Frequently Asked Employment Law Questions
In this employment law blog article, we discuss and provide general information regarding a few frequently asked questions various topics.
Termination of Employment
What is Termination of Employment “With Cause”?
If an employer proves an employee engaged in serious misconduct that undermined the root (or essence) of the employment relationship, it can terminate the employee “with cause” by not providing any prior notice or a financial severance package. A few examples of termination with cause include:
- Dishonesty
- Theft or fraud
- Workplace Harassment
- Neglect of duties
- Insubordination and insolence
- Poor performance/Incompetence
What is Termination of Employment “Without Cause”?
If an employer does not have valid grounds to terminate the employee “with cause,” it can do so “without cause” by providing the employee with at least the minimum amounts of termination pay, benefits continuance and severance pay required under the Ontario Employment Standards Act, 2000. In such cases, the employer can terminate the employee’s job for any reason (or no reason at all), except for discrimination or reprisal.
Severance Packages
What is a “Severance Package”?
A financial Severance Package is a combination of money and benefits (severance pay) that a former employer pays for terminating an employee’s job. The amount of severance pay and benefits in a severance package (or settlement agreement) is usually determined by a enforceable termination clause in Employment Contract. Otherwise, an employee’s severance package is determined under common law by considering an employee’s age, years of service, position and the availability of similar employment. Once agreed upon, an employee’s financial severance package often contains several different components, such as outstanding wages and vacation, base salary, payment of accrued bonus pay (incentive compensation), pension plan and health benefits.
What is a Settlement Agreement?
A settlement agreement is a written contract that establishes the terms and conditions of an employee’s departure and separation of employment. Among other things, it will usually include a “Full and Final Release” of all legal claims the employee may have against the former employer, in exchange for payment of money (i.e., severance pay) to the employee. However, beyond severance pay, there are also other key provisions usually contained in a separation agreement, including:
(1) Paying the employee all outstanding wages and vacation pay;
(2) Agreeing to continue the employee’s health benefits and pension plan for the notice period;
(3) A “Full and Final Release” (legal waiver) of all claims the employee may have against the employer. This means the employee agrees to give up any potential (and ongoing) legal claims or lawsuits against the employer, such as a claims of wrongful dismissal or discrimination).
(4) A confidentiality requirement for the employee to not disclose the terms (or the very fact) of the separation (settlement) agreement;
(5) An agreement by the employee to honour its legal obligation to not disclose confidential or proprietary company information;
(6) A non-disparagement clause, in which the employee agrees to not make any critical, defamatory or disparaging comments about the company;
(7) A neutral “reference letter,” in which the employer agrees to only confirm to prospective employers the dates of employment and job title, and to not release any other information about the employee’s employment or circumstances of termination.
Employment Discrimination
Under the Ontario Human Rights Code, an employer is prohibited from discriminating against an employee in any way. The term “discrimination” refers to unfair and unequal treatment of one employee when compared to others (even if it is unintentional) because of an employee’s human characteristics (such as their gender, ethnicity, race, age or disability).
Among other things, an employer has a “Duty to Accommodate” an employee’s personal characteristics by taking all reasonable steps to allow the employee to balance: (a) their personal life circumstances (e.g., disability or family responsibilities) and (b) work life and job responsibilities. This is a legal standard requiring an employer to prove that providing any more workplace accommodations is too expensive, or creates serious health and safety problems.
Employment Contracts
What is an Employment Contract?
An Employment Contract (or “Employment Agreement”) sets out the legal rights and responsibilities in an employee’s relationship with their employer (the company they work for). Typically, the reason an employer requires an employee to sign an employment contract is reduce the amount of future severance pay the employer must provide if it terminates the employee’s job. This is why a review with an employment contract lawyer is essential.
What to Look for in an Employment Contract?
When considering whether to sign a new employment contract, some of most common provision to review include:
Termination Clause
- this section of an employment contract determines the rights, obligations and circumstances under which either the employer or employee can terminate (end) the employment relationship. For example, it can state what notice of termination (or severance pay) an employer must provide to the employee if it terminates their employment “without cause.” In these cases, the employer must provide at least the minimum amount of “notice” (or termination pay) required by the Ontario Employment Standards Act, 2000, which is one week per year of service (up to 8 weeks).
Compensation Clause
- this provision in an employment contract typically describes what the employee will be paid for doing their job, including base salary, health and medical benefits, life or disability insurance, bonuses or incentive compensation and car allowance.
Non-Competition and Non-Solicitation Agreements
- A Non-Competition Agreement prohibits an employee from “competing” with the employer by working in similar jobs in the same industry for a specific period of time after their employment ends. A Non-Solicitation Agreement prohibits the employee from soliciting customers, clients, suppliers or employees. In either case, these restrictions on an employee’s post-termination activities are very important to review, especially from an employee’s perspective.
Contact Employment Lawyer
If you are an employee or an employer looking for an employment lawyer to help with an employment law or workplace issue, please contact Bune Law today.
Understanding a termination letter or severance package often requires understanding the impact on your employee pension plan. If you think that your employer is not compensating you fairly for your pension in your termination package, please call Bune Law to discuss your rights and options. To speak with an experienced employment lawyer, please contact 647-822-5492.
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