Employers Conducting Termination of Employment in Ontario

Navigating Termination of Employment in Ontario: A Guide for Employers

Terminating an employee’s employment is a delicate process that requires careful consideration by Ontario employers to ensure they comply with legal requirements under employment law. Employers must be cautious to avoid wrongful dismissal claims, which can result in significant consequences, including financial obligations and wrongful dismissal disputes. This blog will discuss the types of terminations, severance entitlements, the impact of employment contracts, best practices for employers, and the potential consequences of improper terminations.

Types of Terminations of Employment

There are two primary types of terminations of employment:

(a) Termination of Employment for Just Cause

This occurs when an employee is dismissed due to serious misconduct or insubordination that warrants immediate termination without notice or severance pay. To establish just cause, employers must generally prove:

Serious misconduct: The misconduct must be severe and directly related to the employee’s employment duties. In fact, in order to withhold an employee’s minimum entitlements to notice of termination (or termination pay), benefits continuation and severance pay under the Ontario Employment Standards Act, 2000, the employer must prove the employee was

“guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.”
Just Cause Under Common Law: sufficiently serious that it strikes at the heart of the employment relationship. This can be due to an employee’s a single wrongful act or several acts, and a court will consider the surrounding context to determine whether dismissal is a proportionate response. However, the important distinction is that common law just cause does not require the employee to commit a wilful (or intentional) wrongful act.

As the Ontario Court of Appeal stated:

“… the core question … is whether an employee has engaged in misconduct that is incompatible with the fundamental terms of the employment relationship. … [t]he sanction imposed for misconduct is to be proportional — dismissal is warranted when the misconduct is sufficiently serious that it strikes at the heart of the employment relationship. This is a factual inquiry to be determined by a contextual examination of the nature of the misconduct.”

In essence, the employer must demonstrate that termination was the only reasonable course of action to justify not providing an employee prior notice or any other form of compensation if they have “just cause”. Some examples of just cause under common law theft, fraud, assault, insubordination, gross negligence or repeated poor performance.

(b) Termination of Employment Without Cause

This occurs when an employee is dismissed due to reasons unrelated to misconduct, such as economic downturn, business restructuring or downsizing. In such cases, employers must provide reasonable notice or a severance package.

An Employee’s Entitlement to a Severance Package

The amount of severance pay an employee is entitled to depends on several factors, including:

Length of service: The longer the employee has been employed, the greater a severance package they are typically entitled to.
Job Position: higher-ranking job title, duties and responsibilities, and compensation generally receive more severance pay (since the assumption is it will be more difficult to find a comparable job).
Age: older employees may be entitled to additional severance pay.
Economic and Labour Market Conditions: employees terminated during negative economic conditions will generally find it harder to harder to re-employ, which generally entitles them to greater severance pay.

How Does an Employment Contract Termination Clause Impact an Employee’s Entitlement to Receive a Severance Package?

Employment contracts can include termination clauses that may limit or modify an employee’s entitlement to severance pay. However, they must be reasonable and comply with applicable laws. Most importantly, an employment contract may specify shorter or longer notice periods than required by common law, but always provided at least the minimum statutory entitlements under the Ontario Employment Standards Act, 2000. Just as importantly, an employment contract cannot waive an employee’s right to sue for wrongful dismissal claims for simply receiving their basic minimum statutory entitlements.

Best Practices for Employers to Carry Out a Termination of Employment to Avoid Wrongful Dismissal Disputes

It is generally prudent practices for employees to treat employees fairly, honestly and respectfully during the termination of employment process, including:

Conduct thorough investigations: If there are allegations of wilful misconduct to justify a termination for just cause, conduct a thorough investigation before making a decision.
Provide clear reasons: Clearly communicate the reasons for the termination to the employee in a termination for just cause.
Document everything: Maintain detailed records of all relevant information, including performance reviews, warnings, and disciplinary actions to support a termination for just cause.
Offer a fair severance package: Ensure an employee’s severance package complies with legal requirements, including the employee’s entitlements under the employment contract, and is fair under the circumstances.
Consult with employment legal counsel: Seek advice from an Ontario employment lawyer to ensure compliance with applicable laws and minimize legal disputes.

Consequences for Employers Who Do Not Carry Out a Termination Properly

Failing to follow proper procedures when terminating an employee can result in serious consequences, including:

Wrongful dismissal claims: Employees may sue for wrongful dismissal if they believe they were not given adequate notice of termination or financial compensation in the form of a severance package, or a discrimination claim if they feel the employer violated their human rights.
Aggravated or moral damages: If the employer acted maliciously or in bad faith, the court may award aggravated or moral damages in addition to compensatory damages.
Punitive damages: In exceptional cases where the employer’s conduct was particularly egregious, the court may award punitive damages to punish the employer and deter similar behaviour.

By following simple guidelines to treat employees with a basic level of decency, employers can minimize the risk of wrongful dismissal claims and protect their business interests.

Book a Consultation with an Employment Lawyer in Toronto

At Bune Law, we understand and are familiar the complexities of workplace law and are committed to helping both employers and employees navigate these challenges. Whether you are an employer or employee dealing with employment contracts, workplace disputes like a wrongful dismissal or constructive dismissal, or simply need guidance on your rights and obligations for a severance package review and negotiation, our experienced employment lawyer is here to assist you.

Book a confidential consultation with our Toronto employment law firm to protect your legal rights to understand your options and protect your rights.

Why Choose Bune Law When You Need an Ontario Employment Lawyer?

Experience in all areas of workplace law, including wrongful dismissal claims, constructive dismissal claims, severance package reviews, severance package negotiations, discrimination and human rights disputes, and employment contract reviews.
Proven track record of successfully resolving workplace disputes through negotiation, mediation, and employment litigation.
Compassionate and personalized approach to each case, ensuring tailored solutions that meet your specific needs.

If you need a Toronto employment lawyer who is committed to delivering strong results and proactive solutions, please contact Bune Law online or by phone today at 647-822-5492.