Employment Lawyer Advice
An inevitable part of any business operating in Ontario is effectively managing its workforce, especially in times of economic uncertainty. Following the COVID-19 pandemic and the resulting economic disruptions, many employers now find themselves having to making difficult decisions to balance competing interests between, on the one hand, pair down operating costs when business is impacted by the ongoing inflation and increasing interest rates, and, on the other hand, acting fairly and compassionately with employees when having to trim down its staffing levels.
Add to this equation the need to ensure the company follows all employment laws (be it provincial or federal), and it becomes evident it is how important it is to have an experienced Ontario employment lawyer guiding employers in Ontario.
Got terminations and layoffs on your mind? Check out these 5 tips for effectively handling terminations and workforce reductions in force.
– Know your minimum legal obligations when terminating employees. In Ontario, there are minimum legal requirements for providing employees with notice of termination (or termination pay) and severance pay when firing an employee without cause. While as a basic obligation, employers cannot fall below these minimum standards, often employees are entitled to even more compensation under their employment contract or under common law.
– Keep in mind the factors influencing employees’ entitlements to reasonable notice of termination (severance package). When assessing an employee’s right to reasonable notice under common law (a financial severance package), courts weigh several factors, including an employee’s length of service, age, type of position, and ability to find new work. Generally, long-tenured and older employees are entitled to longer notice periods.
– Be proactive by having employment contracts with enforceable termination clauses to help reduce severance pay costs. In Ontario, employers who have employment contracts with legally valid termination clauses that are properly drafted have a crucial tool at their disposal when it comes time to negotiate an employee’s severance package to be below their common law entitlements. However, employers should always consult and work with an experienced employment lawyer in Toronto when they wish to include termination provisions in employment contracts.
– Consider strategy relating to employees’ duty to mitigate. Employees have a duty to mitigate their damages by seeking new employment. As a general rule, money earned during the applicable notice period will be deducted from common law entitlements (but not during the statutory notice period under the Ontario Employment Standards Act, 2000 or Canada Labour Code). In certain cases, employers may strategically look to waive the employee’s duty to mitigate in exchange for a reduced severance package.
– Always use proper severance package drafted and reviewed by an Ontario employment lawyer. A severance package should include a legal release of claims where the employee agrees to waive (forfeit) any potential legal claims against the employer in exchange for the severance package, including a wrongful dismissal claim, constructive dismissal claim or discrimination claim. Equally important, a severance package should include a termination letter should at least include a termination the following information:
- the employee’s last date of employment (termination date)
- details regarding any remaining or additional payments to be made to the employee and, if asking for a legal release of potential legal claims by the employee, an additional payment if the employee signs and returns a legal release (however, statutorily guaranteed legal minimums of termination pay, severance pay, benefits continuance should be paid without any conditions attached)
- any outstanding vacation amounts (should be provided for all time accrued up to and including the end of the minimum statutory notice period)
- the date any benefits will be terminated
- the date the employee is required to return all company property, including keys, documents, and so on
By ensuring it follows a clear, professional and respectful process to ensure the employee’s dignity and feelings during what often is a stressful and difficult time, an employer acting in good faith will better ensure a smoother transition for both itself and the departing employee.
If you are an employee who believes you were wrongfully dismissed from your employment without a fair severance package, or are experiencing workplace hostility or other difficulties, please call today to discuss your options and next steps on how to deal with a wrongful dismissal. As an employment law firm in Toronto, Bune Law has reviewed and negotiated improvements to many severance packages. You will review and get guidance on your severance package before you agree to sign any termination documents, and help ensure that your severance package is fair and reasonable.