge Wrongful Termination
A dismissed employee who believes he was not provided with the appropriate notice of termination, is entitled to bring a complaint under employment standards legislation or file an action in court (in the case of a non-unionised employee). 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 do not have a right to reinstatement if they have been wrongfully dismissed. The reasonable notice period is designed to compensate employees for their loss of employment and is based, in part, on the amount of time it will likely take for the employee to find similar employment.
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.