Human Resources 101

Here in Canada, terminating an employee can be a risky, difficult job. If you do it for the wrong reasons, or in the wrong way, a court may force you to pay damages to the employee. Fortunately, there are steps you can take to reduce the chances of being sued.

Here is an outline of things you need to consider to protect yourself, and keep the situation under control. This is not legal advice—I’m not a lawyer. This is the result of my experience in human resources. It is always good to consult a lawyer when dealing with complex employee issues.

Dismissal

A dismissal is any change by the employer of a major term of the employment relationship, such as the following:

• Forced resignation;
• Demotion - cut in salary, benefits or job responsibilities constitute a constructive dismissal;
• Downward change in reporting function;
• Unilateral change in job responsibilities;
• Forced transfer;
• Intolerable behaviour of employer;
• Termination.

Just Cause

Valid reasons for termination are:

• Serious misconduct not condoned by the employer: (action must be taken immediately or condonation will be assumed.)
• Habitual neglect of duty;
• Serious incompetence which has not been condoned; (Not just management dissatisfaction with performance. Adequate warnings with opportunity to improve must be granted by the employer.)
• Conduct incompatible with duties or prejudicial to the employer’s interests; (i.e. conflict of interest.)
• Wilful disobedience to a lawful and reasonable order of a superior in a matter of substance;
• Theft, fraud or dishonesty; (The onus is on the employer to prove this, and immediate action must be taken or condonation will be assumed.)
• Continual insolence or insubordination;
• Excessive absenteeism and/or consistent lateness despite corrective counselling;
• Permanent illness;
• Inadequate job performance over an extended period, resulting from drug/alcohol abuse, and failure by the employee to accept the employer’s attempts to rehabilitate the employee.

The employer carries the onus to prove just cause, so sound documentation must be in place:

• Regular, accurate performance evaluations are essential in order to substantiate any dismissal for just cause.
• Where poor performance is cited as the reason for dismissal, at least three warnings must be given documenting:

• the area of inadequacy,
• steps to be taken to improve,
• the level of competency required and
• the consequences of non-compliance, including the possibility of dismissal.

Where just cause is proven, the employer is not required by law to pay the employee any severance allowance. If none of the valid reasons for dismissal exist, then adequate compensation in lieu of notice and severance allowances must be provided. Other factors eliminating the need for severance pay are:

• If the employment arrangement was temporary or on a contract of less than 12 months, with a specific termination date.
• If the employee has refused reasonable alternate employment with the employer.
• If it is impossible to perform the contract of employment due to an unforeseeable circumstance; or
• If an employee is temporarily laid off with a reasonable prospect of return to work.

Human Rights

Under Human Rights legislation wrongful dismissal is considered to have taken place where discrimination is evidenced (involved or implied) in any of the following areas:

• age,
• race,
• sex (including pregnancy, and, in some jurisdictions, sexual orientation),
• colour,
• religion,
• marital status,
• physical or mental handicap,
• ethnic origin,
• a prior unrelated criminal record.

It is important to consider the human rights in all matters of employee relations, and especially when dealing with the subject of termination. The reason for dismissal may well include grounds which potentially infringe upon prohibited discriminatory grounds. Even if the underlying circumstances of the dismissal involve prohibited discrimination, then the dismissal could be construed to be a human rights violation. If so, the employer must satisfy the Board of Enquiry that it is an unjustifiable hardship to the organization to keep the employee.

Termination Without Cause and Severance Allowance.

When termination is being considered, it must first be established if any of the approved criteria for rightful dismissal exist. If not, a reasonable notice period or pay in lieu of notice is to be granted. Reasonable notice is the length of time necessary for the terminated employee to find equivalent work elsewhere. In determining the length of reasonable notice to be granted, the following factors are to be considered:

• Availability of similar employment in immediate area; This is considered the major factor in determining reasonable notice.
• Age; Recognize that older employees may find it more difficult to secure suitable alternative employment.
• Character and Nature of the Position held; Was this employee in a management/executive position or unskilled?
• Circumstances surrounding the hiring; If the employee was induced to leave a secure, well-paying position to join the employer and then, subsequently, dismissed, the notice period will need to be increased.
• Manner of dismissal; In some cases the circumstances of an unwarranted and abrupt dismissal merit a greater severance allowance.
• Length of Service; Provincial Employment Standards outline the minimum notice periods required by law, based on the employee’s length of service. It should be recognized that these are minimal guidelines.
• Experience, training and qualifications of employee, which would have a bearing on his considered value to the employer prior to termination

In considering these factors, it may be advisable to seek legal counsel.

Any severance package to be offered should be outlined in a letter to the employee. The employee must be granted reasonable time to consider the severance package and any release to be signed as a condition of settlement. The key issues which should be addressed in the letter and severance package are

• Pay in lieu of notice (as specified by Provincial Employment Standards) and any additional severance payments being granted;
• Vacation Pay;
• Reimbursement of any outstanding expenses upon presentation of applicable receipts;
• Benefits;
• Arrangements for a letter of reference, if requested; This letter should provide only basic information - date of hire, date employment ceased, employee’s position, and brief description of duties held.
• Arrangements for the return of employer’s property;
• A release form to be signed by employee.